Event Tourism in Abu Dhabi

Executive Summary

Tourism has been a major contributor to the economy of the United Arab Emirates (UAE). This rise in the hospitality industry has enabled the region to experience many tourists from the other countries for holiday vacations. Some people come for recreational tourism to enjoy the beaches  the climate, which is favorable for the tourists, and others to attend events hosted in the region.

The region has a well-established Tourism and Culture Authority (TCA) in Abu Dhabi, which is in charge of all tourism activities in the emirate. The authority has not put a lot of emphasis on the development of event tourism, yet it has a lot of potential in the region. The marketing strategies employed by TCA of Abu Dhabi are not favorable to event tourism, and the region has some elements that do not contribute to the development of event tourism, including political instability and the weak currency.

Political instability has mainly been influencing people’s decisions because the tourists have been opting for other tourist destinations in fear for their lives and other safety-related reason. This tendency has led to competition of tourists in the different subsectors of tourism leaving the growing subsectors struggling to get visitors.

The government needs to invest in the security of the region in order to attract more tourists to Abu Dhabi. The Authority in charge of tourism needs to market event tourism in the country and provide competitive packages for the clients. Using this approach the industry has a potential for growth since most of the other factors are favorable for event tourism. In the case of the success of this sub-sector, the region will be a step closer to self-sustainability, which is in line with Abu Dhabi’s Vision 2030.

Introduction

Tourism in the United Arab Emirates  has been a major boost to the growth of the country. According to  September 2016 Hotel Establishment Monthly Report released by the Abu Dhabi Tourism and Culture Authority, the number of tourists has increased by 13% compared to the data from September 2015 report (Abu Dhabi Tourism & Culture Authority, 2016b). This statistic shows an increase in the number of tourists visiting the region. Tourism is one of the main sources of revenue in the UAE, with some of the world’s most luxurious hotels being in the UAE. The country’s infrastructure amongst other tourist attractions has provided a plan to boost the economy of Abu Dhabi. The region is also rich in event tourism. Event tourism is a part of the tourism sector, which involves hosting various types of events, such as business, sports, and cultural festivals, with the purpose of inviting and involving people from other regions. For example, in Yas Island there are two main events that can be hosted here, namely golf events tourism and car racing events. Other events in the regions include Qasr Al Hosn Festival, Abu Dhabi Art, Al Ain Air Championship and other partner events such as Formula 1 Etihad Airways Abu Dhabi Grand Prix, which takes place at the Yas Marina Circuit. This unexploited sector has the potential of increasing the revenues generated and act as a prime investment opportunity to attract investors into Abu Dhabi, which is in line with the vision 2030 that seeks to build a sustainable, diversified, and high value-added economy.

Macro Environment

To evaluate the viability of event tourism the paper has to take into consideration the macro environment of the subsector. The main issues affecting the success of this sector include political, economic, social, and technological factors in Abu Dhabi.

1. Political Factors

• The taxes imposed on tourism are relatively low but the Emirates recently increased the taxes imposed on tourists, which is directly affecting hotel stays (Sebugwaawo, 2016). According to September 2016 Monthly Establishment Report, there is a 12% drop in room revenue compared to September 2015 (Abu Dhabi Tourism & Culture Authority, 2016b).
• The Emirates is experiencing political instability, which is a threat to the tourists visiting the region (Diaa, 2016).

2. Economic Factors

• The UAE has a stable economy, which gives security to investors in the tourism sector.
• Financing is accessible due to the low interest from the region, which was 7.16% as of September 2015, but it has been 5% by some banks in late 2016 (Maceda, 2016).
• Abu Dhabi has been experiencing weakening of its currency due to the dropping oil prices. This tendency affects the valuation of the currency, which has a negative impact on the industry (Diaa, 2016).

3. Social Factors

• The region has interesting lifestyles due to well-paid jobs. These luxurious lifestyles also avail money to be spend or tourism.
• The Emirate is rich in culture, which is a boost to the cultural festival tourism as they display their different cultural practices.

4. Technological factors

• The wealth that this country possesses allows it to purchase new equipment and be in the vanguard of technological development.
• The Tourism and Cultural Authority has also incorporated technology in its activities in the form of E-licensing, including Hotel establishment license, Hotel establishment management and operation license, Excursion boat license, Tour operator license, Travel agent license, Tourism restaurant license, and Floating restaurant license (Abu Dhabi Tourism & Culture Authority, 2016a). This technology makes it easy to acquire any necessary tourism license.

Porter’s 5-Forces Analysis

In this analysis the paper discusses the ability of event tourism to survive in Abu Dhabi despite Abu Dhabi having other forms of tourism. It will look deeply into the competitiveness of the subsector in the vast tourism industry. The Porter’s 5-Forces include the following components.

1. The Power of Suppliers

Porter (2008) argues that when there is a pool of suppliers the prices of materials and goods needed are at reasonable price. In such a case, the suppliers do not have the ability to influence the prices of materials needed or hike them unnecessarily. In the case of event tourism, transport facilities for tourism, hotels where the tourists can stay, food and beverages provision, stage and stand setups are the major requirements needed. All the listed requirements have multiple suppliers. For example, in the case of accommodation, Abu Dhabi has many hotels with different ratings, which leave the target market spoilt for choice. There are also numerous tour and travel companies most with tour guides to enable easy navigation across the Emirate. There are numerous travel agencies in case the target market is represented by the international tourists. The presence of many suppliers lowers the cost incurred organizing events.

