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April 5, 2009

Daniel Tschudy:Gulf States: Welcome to reality

For the first time in modern history, the United Arab Emirates returns back from the future. What has been a constant growth since its foundation in 1971, financed by petrol dollars and motivated by visionary leaderships, has come to an abrupt stop. During the crisis of 1972, the Gulf States were part of the problem, and during those in 1992 and 2002, they tried to stay away from trouble. But in autumn of 2008, the global financial crisis hit hard, particularly in the Real Estate industries.

The impact to the hospitality business is substantial, even though the industry avoids talking openly about it. At MPI’s Gulf Conference and at GIBTM, both staged back-to-back in Abu Dhabi, the difficult matters were not on the agenda. On one side, because in this region delicate items are not laid open to discussion - part of traditions and the cultural heritage - and on the other side, there is simply no (domestic) experience of how to deal with such a compact and global negative development.


Business as usual?: A working moment at
GIBTM’s Abu Dhabi booth


Dubai harder hit
Dubai seems harder hit – as their near-future is not based on gas or petrol, but was planned on creating a major global mega-city, a centre of hospitality, and a hub between East and West. Space and money was available, cheap manpower was brought in and the ‘City of Babel’ was built. The 10-year old elegant Burj al Arab, originally standing as symbol of Dubai’s growth, now seems like a boutique hotel against what is being constructed in downtown Dubai, around the Marina and in Jumeirah, and, the true tower of Babel, the 818m (206 floors) Burj Dubai is both inspiring and terrifying.

Getting nervous
And so it happens that people get nervous and the lack of ability for direct confrontations now becomes a handicap. Before, the fabulous growth strategies were based on cheap money and cheap labour (from within the New World). Now, that should all be questioned, and fast. But to discuss publicly failed strategies (regardless of ‘who’s’ mistake it is) is difficult in the Middle East. So decisions are being turned around, plans scrapped, projects stopped, but without public discussions or explanations. This creates insecurity and increases pressure.

The results can be seen, in Dubai more than in Abu Dhabi: unfinished apartment buildings, 80% credit for house purchases, untouched fronds on the Palm island and the brand-new Atlantis, which less than half a year after its opening has been forced to reduce its rates substantially in order to fill it rooms. Hundreds of tourists queuing for 20 minutes for breakfast, a low-quality internet connection and a lack of service attitude sums the consequences up. Dubai is heading rapidly towards one possible destiny, to become the “Las Vegas of the Middle World”, with Macau taking that position in the East. Masses for masses - and quantity instead of quality.

Etihad Airways a role model
Abu Dhabi acts differently and for obvious reasons still has money to flow for decades. So the capital’s development – part of its 2030 plan – runs quieter and as it seems more focused. Five year-old Etihad Airways already serves 50 cities (just added Australia with direct flights) with a brand-new fleet and a quality competitive with Singapore Airlines and Qatar Airways. The highly publicised Saadiyat Island project, just offshore from Abu Dhabi with the Guggenheim and Louvre museums (both opening in 2010) and the Performing Arts Center, is a clear gesture towards culture, and thus quality.

But Abu Dhabi too does not want to talk about a crisis publicly – the paroles are ‘think positive’ but the faces (of the panellists) speak a different language. For example, they are planning another 5,000 hotel rooms by 2010 and it is not clear how to fill them – conference business might be the safest bet.

The question is (in order not to follow, for example, AIG’s or UBS’s inadequate communication policies), whether the region learns to exchange and process openly about the economic developments and particularly about what is happening in the meetings industry. Because confidence and trust in the Gulf region is, without straight and immediate communication, not possible and would only provoke that foreign interests and investments will disappear as quickly as they came. And those ten-of-thousands of soon-ready apartments and hotel rooms in the UAE will just be staying empty... or be filled with even lower-level markets.

MPI’s answers to the ‘thirst for knowledge’
MPI is both able and willing to respond to the challenges in the Gulf States’ meetings industry: on the one hand, the constantly growing infrastructure (convention centres, hotels, event locations, transport and fabulous airport-hubs) and on the other the need for education, fine-tuned operations and market-specific sales approach. What now seems understood is that the meetings industry is not leisure tourism and tour operating. What still needs to be brought to the trade is open communication abilities, confrontational behaviour and the acceptance of the fact, that the Gulf States, too, are part of the ‘global whirlpool’. Demonstrating its commitment to the Gulf Region’s meetings and events industry, MPI opened its Middle East Office in Doha, Qatar, supported by the MICE Development Institute (QMDI) and the Qatar Foundation. The partnership with QMDI is a key tool to transfer the global industry’s expertise to the region.

Facts and Figures of GIBTM 2009
Two hundred and forty exhibitors participated at the third edition of GIBTM (a growth of 7% on last year). New destinations have participated such as Jordan, Oman, Gulf Air and Turkish Air. The pre-audited figures show a total visitor attendance of 1904, which includes 236 Hosted Buyers - an increase of 15% on 2008. Exhibitors increased to 768 attending personnel. In total, 6,390 pre-scheduled appointments were undertaken at the event; up 23% on 2008. GIBTM will be held again in Abu Dhabi from 29-31 March, 2010.

Daniel Tschudy provides expert advise, in-depth consulting and educational support to the global communication, meetings and tourism industries. www.tschudy.com

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