Tourism 11 - Shopping

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Shop Till You Drop: Shopping Tourism in the Gulf
It is clear than in a few years time, the GCC will be home to some of the largest and most stunning shopping malls in the World. However, considering the small population in the region, will there be enough shoppers to justify all this glamour and extravagance? Specifically, who will buy the fancy clothes, eat in the pricy restaurants, ski in the indoor ski slopes (Mall of the Emirates), and watch the animatronic dinosaurs (Restless Planet at the Mall of Arabia)?
Tourist officials must develop coherent, integrated approaches to attract international shopping tourists. Malls cannot be simply considered as amenities for tourists; they must become magnets luring international travellers seeking bargains and shopping experiences they cannot find at home. Dubai has always been a regional shopping hub, with visitors from the Middle East coming to buy gold, designer fashions, perfumes and other items not available elsewhere. Al Ghurair City in Deira was one of the first shopping malls in the Gulf and retains a great deal of popularity from GCC visitors. Today, despite the prevalence of modern shopping malls in virtually every Gulf city, Dubai remains a popular destination for shopping tourists. However, Dubai is no longer merely a regional shopping hub; it now attracts visitors from Europe, the Indian subcontinent and East Asia. This phenomenon is the result of aggressive marketing, the perception that prices are lower in Dubai than other countries, the strength of the Euro, and the attractive, glamorous malls of Dubai. In all likelihood, this trend will continue. For shoppers who love massive, destination malls, Dubai will soon emerge as among the best places in the world. All of Dubai’s mega projects, including Festival City, DIFC and Palm Jumeirah, will have massive retail components. When they open in 2008/9, The Mall of Dubai and the Mall of Arabia will vie for the title of Largest Mall in the World. All of these will feature more than enough diversions to entertain non-shoppers. According to a study by Retail International, by 2009 per capita Gross Lettable Area in Dubai will reach 2.5 square metres; the highest of any city in the world. Retail spending is required to reach AED 37.4 billion by 2010 in order to sustain a global average annual sales figure of US$3,500 per square metre. Total retail space in Dubai will reach 2.8 million square metres by 2010, up from roughly 650,000 square metres today. Dubai Shopping Festival The pinnacle of shopping tourism is the annual Dubai Shopping Festival (DSF), which began in 1996 as a regional event intended to revitalise the retail trade in Dubai. Subsequently, it expanded into a comprehensive tourism event with concerts, family events, fireworks, competitions and cultural events. According to the organisers, DSF 2005 had 3.3 million visitors (1.1 million international visitors) and total spending reached AED 6.7 billion over 32 days. That is a far cry from 1996, when the event drew 1.6 million visitors over 43 days. DSF 2006 was postponed from January until December due to the passing of Dubai’s ruler, Sheikh Maktoum bin Rashid al Maktoum. It was expected to be the largest ever and some hotels and travel agents have reported significant cancellations. Shopping Hotels The recent phenomenon in the Gulf area of merging hotels and shopping centres, which is not as common in other parts of the world, is an obvious example of how shopping and tourism are becoming intertwined. In the past 12 months alone, TRI Hospitality Consulting has conducted 10 studies on projects that included combined retail and hotel components. In Dubai, the Sofitel connected to City Centre Mall was the first example of this combination and set a trend for the future. The hotel estimates 65 per cent of hotel guests choose the hotel primarily due to its location, which is especially advantageous during the hot summer months. The hotel also gives out “City Plus” cards to guests which provide them with discounts on 70 mall outlets. The Kempinski at the Mall of the Emirates will open in April 2006 with extra-sized rooms perfect for storing souvenirs. Under construction at Wafi City is a 240room Raffles Hotel, built in the shape of a pyramid. We understand that Al Ghurair City in Deira is planning to


