Will the Russian return to Dubai? Part II

The return of Russian tourists to the shores of the Arabian Gulf is as relevant as ever. With the approach of the pleasant year-end climate to Dubai, the retail and hospitality sectors eagerly await to greet a bustling tourist season, which traditionally welcomed Russian tourists who flocked to the boutiques during their vacation in the emirate.

But the Rouble still resists strengthening its position against other currencies as the price of a barrel of black gold appears to be in no hurry to increase. So will the Russian return to bask in the warm waters of the Gulf and enjoy the hailed Arab hospitality even as the key sectors of retail and hospitality await hi return, eager for his generosity?
In our first report, we gave an example of the increase of flights from Russia to Dubai, from which it can be safely gauged that air carriers are preparing for an increase in tourist traffic from this part of the world. As is well known, the tourism industry is a harmonious mechanism where one wheel sets another in motion. Tourism industry experts in their interviews and predictions also speak about the return of Russian tourists, noting changes in this sector of tourism to Dubai.
Until recently, Dubai was often perceived as a high-end destination for an exclusive category of tourists. But today, people see the Emirate as a possible alternative to other destinations. The difference being in Dubai, it was the Russian tourist segment which greatly contributed to boosting its tourism development. In recent years however, Dubai has begun to actively develop its affordable hotel segment, without giving up its exclusiveness,
It’s well known that Dubai, like other tourist destinations, suffered from the effects of the tough economic situation in the world at the end of 2015 and throughout 2016.

"During this time we have lost about 30-35% of tourists, which is due primarily to the depreciation of the Rouble," said Mr. Sergey Kanaev, Director DTCM Russia office in an interview with RIA Novosti.

Major losses in Dubai in the Russian market during the crisis occurred precisely at the expense of the budget category of tourists. Least of all these changes affected the premium segment: five-star hotel services, until recently, used Top of Form to 75% of tourists in Dubai. However, recent trends suggest that the situation is changing.

A versatile tourist destination

The Emirate has begun to transform itself from an elite destination to a versatile tourist destination, which can appeal to a wide range of travelers on varying budgets. In addition, Dubai has set a goal in 2020 to attract 20 million visitors a year, taking into account the upcoming Dubai Expo 2020 and the opening of several themed world-class parks. So the expansion of accommodation options for tourists is an urgent task.

In May 2015 HE Helal Saeed Almarri, Director-General of DTCM revealed that the Dubai Department of Tourism and Commerce Marketing (DTCM) will continue to push for more mid-market hotels in the emirate.

The Dubai Annual Visitor Report, launched revealed that DTCM has received applications for 46 hotels, representing 14,339 rooms since it introduced its incentive scheme for the segment in Q4 2013. This includes the waiver of municipality feels on a hotel for the first few years of operation. 

“When you look at our targets and incentives it’s mainly because we have a lot more five-star than we need especially when you look at the MICE and business tourism sector. A lot of business visitors need three- and four- star,” commented H.E. Almarri.

“The segment is growing from strength to strength and it’s important that that’s backed up by the room capacity that’s needed. 

“Additionally, when it comes to the type of configurations and room sizes, hoteliers have been working hard to optimise that to ensure they develop the right type of products for the market.” 

The new report reveals that of the 46 properties that have been applied for in the mid-market segment, 18 of these are three-star, representing 4413 rooms, while 28 are four-star, comprising 9926 rooms in total. 

No further incentives have been introduced since the launch of the fee concession in 2013, and there are no plans for more at the moment. Five-star hotels will continue to be a focus for DTCM, according to HE Almarri. 

“We put in an incentive programme and we’ve not looked at other incentives above that – that seems to be going well. We’ve had 46 new hotels in the last year so it’s been positive.  

“This doesn’t mean people aren’t building five star – there’s still a very strong demand and focus for investors to build five star – especially in prime locations and on the beach and it’s important for us to encourage that,” he said. 

In May 2016, Emaar Hospitality Group opened the first Rove Hotel - Rove Downtown Dubai. It is the first property under Rove Hotels, a joint venture by Emaar and Meraas, a Dubai-based holding company. A contemporary new midscale hotel and residences brand, the 420-room Rove Hotels is defined by its cosmopolitan, high-tech, cultural and social outlook - a new niche for Dubai. It is also the first of ten planned hotels operational in the city by 2020, seven of which have already been announced. 

Chris Newman, Corporate Director of Operations at Emaar Hospitality Group, said: "Rove Downtown Dubai marks the beginning of a new journey for us, inspired by the city of Dubai, past, present and future. It delivers up-to-date convenience packaged in a thoughtfully developed hotel concept that complements Dubai's booming tourism sector, which welcomes visitors from across the globe.

"Rove Hotels is a concept whose time has truly arrived in Dubai. With the profile and aspirations of the modern traveller changing, it is important that we deliver them the right value experiences while contributing to supporting the Dubai Tourism Vision 2020 to welcome 20 million annual visitors by the turn of the decade."

In addition, guest house rentals are being encouraged to develop, in order to widen the appeal of accommodation options. Apartments, villas, townhouses and any such placements are monitored by the authorities for compliance with the rules and are rented for a certain period of special agencies. In recent years, the demand for hotel and private apartments is growing, due to attractive options for families with children or for several families traveling together.
Many hotels interested in Russian customers, offer a special pricing policy not only for summer, but the peak winter season too. For example, hotels in the most popular chains have special offers for the Russian market in different seasons. And in the summer most of the hotels in Dubai offer either lower prices or promotions - you buy a week’s stay and get a day or two days free. Or you get free tours, food, etc.
"The crisis, which began in 2014 and is still ongoing, showed that interest in Dubai hotels among Russians remains high. Before the crisis, Russia and the CIS together were in fourth place in the general flow of foreign tourists in Dubai, and Russia alone was in fifth place. Now Russia is somewhere in the 6-8 position. At the initial stage of the crisis, some hoteliers had the impression that tourists from Russia can be replaced by customers with other public areas, but very quickly they came to the realization that the Russian clientele of tourists from other countries cannot be replaced. This also applies to the number of travelers and length of stay, and costs in the hotel, and room category they choose. Now all hotels are actively working on the Russian market, to attract customers," said one channel.
Although it is too early to talk about the return of tourist traffic on the same level as before the crisis of 2014, there are already signs about the change in the situation in the market. And it’s a fact that nearly half the Russian tourists are repeat tourists who are irresistibly drawn by the Emirate’s assurance of a tranquil vacation, warm, welcome hospitality venues, great beaches and its unbeatable shopping and luxury options.

There’s a bustling, fresh and positive energy in Dubai as a city which continually offers something new, such as unique and new tourist attractions and new hospitality and shopping venues. Stagnation is certainly one aspect you will never associate with this leading and sunny tourist destination. It’s like a balm to drive away life’s blues.   

This year saw Dubai open several large-scale theme parks, and it is also actively developing its network of four and three-star hotels, which will help transform its image as an expensive and inaccessible destination for mere mortals to one where travellers on all budgets are welcome.  This trend will have a significant impact on the development of tourism in the Emirate.