NTCC PROJECT

First and foremost, I would like to thank my professor, Dr. Ashok Chopra for helping me and guiding me for the term paper. His valuable guidance and advice were the first input which helped me complete this assignment. He inspired me greatly to work on this. Besides, I would also like to thank Amity University Dubai to for providing a good environment and facility to complete this term report.

Without helps of the above mentioned a, I would have faced many difficulties while doing this report.

ABSTRACT

United Arab Emirates is one of the nations in the world whose tourism industry is suffering due to the COVID-19 pandemic. Hotels, restaurants, tourist destinations as well as other areas that are supported by the tourism industry have been negatively affected by the pandemic. Some hotels have been forced to shut down whereas those still in operation have an occupancy rate that is below 10%.

In a bid to understand how severe the tourism industry of the UAE has been affected; researchers carried out a study. The study used a mixed-method approach. 70 participants participated in the study. The 70 participants compromised of hotel and restaurant owners, hotel managers, and employees in the UAE tourism sector. The participants were asked 8 questions that regarded the COVID-19 and how it affected their businesses and their employment status.

According to the data collected and the analysis, the tourism sector has been greatly affected by the COVID-19 pandemic and this is information confirmed by hotel managers, hotel owners, and employees in the diverse tourism industry. The majority believe that the effects of the pandemic are negatively affecting the industry. The stay indoors and the travel restrictions have made it impossible for both local and foreign tourists to tour the nation. The social distancing instructions have also limited the hotels' and restaurants' business operations as they have to limit the number of people that they can serve. In an attempt not to declare bankruptcy and salvage their financial statuses, most organizations in the tourism industry have temporarily let go of their workers.

Despite reducing the number of employees, most organizations foresee them closing down in a month if the situation does not change. Most organizations believe that the government can intervene and save their operations during the pandemic period. Out of the suggested programs, most respondents suggested that cash waivers, employment programs, reduction of tariffs on imported inputs are some of the best strategies that the UAE government can implement to give their organizations a fighting chance.

Introduction

The major source of economic stabilization in the United Arab Emirates is oil production and export. Second after oil production and export is tourism. Tourism is the biggest non-oil source of revenue for the country. UAE’s tourism sector has thrived due to the nation having some of the world’s most luxurious hotels, expanding manufacturing base, a massive construction boom, and a thriving service sector. The recent pandemic is causing turbulence to the economy of the nation as it has not only affected oil production and export but it has hampered tourism. A sudden drop in domestic and external demand for goods and products especially crude oil, downfall in the crude oil prices, halts in the production due to labor shortage are some of the major impacts observed in the nation. Additionally, due to the COVID-19 pandemic, international tourists have been cautioned against traveling just like local tourists to curb the spread of the disease.

The World Travel and Tourism Council has warned the COVID-19 pandemic could cut 50 million jobs worldwide in the travel and tourism industry. Once the outbreak is over, it could take up to 10 months for the industry to recover. The tourism industry currently accounts for 10% of global GDP. The UAE economy derives much from its tourism industry. Studies project the travel and tourism industry will contribute about Dh312.4 billion to the UAE’s GDP by 2027. The industry and its employees are part of the backbone of the economy. Basing on the current trend, if businesses in this industry don’t receive immediate aid from the government, the chances of them surviving the coronavirus outbreak are slim even though they were growing at a commendable rate before the outbreak (Hill, 2020).

The coronavirus epidemic is putting up to 50 million jobs in the global travel and tourism sector at risk, with travel likely to slump by mid-year. Fortunately, the United Arab Emirates began implementing social distancing measures whilst the virus was still at its infancy. As of 21st May 20120, the nation had recorded over 26,000 infections with 233 deaths. With tens of thousands infected across the nation and hundreds of lives lost, it is clear that Covid-19 will deepens economic cleavages in the UAE as it has disrupted tourism and other economic activities of the nation.

The impact is at the moment being felt but it will be felt the most in three months if a solution for the pandemic is not brought forth. Tourists have evaporated and the situation amid a ban on flights and lockdowns. With the UAE canceling its Expo 2020 and Saudi Arabia not allowing the annual haj pilgrimage to take place, the UAE has lost hundreds of millions of dollars that was expected due to tourism activity. The UAE was expected to attract 25 million visitors to its Expo 2020 event which was to be held in October 2020.

