Tourism in Dubai: Economic Factors of Demand


Tourism refers to travelling for the purpose of pleasure, research or business. The concept of tourism covers a very wide area of the economy. These areas include the travel or transport industry, the hotel and accommodations sector as well as the agriculture sector and the manufacturing industry. Tourism has contributed to the growth of many economies in the last decade for those countries that have embraced it.

Switzerland in Europe is one of the developed economies that rely on tourism and the developing economies of African countries like Kenya and the Republic of Tanzania are following suit. According to recent research studies carried out by Xola Consulting, Inc., adventure tourism, given its emphasis on pure and pristine natural environments, lower barriers to entry for small business, and frequently reduced requirements for new construction in particular, is promising for countries with lower levels of capital investment and existing infrastructure (p2). Therefore, tourism has been recognized as a significant element of the economies of developing countries influencing them either positively or negatively.

Positive impacts of tourism to the economy

Tourism contributes positively to the economies of countries through foreign direct investments (FDI) and the involvement of transnational corporations (TNCs) who alter the demand patterns through marketing of the country’s tourist attractions abroad. They also come with different technologies that help grow the economy of the developing countries.

According to Williams (1998) “tourism’s contribution to GDP will vary substantially according to the level of diversity and the extend of linkages within an economy” (p89). From William’s point of view, developed nations’ tourism contribution to the GDP is a small fraction as compared to the developing countries. Taking a look at developing countries, Kenya is one country whose Tourism sector contributes immensely to the GDP. At the moment, tourism is the leading foreign exchange earner therefore contributing highly to the country’s GDP.

Negative impacts of tourism to the economy

Taking into account the fact that the flow of inbound tourists cannot be controlled by the government, tourism can have a negative impact on the economy of the country. The environment could be depleted due to overuse of the tourist attractions for example the natural attractions like game parks and nature walk parks. On the social scene, tourist destination countries are mainly affected by tourism in such a way that the tourists bring in foreign habits that distort the citizens’ way of life. The morals that are normally treasured are sometimes lost when the youths are engaged in foreign activities like using drugs and prostitution.

Tourism attractions and how different countries are struggling to maximise on them

Tourists travel to different countries to view different attractions ranging from the natural attractions like wildlife to artificial attractions like extra ordinary buildings. For a country to attract tourists there has to be peace and stability, attraction sites, good infrastructure i.e. transport and communication and good accommodation facilities to host tourists. Due to global warming threats to the environment, many tourist destination countries are venturing into new areas of attraction for instance, green tourism or ecotourism. Thailand has branded its tourism as “the ‘amazing Thailand’ and ‘Seven amazing wonders” by the Tourism Authority of Thailand (2010).

Many countries are concentrating on attracting and maintaining the flow of inbound tourists through different ways. Developed countries like the USA, and Australia are struggling to increase the growth in the number of tourists through the program of eco certification of tourist facilities. This is a process of promoting environment friendly tourism activities by registering facilities with an ‘ecolabel’ indicating that the facility promotes ecotourism. According to Bien (2001), “Professional market surveys indicate that there is a clear interest in the travelling public in choosing environmentally and socially responsible businesses” (p20).

Demand for Tourism in Dubai

The term demand in economics means a want or need of a particular quantity and quality of a product or service. Therefore, demand for tourism refers to the need for tourist attraction sites, transport infrastructure, accommodation facilities and the required labour at the destination. United Arab Emirates (U.A.E) is made Dubai and other six states of the Arab Emirates.

This federation was created in December, 1971 and was one of the poorest countries in the Persian Gulf. According to Shihab (2001), “U.A.E has developed to an industrialised nation in three decades as a result of its vast oil and gas resources the country has” (p249). It has managed to skip the stages of development which most developed countries went through. Due Dubai’s geographical location, it has made one of the connection points when it comes to air transport. The port of Dubai is also a very busy port serving the gulf hence a lot of traffic is directed to the port.

