The United Arab Emirates (UAE) tourism industry, which took a heavy hit from Iran's retaliatory attack, is scrambling to regain its prewar vitality. But with Western tourists slow to return to Dubai, there are forecasts that the slump will drag on.
According to financial services firm Moody's on the 2nd (local time), Dubai's hotel room occupancy rate, which was about 80% before the Iran war broke out, is expected to fall to 10% in the second quarter of this year. Moody's said, "This means a substantial portion of the lodging industry is effectively in a shutdown state."
Dubai is the tourism hub of the Gulf and has grown into a global destination over decades by promoting its image as a "safe place to travel." Until before the Iran war, even when conflicts flared across the Middle East, it was considered a safe resort and efficient transfer hub for overseas tourists.
The situation changed rapidly on Feb. 28 after attacks on Iran by the United States and Israel. As Iran launched drones and missiles toward Gulf countries in retaliation, major landmarks in Dubai also came under attack. Since then, tourist attractions have been rolling out various promotions to attract visitors.
On the surface, Dubai's tourism sector appears to have returned to its prewar look. Major hotels such as Fairmont The Palm, The Ritz-Carlton Dubai and Mandarin Oriental Jumeira are operating normally and running discount promotions. Dubai International Airport, which at one point faced operational disruptions due to Iran's drone attack, is also returning to normal, with more than 40 airlines currently operating.
However, CNN said, "On the surface, Dubai's daily life appears almost back to normal, but travelers' confidence has not fully recovered," adding, "Dubai faces the task of reviving the tourism industry that has long underpinned the economy and restoring travelers' trust."
On top of that, travel advisories from Western countries are also acting as a stumbling block to the recovery of the tourism industry. Australia advised its citizens to avoid transiting through some Middle Eastern countries, including the UAE, while Canada advised against travel to the UAE. The United States also urged its citizens to reconsider plans to travel to the UAE.
As a result, many of the tourists currently visiting Dubai are reported to be from countries such as Russia or Lebanon, where people are relatively accustomed to conflict risks. For them, the UAE is perceived as relatively safer than their home countries. Fatma Ammar, who lives in Beirut, Lebanon, said she came to Dubai to see her sons for the Islamic holiday, adding, "Dubai feels much safer than Beirut."
Dubai authorities are also rolling out various support measures to revive the tourism industry. These include exemptions from the nightly hotel tax imposed on luxury accommodations, exemptions from the 7% local government tax on hotel and restaurant spending, deferments of sales commissions related to lodging, and fee waivers for event permit deferrals and cancellations.
Still, industry officials expect it will take considerable time to restore travelers' confidence. Naeem Maddad, founder of Gates Hospitality, which operates resort and restaurant businesses in Oman and Dubai, said, "Rather than fundamentally undermining trust in the UAE itself, this incident has heightened travelers' hesitation," adding, "With travel advisories in place, many people are revisiting their plans."
Victor Abu-Ghanem, CEO of Story Hospitality, said, "For families planning vacations, concerns alone—such as government travel advisories, travel insurance restrictions, and potential flight disruptions—can be reason enough to postpone trips," adding, "The same holds even if the destination is operating normally."