Travel and Tourism

Air transportation is an important source of revenue for the UAE, being home to Emirates, the world’s largest long-haul airline, as well as a center for other major regional carriers such as Etihad Airways and Air Arabia. According to a 2019 report from the International Air Transport Association, air transportation accounted for $19.3 billion, or around 5% of the UAE’s GDP last year. Tourism doubles this figure. The World Travel and Tourism Council had travel and tourism accounting for over 11% of the UAE’s GDP in 2018. All airlines will have to contend with cancellations as further flight restrictions come into effect. With global travel almost certain to be severely disrupted well into Q2 of 2020, this is a key part of the UAE’s economy that will take a hit. Shares in Air Arabia fell to lows of 1.08AED during Monday’s trading session before recovering slightly in the following days. They are currently down more than 30% year-to-date.

Flights halted- A given hotel, which has reduced staffing to 20%, is among hundreds of similar establishments facing similar strains in Dubai, where tourism accounts for more than 11% of GDP and supports the retail, transport and construction sectors. The hotel put 300 employees on unpaid leave and shut its pool bar and beach club after the pandemic hit global travel and led the United Arab Emirates to close most public venues. The World Travel & Tourism Council said Dubai was the third-largest city in the world in attracting direct international tourism spending, with $28 billion in 2019. More than 16 million tourists visited the city last year, the government said. State-owned Emirates airline, which posted 862 million dirhams ($234.70 million) in profits in the first half of 2019, halted passenger flights even before the UAE suspended all passenger flights, except evacuations trips. Dubai is the most vulnerable UAE economy to coronavirus travel curbs and state firms could be forced into a debt restructuring or seek help from UAE capital Abu Dhabi. Dubai’s debt burden is at around $135 billion (125% of GDP), almost half due before end-2024, Capital Economics estimates. Abu Dhabi last year rolled over for a second time a $10 billion loan made to Dubai in the global credit crisis, which saw Dubai’s real estate market crash. This is generally bad for the economy of the UAE. Hotel occupancy rates in the UAE, a federation of seven emirates, were down 28.2% year-on-year in the first week of March, while revenue per available room was down 43%, preliminary data from analytics specialist STR showed. The spread of the disease is also putting at risk the EXPO 2020 world fair which Dubai is preparing to host from October, with a target of 20 million tourists. “We can confirm that some of our properties in the UAE have temporarily closed,” Marriott International said in a statement to Reuters.

Chinese tourists, who until recently thronged the city’s main tourist attractions, are largely absent. Shopping malls in the city are noticeably quieter and taxi drivers lament a lack of customers. Hotels have slashed rates in a bid to sustain occupancy, with some reportedly asking staff to take leave to cut costs through the downturn. Technically the outbreak has prompted the cancellation or postponement of a host of other events in the UAE, from music festivals and business conferences to Art Dubai, the Gulf’s most prominent art fair.

To carry out the literature search efficient literature search techniques and strategies have been implemented by the researcher, for instance, the keyword and Boolean Operators techniques along with strategies like most recent and relevant literature are selected. The most important technique of literature search is searching the important literature with the help of keywords. The literature search has been carried out in few integral steps which are question formulation, defining the key concepts and keywords, selection of databases, carry out a search, evaluation of the search results, lastly selection of the most relevant pieces of literature for conducting the study and collecting important information for the study.

For keyword searching the research, the question has been broken into several parts to find out the key concepts of the study. Then, the keywords and their entire synonyms and acronyms are used to search the essential literature. The keywords are UAE tourism and COVID-19 pandemic. Apart from the keyword’s technique, the Boolean operator method is also used to search for the necessary literature for the study. The essential secondary data has been collected from the Ebsco database and other reputable online databases. After a thorough literature review, one article was identified that represents UAE’s tourism industry status in light of the COVID-19 pandemic.

Dubai braces for a financial hit as coronavirus batter’s vital tourism

In an article published in March 2020, the article looks at how Dubai and generally the UAE ‘s tourism industry is affected by COVID-19. According to the article, tourism in Dubai accounts for 11% of GDP as well as supports the construction, the transport and retail sectors (Aziz & Barbuscia 2020). Furthermore, the article quotes the World Travel & Tourism Council by stating that Dubai is the third-largest city in the world in terms of attracting direct international tourism. According to the report by the council, over 15 million tourists visited the city in 2019.

In a study of the city after the pandemic breaks out, Yaakoubi and Barbusia, the authors of the article stated that most of the hotels in Dubai have closed and the occupancy rates have fallen to only 10%. In a bid to counter the effects of the pandemic, some hotels have been reconfigured to space out sitting arrangements. Furthermore, they sanitize all hotel employers in an attempt to build confidence in potential customers. The authors of the article managed to capture the response of a hotel manager that they interviewed. The hotel manager believes that the hotel industry and extension of the tourism sector in Dubai will be greatly affected and that the effect of the pandemic will last the whole year.

