Posted at 10.14.2018
In the next survey we highlight the economy of the UAE and analyze its source of capital. We look at the various resources of income for the Emirates and what role does indeed Tourism and Airlines industry play in the oil-dominated UAE overall economy. We also discuss the UAE economy prior to the financial crisis and exactly how it undertaking in the international market again, concentrating on the Tourism and Airlines industry in UAE. We then discuss the aftereffects of the financial crisis on the whole UAE economy and exactly how it afflicted the Tourism and Airlines industry which can be slowly growing to be major revenue creating sectors for the UAE. As all the sectors in any overall economy are interlinked, so can be the Tourism and Airlines companies with all the other major industries of the UAE market and so not only the immediate affect of the financial meltdown, but also the cumulative impact needs to be considered. These two companies thus are influenced by the effects of crisis on other areas of UAE and also of the whole globe and specific countries as the clients of these two business are mainly from abroad. Considering the brighter side, we evaluate the opportunity of the Tourism and Airlines business in UAE as the financial meltdown phases passes away and what new leads do these industries have in the post problems era. Finally we conclude the report by giving the recommendations for further growth of the two industries based on the evaluation conducted. Source of information is provided in the end.
United Arab Emirates (UAE) is one of the quickest growing economies of the world with GDP expansion of over 9. 4%. The economy is dependant on assorted aspects like energy utilization per capita, GDP per capita, etc. The GDP of UAE regarding to 2008 total annual survey is 270 billion US us dollars which is 3rd highest in Middle East and positioned 38th all over world.
UAE's Current economic climate:
Before getting to the financial meltdown it is important to learn the structure of the Dubai's economy which is one of the most unique and different on the planet. It is split into free zones installation by the federal government of Dubai. The zones are industry specific with Jebel Ali free area being the fastest growing in the earth. The zones provide a set of products and services such as: ready to use offices, Business centers, factories, Warehouses, infrastructure ready plots etc. Jebel Ali free area commonly known as JAFZA is a part of Dubai based; circumstances owned free area. It is one of the world's biggest designers of Economic Zones, Logistics and Research and development driven Industrial Parks. The main free areas of UAE are Jebel Ali free zone, Dubai Internet City, Dubai Mass media City, and Dubai Maritime City which derive from the industries they are really related with.
People have fake misconception about UAE's economy; they believe it's mainly influenced by coal and oil. Cleary from the information we can easily see that the olive oil sector consists of significantly less than 6% economy of Dubai that was primarily dependent on olive oil as a main source of revenue before. Although it holds true that Dubai's current economic climate was at first build on the income made by its reserves of petrol and gas but with time the engine oil reserves have reduced significantly also to keep up with the income, it offers focused on the travel and leisure industry to generate good profits. Other Emirates are doing the same and since olive oil and gas reserves are limited, UAE projects to harness the strength in its tourism industry.
All the Emirates realize the future scope of tourism industry and also have also invested in their travel and leisure industry and the airlines industry to be able to generate foreign cash in UAE. Dubai which is the most famous Emirate, has were able to convert into a gigantic and amazing metropolis offering luxury and modernity from a mere desert in few ages.
Another large adding sector of Dubai's market is the real estate which sorts 22. 6% of the economy of Dubai. The fantastic success of this industry is owed to the focus on tourism.
The air travel industry, which is very important considering the market which invests in travel and leisure for its excellent future potential clients.
National Airlines of the UAE are:
Gulf Air: owners are Kingdom of Bahrain and the Sultanate of Oman.
Emirates Airlines: completely held by the Dubai government
Saudi Arabian Airlines: indie and run by Plank of Directors which is chaired by the Minister of Security and Aviation.
Etihad Airways: National Airline of UAE set up in July 2003.
The major international airports in UAE are Abu Dhabi, Al Ain, Dubai, Sharjah, Ras Al Khaimah and Fujairah.
Dubai, which is the most popular emirate of UAE, is currently one of the latest areas for shopping, trading and travel and travel and leisure industry.
The factors which affect tourism for any country are the following:
Infrastructure, Security and safety, Cultural and natural resources, Health and hygiene; Air, earth and sea transportation, tourism insurance plan and rules and regulations, Information and Communication
Earnings of around AED98. 6 billion in the fiscal calendar year of 2006 are projected to attain AED170. 7 billion by the year 2016 thus playing a crucial role throughout the market.
