Emirates: The outlook for the UAE’s travel and tourism sector has brightened in the second quarter of 2021 as the positive impact of the country’s strong vaccine programme started to take effect, Mashreq Bank said in a report.

However, the lender warned that building consumer confidence and opening up in a phased manner would be crucial in ensuring the resumption of UAE’s tourism sector.

The bank noted that as challenges continue to persist for certain segments of the tourism and hospitality industry, businesses will have to remain agile and keep operations as lean as possible.

With the UAE remaining at the forefront globally in Covid-19 testing and vaccination rates, the nation’s hospitality and tourism industry's recovery is expected to accelerate in 2021, also helped by the easing travel restrictions in some markets.

During Q1, 2021, the UAE tourism sector has continued to recover with the average hotel occupancy rates across the country nearing 63 per cent.

“The UAE continues to enhance its coveted position on the global tourism scene, with domestic tourism now proving to be a significant catalyst for economic growth and a key contributor to GDP in implementation of the directives of the UAE’s wise leadership,” Dr Ahmad Belhoul Al Falasi, Minister of State for Entrepreneurship and SMEs, who is also the Chairman of the Emirates Tourism Council, has said.

While Dubai has eased Covid-19 restrictions, allowing hotels in the regional tourism hub to operate at full capacity and permitting concerts and sports events where all attendees and participants have been vaccinated, Abu Dhabi expects its hotel occupancy rates to increase to at least 80 per cent this year, from 70 per cent in 2020.

The latest industry briefing from Mashreq Bank highlights how business travel and hospitality businesses will face hurdles for the remainder of 2021 as a result of the Covid-19 pandemic.

“While hotel occupancy in the UAE will gradually recover on the back of increased domestic tourism and the return of international travellers, business travel will not return to pre-pandemic levels in the foreseeable future,” said Zain Qureshi, managing director and Global Head of Real Estate Finance and Advisory at Mashreq Bank.

Recent studies have shown that remote-working trends brought about by the pandemic are expected to continue, given the safety and cost-effectiveness of digital conferencing tools.

“The success of the UAE’s vaccine drive as well as the strategic initiatives by the government to support local tourism has significantly contributed to improving the outlook for leisure travel. In order to combat the pandemic, both federal and emirate-level agencies in the UAE have adopted a ‘zero-tolerance’ approach to non-compliance with safety protocols. Penalties have been swift, ranging from warnings to suspension of licenses, ensuring that rules are followed through,” Mashreq report said.

“Traveller sentiment remains wary, however, and it is critical for the sector to take a phased and coordinated approach to rebuild traveller trust. For hospitality and tourism businesses to successfully bring back their customers, achieving operational agility will be critical in the evolving situation,” said the report.

According to Qureshi, the UAE has continued its strategy of becoming a world-class travel hub, despite the challenges of 2020, indicated by the number of new flight routes and destinations added in the past six months.

“The introduction of new routes not only makes the UAE most relevant as a tourism hub, but also encourages inbound traffic of visitors that may have never made the trip to the UAE otherwise. Even if it’s just for a stopover or short stay, it still adds value to the local aviation industry,” said Qureshi.

As one of the first mega events to take place since the pandemic began, Expo 2020 could serve as a case study for the way forward, said Qureshi. “Covid-19 and its variant forms will perhaps stay on in the foreseeable future, and the UAE really has a chance to set the benchmark with this global event.”