open a five star hotel in the coming years and the Mall of Arabia will include a themed hotel. The benefits of combining hotels and malls are significant. These hotels become the preferred choice for shopping tourist. Other hotel guests, even those who are not visiting for the express purpose of shopping, have a nearby attraction. Hotel restaurants and spas can also benefit from the increased footfall in the immediate area. Other GCC cities have similar mall/lodging developments. The Beach Rotana in Abu Dhabi is connected to the 100,000 square metre Abu Dhabi Mall and is consistently among the best performing hotels in the city. City Centre Bahrain is under construction and will be Bahrain’s first major development linking shopping and lodging. In Kuwait, several developments will include hotels adjacent to malls, such as the Khabary Future City development in Fahaheel which will feature a hotel and serviced apartments atop one of the largest malls in the region. Five hotels are underdevelopment in close proximity to Qatar’s City Centre Mall. Following Dubai Other GCC countries must follow Dubai’s lead and market themselves to shopping tourists. The GCC is a logical area for this type of tourism. Geographically, it is located within reach of Europe, India and the Far East. It also has one of the highest concentrations of wealthy individuals in the world giving upmarket retailers a large target market. The extraordinary amount of investment capital available in this region gives developers the opportunity to create mega projects not feasible in other parts of the world. With most GCC cities unable to offer the historic and cultural attractions of other Middle Eastern cities, exciting and attractive shopping destinations should be viewed as important tourism creators. This is especially true when the malls have special attractions like IMAX theatres (Ibn Battuta Mall), Indoor Ski Slopes (Mall of the Emirates), giant aquariums (planned in Mall of Dubai) and theme parks (the Restless Planet dinosaur attraction planned near the Mall of Arabia). Moreover, considering the number of retail projects underway in the GCC, it is essential that governments and tourism authorities seek to bring outside spenders in. Kuwait, according to TRI research, will double the amount of upmarket retail space by 2008, and could quadruple it by 2010. With a small, albeit high income, population, Kuwait will have to look to outside shoppers to keep these projects viable. Similarly, in Abu Dhabi over 300,000 square metres of high-end shopping space is set to enter the market by 2009. If these malls prove to be alluring, exciting destinations, they could help Abu Dhabi shed its quiet image and lure shopping tourists turned-off by Dubai’s traffic and hotel rates. Keys to Success With most GCC countries expecting to see significant increases in the number of hotels and major malls, they should endeavour to combine the two and thereby encourage international visitors. Governments and tourism authorities can help this process in the following ways: § Encouraging developers to create unique, destination malls rather than standard malls § Provide adequate infrastructure so tourists can easily go from hotels to shopping areas § Initiate a strong marketing campaign (Dubai spent roughly AED85 million in direct marketing and advertising for the DSF) § Organise shopping festivals like those mentioned above § Highlight local shopping malls in promotional material § Reduce duties and tariffs to encourage low prices With respect to shopping festivals, while DSF remains the only festival with worldwide renown, other cities are trying to emulate its success, often packaging the shopping promotions with cultural events. Kuwait’s Hala Festival occurs every February with discounts on flights and hotels. Oman’s version of DSF is called the Muscat Festival and occurs annually from January – February. It is focused more on culture, arts and heritage although shopping is a component. If other Gulf countries can develop their shopping tourism potential, it could give the GCC an overall reputation as a haven for shoppers. Given the eventual decline in oil revenues, and the sheer number of future hotels that will desperately need international visitors to fill their beds, the importance of shopping tourism cannot be underestimated.


International experts in hotels, tourism, leisure, and real estate.
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David Lang, Consultant Fascinated by the hotel industry since working as a bellman at age 16, David Lang graduated from the Cornell University School of Hotel Administration in New York. His studies also took him to the American University Cairo, Egypt and the Universidad de Buenos Aires, Argentina. David gained most of his operations experience with Hyatt Hotels and Resorts, where he worked at their landmark Hyatt Regency Atlanta. In addition, he worked for Fairmont Hotels and Resorts and several independent hotels. With TRI, David has applied his industry knowledge and prepared market and financial feasibility studies for prominent hotel and real estate developments in Kuwait and Dubai. He has also assisted and advised numerous hotel developers in the identification and selection of preferred operators as well as assisting with the negotiation of the main management contract terms.

For further information, contact: Peter Goddard Managing Director Gavin Samson Associate Director gavin.samson@ P. O. Box 31933, Dubai United Arab Emirates TEL: +971-4-345 4241 FAX: +971-4-345 8502 Email: Web: Offices in: London, United Kingdom Dubai, United Arab Emirates Istanbul, Turkey Madrid, Spain Lagos, Nigeria


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