Economic factors impacting the UAE hospitality industry

Question

Please explain the pestle (economic) factors to consider for the hospitality industry in the UAE.

Answer

Three economic factors that should be taken into consideration regarding the hospitality industry in the UAE are as follows. One factor to consider is that the UAE has a good track record of attracting foreign direct investment (FDI) (Trading Economics, 2016a). This means that foreign hospitality companies will see that it is easy to invest in the UAE and are therefore more likely to invest in the country compared to others where it is considered more difficult to invest.

A second economic factor to consider is that the UAE has a low unemployment rate (Trading Economics, 2016b). As there is a low unemployment rate in the country it may mean that it is harder for a hospitality company to attract talented staff to work with and for them as they are already working for other companies. A hospitality company would therefore have to offer a very attractive remuneration package to attract the most talented workers to work for them.

A third economic factor to consider is the currency exchange rate. It is likely that foreign visitors (tourists) will make use of the hospitality services available in the UAE. Therefore, it is important to consider how changes in the currency exchange rate may positively or negatively affect demand for UAE hospitality products from tourists. Hospitality companies will need to closely monitor currency exchange rates from the most popular tourist countries to see if there is a need to alter service prices due to exchange rate changes.

References

Trading Economics (2016a). United Arab Emirates Foreign Direct Investment. [online] Available at: [Accessed 25/07/16]

Trading Economics (2016b). United Arab Emirates Unemployment Rate. [online] Available at: [Accessed 25/07/16]