2. Power of Customers

In this category of analysis, there are two types of customers involved:

          a) a small customer number with high buying power and

         b) a large customer base with low purchasing power

In event tourism, the best customer type will be a small group of customers but with high purchasing power that will leave the power to control prices to event organizers and planners. In such a situation, the organizers can be able to project their profits because they understand their client base.

3. Competitive Rivalry

This subsector faces competition from other sectors that look more attractive to tourists, such as recreational tourism. This tendency poses a great threat to the survival of the event subsector.

4. The Threat of Substitution

In event tourism, there is no threat of substitution since the sphere remains unique, has a distinguishing theme, and it is periodically celebrated. This factors eliminate establishment of substitute event.

5. The Threat of New Entry

In event tourism, there is a threat of new entry, especially if an investor establishes an event that coincides with the specific of the others. This tendency will tend to take a fraction of the intended customers, especially if the event is more entertaining and cost-effective.

Driving Forces

Driving forces is a concept of looking at a business’ competitive advantage and strength compared to other competitors in the same field (Martin, 2009). Martin identified some of the driving forces for most businesses.

1. Products/Services offered

Event tourism has two main services offered which are entertainment and cultural exchanges and exhibitions. Abu Dhabi being an emirate rich in culture presents those services to the tourist. It is a major driving force for the event tourism industry.

2. Technological Advancement

Abu Dhabi is technologically advanced in terms of transport, communication, and even energy, where the city embraces use of renewable resources for energy, such as solar energy. This is a big boost because resources needed are easily accessible from the suppliers.

3. Natural Resources

 Abu Dhabi has vast oil wells, which has a positive impact on the economy of the emirate. The abundance of natural resources lowers the costs of investment due to availability of capital flow in the emirate.

4. Climatic Factors

Abu Dhabi has a desert-like climate that is usually warm or dry, which is accommodative for tourism. It is the main reason why Abu Dhabi experiences a high inflow of the international tourists. This climate contributes to the success of event tourism in the region.

5. Cultural Diversity

Abu Dhabi being rich in culture positively influences event tourism because most of the events will mostly entail exchange in cultural products. Cultural diversity stands as a key driving force in the thriving of this subsector of tourism.

Strategic Group Map

A strategic group map shows the position of a business entity in the market when compared to its competitors (Forgang, 2001). In Figure 1 below it is clear that only two subsectors are higher priced than the event tourism category. In terms of customer base, recreational and sport tourism has a larger customer base than event tourism. In the case of ability to expand, event tourism has a higher expansion potential since recreational tourism has almost reached its climax. The other subsectors of tourism offer competition at a lower level but also have the potential of expansion, however, at a lower rate due to their small customer base.

Key Success Factors

Event tourism has a great potential for growth compared to mostly recreational tourism, which is dominant in the industry. It has more room for growth and expansion because it is not fully tapped. Macro factors are all favorable for this subsector due to the government support and developed infrastructure. Finances are also available at low rates, which make it easy for investors to get capital to invest. The subsector also enjoys low taxes, which also attract investors who are not going to have high taxes issues. Abu Dhabi is rich in culture, which acts as a source of materials used or services offered to tourists, such as art exhibitions and drawings.

The region has favorable climatic conditions that are suitable for hosting different events even those running up to several months, including the Abu Dhabi Summer Season, which lasts for almost three months. This climate attracts more tourists, especially those from regions that experience extreme winters.

Event tourism stands out as the only subsector with a lot of potential for expansion. With all the support and favorable conditions, it has the potential for growing and can become the main tourism subsector in Abu Dhabi. The stakeholders should put more resources into advertising and marketing the sector to gain popularity in the UAE and other countries around the world. The paper finds the industry very attractive to investors since it has only one major competition, which is recreational tourism, and has the potential of gaining popularity and making many profits at the same time.

Idea Generation and Development

Despite the fact that tourism contributes significantly to the economy of Abu Dhabi, the sector also experiences challenges resulting from fall in oil prices and valuation of its currency, which is affecting tourists spending. Most hotels have a drop in a number of tourist spending the nights in the hotels.

Political instability has also affected the regional tourism making tourists opt for other countries, where there is safety (Diaa, 2016). This factor makes the subsector face a lot of competition for tourists from other subsectors. For this subsector to realize its full potential, the Tourism and Cultural Authority has to source for tourists from other markets and offer them competitive packages to lure them to Abu Dhabi. TCA has to ensure there is peace in the region and assure the people of their safety.

Sustainability and Impact

In line with Abu Dhabi Vision 2030, the event tourism subsector has the potential for making the emirate realize its goals if it is well marketed and has support from all relevant institutions and the government. Some of the contributions are shown in the framework below.

Conclusion

Event tourism has the ability to help UAE achieve its goal if its reaches its full potential. The government of the UAE needs to invest more in this subsector and formulate better policies, which favor the industry. The government should also promote security and assure safety to the tourists in order to reap the benefits of tourism.

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