This includes both the air and sea traffic. As a result, business in Dubai has grown drastically in recent years making it one of the fastest growing business centres in the Middle East. All these have accelerated the development of infrastructure both for transport and accommodation for incoming visitors. Looking at these facts, it is clear that Dubai and the whole of UAE is developing at a steady rate therefore demand for tourism will keep on increasing. The environment in Dubai is becoming more hospitable which encourages more tourists to come in and bring with them the foreign cash.

Factors that might decrease the demand for tourism in Dubai

According to News Room (2010), the U.A.E. has a very hot climate during the summer season. This is the season when most tourists from Europe and America travel to different destinations for pleasure and viewing of different attractions. The hot climate therefore decreases the demand for tourism in Dubai denying it economic gains during this period.

Hotel pricing or charges in Dubai are a little bit high. Most tourists would rather visit other destinations for less amount of money and get the same quality of services or even better.

The global economic crisis and its repercussions is one of the decreasing factors when it comes to demand for tourism in Dubai. In the recent past, there has been an escalation in the prices of oil and gas. This has led to the subsequent increase in the prices of the basic commodities. Since tourism is not a basic commodity, its demand has been on the decrease hence Dubai feeling the pinch of the crisis.

The competitive advantage of the tourism sector in Abu Dhabi which is the capital city of U.A.E. There are sports facilities like the Formula One (F1) racing track which holds the Grand Prix. This is a major attraction that lures in many visitors who flock in the city for the sport. Most luxury hotels are also found in Abu Dhabi. It also has modern towering buildings and shopping malls that attract business tourists.

There are other tourist destinations like Malaysia, Singapore and Thailand. Their climate is friendlier with the green environment, education and medical tourism whish is also cheap compared to Dubai. These provide a stiff competition to Dubai’s tourism sector.

The Sharia law practiced by Islam does not separate the state and religion as seen in other Western countries. All people visiting Dubai for pleasure or work are subjected to the law. This factor decreases the demand for tourism especially when the people from different religious backgrounds want to visit or work. The law also does not allow interest rates and this might decrease the demand for business tourists who might want to invest in the region.

Factors that might increase the demand for tourism in Dubai

The city of Dubai has a well developed infrastructure. The transport system is very efficient due to a good roads network not only in Dubai but also in the adjacent Cities. Dubai International Airport is another developed infrastructure with a great deal of inbound business tourists who jet in regularly for business. Generally, there are quality facilities that accommodate tourists. The hotels cater for all types of classes i.e. there is a seven star hotel as well as the Bed and Breakfast hotels.

In the hospitality industry, customer comfort and satisfaction is always the first priority. There has been a tremendous development in the education sector of the U.A.E. as a whole compared to other Arab nations. The country has invested in the education system where by its citizens have generously been awarded study scholarships either locally or abroad. Shihab (2001) indicates that; “The Higher Colleges of Technology, located in several emirates, were established in 1988 and are aimed at offering courses of three years’ technical training in skills such as business administration, accounting, banking, information systems, computers, engineering, aviation technology, and health sciences” (p255).

Dubai has a number of tourist attraction sites that are unique in the region and to the whole world. There are artificial islands that attract the visitors i.e. the palm islands. There is also the world’s only 7 star hotel, the Burj Al Arab Hotel Dubai. It is strategically located in the city with an approximate distance of 25kms from Dubai International Airport. There are other attractions which include the beaches, Dubai museum and parks.

Geographically, Dubai is strategically located in the Middle East linking it to other countries in the Persian Gulf (Jafza, Jebel Ali Free Zone, which is the world’s fastest growing free zone). This factor has contributed to the demand for tourism in Dubai in that many tourists, be it business oriented or pleasure have an easy access to the areas they indent to visit.

The Emirates Airlines, which is the country’s premier airline company, has become one of the popular airlines in the world today. This is an advantage to the economy of Dubai in such a way that many travellers will take this opportunity to connect their flights to Dubai and hence visit the city.

The government of U.A.E. has also come in and is providing a two days visa to transit travellers who connect through Dubai airport. This enables the travellers to stay and visit the attractions within the city hence bringing in revenue.