Research Methodology

The research implemented the mixed approaches methodology. It used both qualitative and quantitative research methods. The researcher collected data through interviews and questionnaires. In terms of indicators, the evaluation aimed to draw on different types of indicators (i.e., latest inputs, outputs, outcomes, impacts,) to reflect the key results in the disease’s theory of change. Impact evaluations of (COVID-19) should ideally use the indicators that were selected for monitoring performance throughout the disease implementation period, and how coronavirus pandemic has spread across the UAE and the world in general. The researcher employed and linked data collection instruments, including surveys, for assessing COVID-19-relevant Behavioral and Social Science (BSSR) domains for clinical or population research where participants voluntarily gave their feedback.

The researcher also observed COVID-19 related Lifestyle Change (work, sleep, school, testing positive, family, and exercise) and how this has impacted tourism and travel in the UAE. Analysis of disruption to daily activities and social interactions; how the pandemic has impacted routines, social activities, and interactions. Financial Hardship; how the COVID-19 pandemic has affected finances and created and/or exacerbated financial hardships reduced both local and international tourists. Scrutinized perceived benefits; how experiences with the pandemic have led to any perceived benefit or positive contribution and counter the opposite too. Functional social support; access to availability and use of social resources during the pandemic has impacted the tourism industry. Finally, accessed perceived stress management and the ability to manage stress and how this has influenced the ability to implement skills to manage pandemic related stressors. The researcher also looked at trends in social media platforms and media houses for related data.

70 participants participated in the study. The 70 participants compromised of hotel and restaurant owners, hotel managers, and employees in the UAE tourism sector. The participants were asked 8 questions that regarded the COVID-19 and how it affected their businesses and how it affected their businesses and their employment.

Research Objectives

The objective of this study is to measure the impact of the occurrence of Covid-19 on the tourism industry in the United Arab Emirates.

The report will cover:

• A comprehensive research methodology of the pre- and post-COVID-19 impact on the UAE economy based on tourism.

• A detailed and extensive tourism market overview with key analyst insights.

• An exhaustive analysis of macro and micro factors influencing the tourism market guided by key recommendations.

• Analysis of regional regulations and other government policies impacting the UAE economy in regards to tourism.

• Insights about international tourism market determinants which are stimulating the UAE economy.

• Detailed and extensive tourism market segments with regional distribution of forecasted revenues.

Data Analysis and Interpretation

What is the main sector of activity of the business? And what does it involve?

Data Interpretation

Most respondents were certain that the organizations they worked for were registered business

From which types of customers do you generate the most income from?

What field of tourism does your company primary deal with/ services or products that you offer?

Data Interpretation

Most respondents were from the hotel and accommodation services and the desert safari tours and activities fields of the tourism sector.

How many full-time employees does the business have?

Data Interpretation

Most of the respondents indicated that their businesses have between 100 to 249 employees in their places of employment.

Have your business operations been affected by Coronavirus (COVID- 19) pandemic if yes? How?

Data Interpretation

The majority of the respondents have been greatly affected by the COVID-19 pandemic.

How has the coronavirus (COVID-19) pandemic affected the ability to offer services or sell your products?

customers cannot access facility for services or products

business cannot open premises for service delivery or sell of products

Data Interpretation

Most of the respondents said that the measures to protect the general public implemented by the government had hampered operations.

Data Interpretation

Out of 70 respondents, most respondents claimed that the clients cannot access services and products due to stay at home orders.

Have you adopted any of the following strategies to cope with the crisis?  (multi-select)

Data Interpretation

Out of 70 participants, most respondents said that their businesses temporarily reduced employment to avoid business losses

Based on the current trends, do you think there is a risk that your business will permanently shut down because of this crisis, and if so, when is it likely this closure will occur?

1 month or less

Data Interpretation

Most of the respondents suggested that their businesses be closed within the month

Please select the top three government measures that you believe would be most helpful as you cope with the COVID crisis.

Data Interpretation

Out of the suggested programs, most respondents suggested that cash waivers, employment programs, reduction of tariffs on imported inputs, and other services like rent waivers would be most helpful during the pandemic.

