Dubai tourism sector reports declining performance

The output index in the travel and tourism sector declined to an index of 49 last month, signalling a contraction in business activity in the sector, according to Emirates NBD.

The Banks Dubai Economy Tracker reported that overall output/business activity in the emirate expanded at the slowest pace since February 2010, with the index falling to 51.4 in October, from 56 in September.

Travel and tourism respondents cited subdued market conditions and dampened demand as contributing to weaker activity in the sector.

The relative strength of the USD is expected to continue weighing on demand from emerging market countries such as Russia and China.

Output prices declined marginally in October, suggesting that firms are reducing prices to attract customers.

Growth in new orders was also much slower compared to September, with the new work index easing to 51 from 56.9.

Employment declined for the second consecutive month. Firms in the travel and tourism sector were less optimistic about prospects over the coming year, with the business expectations index falling to 65.8 in October from 73.1 in September.

Improvements in travel and tourism activity are expected over the coming months, as it enters into the winter ‘high season’.