Tourism, population gains spur hospitality growth in Gulf countries | QSR Media
Daniel Marc Richards, senior economist at Emirates NBD / File photo

Tourism, population gains spur hospitality growth in Gulf countries

Tourists in Dubai alone spent almost $120m in 2024.

The hospitality sector in the Gulf Cooperation Council (GCC) is thriving on the back of robust tourist spending and population growth, according to Emirates NBD Bank PJSC.

Growth in the oil sector, coupled with strong activity in the non-oil sector, will reinforce momentum in the United Arab Emirates (UAE) economy this year, Daniel Marc Richards, senior economist at Emirates NBD, told the QSR Media Middle East Conference & Awards in Dubai on Sept. 9.

He noted that growth in restaurants has been supported by low inflation despite rising housing costs, adding that many consumer-facing businesses have relied on discounts to sustain spending.

“Businesses have been cutting prices in order to maintain competitiveness in a pretty competitive environment,” Richards told the forum. “One reason is that they are able to compensate for the lower prices with ongoing growth.”

Gulf countries’ food service industry is expected to grow 13.25% annually to $158.22b by 2033 from $51.84b last year, amidst expanding tourism, quick urbanisation, and growing customer demand for convenience, according to Research and Markets.

In the UAE, restaurants and hotels ranked fourth among service sectors in real gross domestic product (GDP) growth last year, expanding by almost 6%, according to Emirates NBD data.

Whilst regional tensions in June weighed on sentiment, the UAE and Dubai’s Purchasing Managers’ Index (PMI) remained well above the neutral 50 level, signaling expansion. Dubai’s Consumer Price Index (CPI) eased to 2.4% in August from 2.9% in July.

Population dynamics are also fueling expansion. Dubai’s population grew 5.7% in the past year, crossing four million for the first time. Richards said the rapid increase in working-age residents boosts demand for goods and services, including food service and quick-service restaurants.

Indicators such as mobile-phone subscriptions and private-school enrolments, tracked by Emirates NBD, reflect how quickly the market is evolving.

“People are coming here not just… for the short term,” Richards said. “They’re coming with families and putting down roots. Given that Dubai targets 7.8 million by 2040, this will sustain the growth for decades to come.”

Tourism remains another growth driver. Visitors to Dubai rose 7% year on year in the first half of 2024, with tourist spending reaching almost $120m last year, much of it directed toward hotels and restaurants.

“A lot of this will be going to hotels and restaurants,” Richards said.

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