World Tourism and Travel Council (WTTC), a regulatory and research body for world travel and leisure rated UAE 18th (world search rankings) considering international travel and leisure.
The importance of tourism is clearly observable in its GDP share which is 19%, 5% higher than the UK and 7% than the united states.
Over the years the government of Dubai has concentrated largely on travel and leisure they have spent large capitals to be able to promote their tourism in the process they have built sky scrapers, clean and well knit network of highways. The government has focused on providing top notch facilities in Dubai along the way creating architectural designs and buildings which attracts travellers from all around the world. As the real house industry is directly related to the travel and leisure industry it is rolling out as a major industry in Dubai and contributes greatly to its market.
From the facts mentioned above it can be ascertained that there's been a shift in Dubai's current economic climate from being exclusively dependent on oil to development of other industries by using the huge amounts of money coming from the olive oil to development of other industries like tourism.
The advantages such as strong financial growth and the centralized location in conjunction with a very powerful leadership have guaranteed the investments created by the UAE in the Tourism Industry.
Aviation industry in the centre East makes up around 20% of their GDP. Travel and leisure industry thus plays a major role in the UAE current economic climate as Airline industry, which serves as a complimentary industry to it has such an enormous talk about in its GDP.
The capacity that the Airline Industry of UAE offers as compared to its counter-parts is a lot higher hence income made is also high as far as the comparison proportion can be involved.
A fleet greater than 500 aircrafts and around 250 more are about to be added. The loan consolidation of the Airline Industry in the centre East must go quite a distance and its talk about in the country's economy is for sure to rise.
UAE is a great spot to be visited by the vacationers in the past 10 years. The Emirates has been working very hard to become the centre of international money and trading. . Advanced sporting events, resorts and luxury hotels has generated its modern before times image.
The major sites appealing are Hand Islands, World Islands, Burj Al Arab hotel (the first seven star hotel to be build), Burj Dubai etc. Dubai is currently one of the latest vacation spots for shopping, trading and travel and travel and leisure industry. Dubai's federal government realizes the future scope of travel and leisure industry and in addition has invested in the same in order to generate foreign cash in Dubai.
The condition of the aviation sector in addition has been appealing. In last a decade the utilization of air travel has increased at the speed of 7% per year. Travelling for both business and leisure activities have become drastically surrounding the world.
Middle East Air travel Industry is well known of its hospitality and leisure air travel and hence has had the opportunity to attract travellers as well as traders from round the globe.
The travelling scheduled to business purposes in addition has increased credited to globalization (i. e. international expansion in conditions of demand, supply, development and customers). The quick expansion of international immediate investment policies and world trade also offers contributed to increase in travelling.
UAE has many free trading jacks and hence visiting due to business and trade has seen exponential rise. Portion as a trade middle for the globe, UAE relishes its economy's progress by providing such assists to the central industries. For instance: air travel revenue generated from connectivity between the different trade areas ant the source and the market.
UAE thus liked the booming improvement made on the huge income produced by the engine oil and associated market sectors and injected its profits in the Tourism and PROPERTY sectors, seeing it as a major income source in the foreseeable future and the final results were according to plans before financial crisis strike UAE.
The immediate development of the UAE was a result of the focus of the federal government on travel and leisure thus promoting the true estate sector by making use of revenues via export of petrol and gas.
With the most significant real property company of Dubai Emaar properties becoming bankrupt in america and vaDubai proposal to postpone the repayment of all its debt's for an interval of six months on November 26, 2009 the financial crisis in Dubai was exposed in front of the globe which possessed bad effects on countries across the world.
The bad debts were as large as $59 billion leading to a stop to the investment pattern of Dubai for 6 months. The Dubai's real estate industry and travel and leisure was based on huge loans that they likely to pay through the income they earn from them but with downturn reaching the industry terribly their programs failed.
In the first period of global economic climate Dubai's financial structure, dynamic development and tourism business and relished tax free incentives appeared to be a great benefit for it and many people even expected it to stay free from any kind of recession.
A major factor that created this illusion in the imagination of individuals was the continuance of investment activities and development at a feverish pace even when there was clearly a lack of capital in all other parts of the world.
Dubai which is governed by Sheikh Mohammed Bin Rashid Al Maktoum borrowed approx 80 billion US Dollars in a period of 4 many years of construction for booming the structure market of economy of regional tourism as their main concentrate was on tourism as they expect that it would lead to a concrete source of income for them even though their engine oil reserves get worn out.