According to the data collected and the analysis, the tourism sector has been greatly affected by the COVID-19 pandemic and this is information confirmed by hotel managers, hotel owners, and employees in the diverse tourism industry. The majority believe that the effects of the pandemic are negatively affecting the industry. The stay indoors and the travel restrictions have made it impossible for both local and foreign tourists to tour the nation. The social distancing instructions have also limited the hotels' and restaurants' business operations as they have to limit the number of people that they can serve.

In an attempt not to declare bankruptcy and salvage their financial statuses, most organizations in the tourism industry have temporarily let go of their workers. By so doing, the organizations have reduced their wage bills. Despite reducing the number of employees, most organizations foresee them closing down in a month if the situation does not change. Most organizations believe that the government can intervene and save their operations during the pandemic period. Out of the suggested programs, most respondents suggested that cash waivers, employment programs, reduction of tariffs on imported inputs are some of the best strategies that the UAE government can implement to give their organizations a fighting chance.

Before the outbreak, airlines had planned to increase seat capacity in 2020 by 3.5%, International by 3.2%, and domestic by 3.7%, compared to 2019. According to the latest estimates, passenger seat capacity could instead drop from the above Baseline by 32% to 59% (international by 38% to 71% and domestic by 28% to 51%). This capacity level would be 30% to 58% (international 36% to 70% and domestic 25% to 49%) below the 2019 level. To prop up the economy, the UAE Central Bank has announced a $27bn support plan for banks, while Dubai has announced $409m in direct stimulus for the energy, trade, retail, and tourism sectors. Individual government-related entities have also begun issuing support packages for their business partners and suppliers. According to Aljazeera, recent travel restrictions imposed to curtail the outbreak could pose a very serious risk as well to the hospitality and tourism industry in the UAE, which is set to host Expo 2020 in Dubai and attract a staggering 11 million tourists to the area. Predictions like these, however, are largely speculative. The UAE has adopted a series of policies that appear to have prevented a full-scale outbreak on its territory as well as preserve its vital commercial ties to Asia. While many nations around the world have seen both, medical and economic fallout in recent weeks, with Southeast Asia being dealt a serious blow, the UAE’s balanced approach is one that can and should be replicated.

FINDINGS

The Abu Dhabi Government has announced the suspension of tourism and municipality fees for the tourism and entertainment sectors until the end of this year. Restaurants have been authorized to resume activity with 30% capacity since April 24th in an attempt to secure its tourism sector.

Other possible solutions from the government during and after the pandemic to help boost the tourism industry are:

a) The government should provide cash loans equivalent to a minimum of three months of working capital. The release of these funds can be micromanaged based on a month-on-month analysis of the budget.

b) The government should waive mortgages, loans, and credit card payments for at least three months until the industry recovers from the pandemic. They should also do the same with credit card repayments.

c) companies would be applicable for zero visa costs if they hire any new employees in the next six months. This will be a boon for the looming high unemployment rate.

d) The cost to renew licenses would be waived off for this year.

e) Utility and housing fees could be cut by half for vacation rental homes, which will allow investors to save money to survive these tough times.

Small businesses have played a huge role in creating and maintaining the successful UAE tourism industry, with vacation rentals being in top form. If these businesses aren’t given the support they need, they will most likely not be around for long. The UAE government has always supported the SME industry, which has helped it soar to great heights of success. In these tough times, the UAE government has a bigger role to play not only to protect its citizens from the pandemic but also to secure its economy from the effects of the pandemic. The emeriti have multiple ways to distance themselves from the virus breakout but the businesses need some ammunition to brave this storm and emerge victoriously. This research paper has examined the impact that the pandemic has on UAE’s tourism sector. It has also detailed the harm the pandemic has created on the country’s economy as well as the world. As much as there are worrisome trends in reference to the pandemic and its effect, it will be in the best interest of the UAE to secure its tourism sector to give the nation’s economy a fighting chance.

Aguiar, Angel, Maksym Chepeliev, Erwin L. Corong, Robert McDougall, and Dominique van der Mensbrugghe. 2019. “The GTAP Data Base: Version 10.” Journal of Global Economic Analysis 4 (1): 1–27. https://doi.org/10.21642/jgea.040101af.

Aziz E. Y & Barbuscia D. (27 March 2020). Dubai braces for financial hit as coronavirus batters vital tourism. www.reuters.com/article/us-health-coronavirus-emirates-tourism/dubai-braces-for-financial-hit-as-coronavirus-batters-vital-tourism-idUSKBN21E1R0

Brahmbhatt, Milan, and Arindam Datta. 2008. On SARS type economic effects during infectious disease outbreaks. World Bank Policy Research Paper No. 4466, World Bank, Washington, D.C. http://documents.worldbank.org/curated/en/101511468028867410/On-SARS-type-economiceffects-during-infectious-disease-outbreaks.