The embrace of Formula 1 racing in Abu Dhabi might also enhance the demand for tourism in Dubai. Formula 1 is a very popular sport which attracts many followers hence they might take this opportunity to visit Dubai after the sports show. This is because of Dubai’s nearness to Abu Dhabi.

In the recent past, Yemen was one of the countries that had a better tourism industry in the Middle East. This changed after a case where tourists were kidnapped and killed in the late 90s. Yemen’s tourism also declined in its popularity due to the insecurity issues and the country being alleged to harbour Al-Qaida operatives after 9/11. This factor has led to the increase in demand for tourism in the U.A.E as a destination country.

The U.A.E. is rich in oil and gas deposits. These natural resources have propelled the country’s economic growth to an industrialised state in a period of thirty years. This means that there has been improvement in the incomes of the citizens and expatriates working in the oil industry and the steel industry as well. Demand for leisure therefore arises when people are financially comfortable. Therefore, this has led to the demand for domestic tourism in Dubai.

In the whole of the Middle East, United Arab Emirates as a country has been the more politically stable country. This situation has enabled the city of Dubai to attract many investors both local and foreign expatriates who have contributed to its growth. Political stability also increases confidence in travellers and researchers and hence the increase in the demand for tourism in the region.


Tourism is a valuable economic resource that needs to be fully developed and protected. The bigger percentage of United Arab Emirates’ economic income emanates from oil and natural gas. These resources can be depleted at one point in time. When it comes to tourism, the historical sites and the artificial sites if well maintained can last for many generations to come. Therefore there is need to protect the tourism resources and enhance them as well for future use.

To promote tourism, there is a need for an adjustment in the country’s legal system. Civil cases, business and criminal cases should be handled separately to meet the modern day expectations. Other religions should not be suppressed in the process but rather be given room to carry out their religious activities.

The accommodation sector should also be looked at in that the charges to visitors are regulated. High accommodation charges are a discouragement to visitors willing to stay in these facilities. Hotel and accommodation rates should vary according to the standard for instance the seven star rooms being highly and the bed and breakfast being lowly charged.


Economic development of any country, state or region depends on a collection of various factors i.e. the resources. The scarcity of these resources brings about questions of the economic nature hence boosting development. Therefore, one should choose according to the driving force either positively or negatively. For Dubai’s case, a two day visa extended to visitors or connecting visitors is an incentive that enhances their choice of visiting the acclaimed tourist sites. This action promotes the economy as the foreign currency is brought in.

From the above discussion, the demand for tourism in Dubai has been enhanced by both internal and external factors, negative as well as positive factors. The government’s commitment to promoting education to both the male and female citizens has been a major step towards promoting the economic growth of not only Dubai but the whole of U.A.E.


Bien, A. 2006. A simple user’s guide to certification for sustainable tourism and ecotourism. A paper presented at Adventure Travel Summit, 2008, Sao Paulo, Brazil, p. 20.

News Room: Tourism Authority of Thailand (2010). Marketing ‘Amazing Thailand’ To the World. Web.

Shihab, M. 2001. Economic development in the UAE. In: Al Abed I. & H. Peter (eds) United Arab Emirates: A new perspective. London, Trident Press Ltd, pp249 & 255.

William, S. 1998. Tourism geography. London, Routledge, pp 89.

Xola Consulting, Inc. (2008) Recent trends in tourism financial flows. Web.

Cite this paper

Select style


BusinessEssay. (2022, December 12). Tourism in Dubai: Economic Factors of Demand. Retrieved from


BusinessEssay. (2022, December 12). Tourism in Dubai: Economic Factors of Demand.

Work Cited

"Tourism in Dubai: Economic Factors of Demand." BusinessEssay, 12 Dec. 2022,


BusinessEssay. (2022) 'Tourism in Dubai: Economic Factors of Demand'. 12 December.


BusinessEssay. 2022. "Tourism in Dubai: Economic Factors of Demand." December 12, 2022.

1. BusinessEssay. "Tourism in Dubai: Economic Factors of Demand." December 12, 2022.


BusinessEssay. "Tourism in Dubai: Economic Factors of Demand." December 12, 2022.