Emirates suffered an enormous loss in the world's steepest property slump as a result of global recession. The house prices decreased by 50 percent off their value in 2008 going out of Dubai in a situation where they were unable to generate adequate profit order to repay the debts that they had taken in order to market the tourism industry.
The global financial meltdown during 2008-09 led to major downfall of Dubai's market. It led to slow down of the economy of Dubai. The monetary revenue generated had not been coming as productive as before which greatly hindered Dubai's expansion and as most of its strategies were predicated on money borrowed by investment companies and there were no plans to face any downturns in the economy it became difficult for them to settle that loan.
As the primary aim of Dubai's current economic climate was the travel and leisure industry a slump in the global markets was always bound to influence the market of Dubai.
Moreover the UAE overall economy and its own important industries such as Airlines Industry and Tourism Industry, on which UAE dreams to depend highly in forseeable future, are regulated by the government which will not encourage the international investors and hence availability of lone was a hardcore task during recession.
Emirates (government owned group) suffered a huge damage in the world's steepest property slump because of this of global tough economy. The home prices fallen by 50 percent using their company value in 2008 going out of Dubai in times where these were unable to generate adequate money in order to repay the debts that that they had used order to market the real estate and the tourism industry.
The overseas investment of Emaar (real property and Development Company of Dubai) said to be the next largest contractors in USA. They ultimately travelled bankrupt because of the recession and / or filed for section 11, which allows reorganization of a company under the laws of individual bankruptcy for USA.
The bankruptcy of Emaar properties was a huge shock for people around the world and even bigger for people in Dubai as it acted as a hint of the financial meltdown that had begun in Dubai that was regarded as one of the flourishing economies of the world.
Dubai has generated one of the best possible infrastructures of the world and it is quite natural for investors to be attracted towards such a location which lead to the initial success of Dubai in a period when the planet was facing downturn and lacking opportunities but its overdependence on money caused the financial meltdown.
Although Dubai is presently battling with a financial meltdown there are still possibilities that it will recover from this turmoil. Abu Dhabi the administrative centre of the United Arab Emirates which is also the richest country of the United Arab Emirates is the brightest ray of expect UAE and Dubai.
Dubai has recently asked Abu Dhabi to bail it from the crisis. The expectation even enhances as Abu Dhabi has helped Dubai in the past when Dubai was in Crisis even though demand is a lot higher than the past.
A recent statement by HSBC which says that Abu Dhabi gets the cash liquidity to aid its companies and banking institutions is even more positive response as Dubai's viewpoint.
International Air Transfer Association (IATA) has forecasted that regardless of the post financial meltdown period, the international air industry is likely to grow by around 6. 6%. UAE too will enjoy some progress but like India, Midsection East is also a highly regulated market and government plays an essential role in center industries such as aviation. This de-motivates the overseas investors and therefore consolidation is slow.
There exist programs to develop the air travel industry therefore also the travel and leisure industry. These programs are given with great support from the respective governments.
Dubai has surfaced as a significant tourist place and competes with the best holiday destinations round the globe. This means that as the tourism industry regains its tempo immediately after the recession, places like Dubai will advantage the most.
Analyst said that the primary reason behind the financial crisis in Dubai was the mismanagement or the incorrect decision of Sheikh Mohammed. He invested all his as well as the Dubai authorities wealth in the real house market in United Point out and experienced no plans to deal with any varieties of shocks confronted in their highway to success such as tough economy.
He thought that Dubai could not be stuck with any sort of recession that was a result of lack of enough planning bad phases during their journey.
The bills were as large as $59 billion leading to a stop to the investment cycle of Dubai for 6 months. The Dubai's real estate industry was predicated on huge loans which they likely to pay through the revenues they earn from them but with recession hitting the industry badly their ideas failed.
Thus the Dubai's financial crisis to a big level can be reported to be a consequence of real house bubble burst in Dubai.
With the U. A. E central standard bank showing positive indications by confirming that its panel has discussed programs for supporting tourism business by lending Dubai as well as remaining United Arab Emirates has increased the probabilities of restoration for Dubai and the UAE to a great level.
The advantages such as strong economical expansion and the centralized location coupled with a very strong leadership have supported the investments made by the UAE in the Travel and leisure Industry.