El-Erian, M. (2020). The Coming Coronavirus Recession and the Uncharted Territory Beyond. Foreign Affairs, Media Report. Available at: https://www.foreignaffairs.com/articles/2020-03-17/coming-coronavirus-recession

Hill, Andrew, and Emma Jacobs, “Covid-19 May Create Lasting Workplace Change,” Financial Times, February 27, 2020. https://www.ft.com/content/5801a710-597c-11ea-abe5-8e03987b7b20

McKibbin, Warwick, and Roshen Fernando. 2020. “The Global Macroeconomic Impacts of COVID-19.” Brookings Institute, no. March: 1–43. https://www.brookings.edu/wpcontent/uploads/2020/03/20200302_COVID19.pdf.

Turak, Natasha (29 January 2020). First Middle East cases of coronavirus confirmed in the UAE CNBC.com

"UAE CORONAVIRUS (COVID-19) UPDATES". UAE's national emergency crisis and disaster management authority. "Dubai's Emirates cuts passenger flights to 13 destinations". 22 March 2020

QUESTIONNAIRE

What is the main sector of activity of the business? And what does it involve?

· Agriculture

· Mining and natural resources

· Agri-food processing

· Non-food manufacturing

· Retail and wholesale

· Travel and transport

· Accommodation and food services

· Information technology

· Finance

· Other services, please specify

Is this establishment currently registered with or licensed by a national authority?

· Yes, registered business

· Freelancing / independent / consultant

· No, unregistered business

· Do not know

From which types of customers do you generate the most income from?

· Foreign tourists

· local tourists

· government activities/ conferences

· Other services, please specify:

What field of tourism does your company primary deal with/ services or products that you offer?

· sky diving

· hotel and accommodation services

· desert safari tours and activities

· Site seeing services

· merchandise selling

· other

How many full-time employees does the business have?

· 0

· 1-4

· 5-19

· 20-99

· 100-249

· 250 and more

Have your business operations been affected by Coronavirus (COVID- 19) pandemic if yes? How?

· Not affected

· Slightly affected

· Moderately affected

· Strongly affected

How has the coronavirus (COVID-19) pandemic affected the ability to offer services or sell your products?

· customers cannot access facility for services or products

· business cannot open premises for service delivery or sell of products

· measures to protect the general public has hampered operations

· delivery of products by local suppliers has been hampered

· delivery of products by international suppliers has been hampered

employee’s health has been compromised

· government has quarantined premises

· the pandemic has not affected operation

How has the coronavirus (COVID-19) pandemic affected your enterprise? (multi-select)

· Temporary shutdown

· Employee absences due to travel restrictions

· Clients cannot pay for services or buy products

· Reduced cash flows

· clients cannot access services and products due to stay at home orders

others specify

Have you adopted any of the following strategies to cope with the crisis? (multi-select)

· Temporarily reduced employment

· Laid-off employees

· Loaned employees to other enterprises

· Teleworking

· Rescheduling of bank loans

· Increased marketing efforts

Based on the current trends, do you think there is a risk that your business will permanently shut down because of this crisis, and if so, when is it likely this closure will occur?

· 1 month or less

· 3 months

· 6 months or more

· Business closure not envisaged

Please select the top three government measures that you believe would be most helpful as you cope with the COVID crisis.

· Employment programs (e.g. temporary unemployment programs or social security waivers)

· Financial programs, such as low-interest credit line or credit guarantees

· Tax waivers or temporary tax breaks

· Reduction of tariffs on imported inputs

· Rent subsidies

· Cash transfers

· Other services, please specify:

Is this establishment currently registered with or licensed by a national authority

Sources that generate the most income

Field of tourism represeneted by the respondents

How many full-time employees does the business have

The ability to offer services or sell your products

customers cannot access facility for services or products business cannot open premises for service delivery or sell of products measures to protect the general public has hampered operations delivery of products by local suppliers has been hampered delivery of products by international suppliers has been hampered employees health has been compromised government has quarantined premises the pandemic has not affected operations 10 3 20 5 15 7 5 5

Has the coronavirus (COVID-19) pandemic affected your enterprise

Have you adopted any of the following strategies to cope with the crisis

When could this closure occur?

Government Measures That Would Be Most Helpful As You Cope With The COVID Crisis

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Tourism