Brief introduction to Destination Marketing

fig 1: tourism campaign of the  Israeli government (source: nigelparry.com)                                          

In the past few months the author has written extensively on “Business tourism”. Today he will attempt to write on another important part of tourism sector namely “Destination Marketing”, considered as the essence of any form of tourism industry. Destination Marketing is all about enhancing the image of a tourist destination which will result into increase in number of visitors and revenue. In today’s world tourism is one of the biggest industries all across the globe, both in terms of employment generation as well as output. Hence almost all the 250 nations across the globe are fighting strong with each other for getting the higher share of the pie. Hence in order to be successful it is essential that the destination must be having a strong as well unique positioning. Destination marketing is an integrated and long term approach dealing with the marketing and brand building of an individual tourist destination. There are various kinds of tourism such as, leisure, sports, life style, cultural, business etc and a wide range of products offered under any kind, but in order to make them successful it is very essential that the destination itself should be holding a strong brand perception among the various tourist communities. The brand image of the destination is the focal point of the “tourism industry”. In the recent time places like, Shanghai, Dubai, Barcelona, Auckland etc are considered as Destination Marketing success stories. (Julie Vardhan, 2008)

There are five main reference points in destination marketing (Julie Vardhan, 2008)

• Tourists: - tourists are the fundamental element of any destination marketing plan. The tourist factor basically includes the desires of tourists such as fun, excitement, comfort, safety, self actualization etc and needs such as safety , comfort etc.

• Tourist destination: - includes all the, excitements, events, avenues and places a tourist destination offers. Consists of both unique as well as complementary services offered by a destination.

• Tourism service providers- There is a wide range of organizations working across the industry that provide various products and services to the tourists. These include hotels, resorts, airline companies, logistic companies, public and private transport, tour planners etc.

• Citizen: - Ultimately one very important stakeholder of the overall tourist industry is the citizens. Citizens are the ultimate beneficiary of the economic gains made; similarly they are also the ones which are mostly affected by the side effects of tourism such as ecological imbalance. More over they provide the social factor such as warmth and friendliness  needed for the success of the industry. Tourism programs cannot be made successful until unless the citizens do not work as self appointed champions of the cause.

• Public private interest coordinator- There is various kinds of public and private stakeholders involved in the tourism industry. For the success of the overall industry it’s essential that there should be proper coordination between all the stakeholders and at the same time their individual interests should be taken care of. Public private interest coordinators take care of this.

Positioning of a tourist destination

Positioning plays a very important role in Destination Marketing. It attempts to provide a unique image for a tourist destination and helps it differentiate from the rest. Often done after customer segmentation and targeting it is based on a unique brand communication strategy. For exp Dubai is positioned as a destination with grandiose and splendor where as Spain as destination full of fun and excitement. A destination positioning strategy has both tangibles as well intangibles. The wide range of products which a place offers such as, hotels, beaches, mountains, safaris, spas etc are tangibles and are needed to sell a destination, but based on them a destination cannot be marketed. Marketing can be done with the help of the uniqueness of experience which these places can offer, the fun and excitement which is associated with them. These are basically intangibles. (Harsha E. Chacko)

Development of an effective Destination Marketing plan: -

A successful destination marketing plan consists of following four steps: situational analysis, development of strategies, implementation of strategies and finally evaluation of strategies. (Vicki L Olton)

• Situational analysis: - is the  understanding of the overall situation of the destination with the help of various strategic frameworks. This step basically includes a wide range of research activities consisting of product, position and prospect analysis. Product analysis includes studying all the offerings which a destination has to offer and what all strengths and weakness are associated with them? It includes analyzing of the overall environment in a destination including, infrastructure, socio-political factors and places to visit. This is followed by positional analysis which includes analyzing the present position of the destination with respect to the competition as well as the way it’s being perceived by the various tourist communities. The next stage is the prospect analysis which includes studying the behavior of various customer segments and based on the situation, selecting the primary target segment. Finally based on the given three analyses, SWOT (strength, weakness, opportunities and threats) analysis for the destination is done. To have a better overall analysis of the tourist destination, other strategic frame works such as PESTEL (political, economical, social, technological, environmental and legal) can be used.

• Strategy development: - once the target customer is decided, based on its profile a new positioning strategy can be worked out or some modifications can be made in the existing one. This is followed by developing strategies for, right products to satisfy the needs of the target market, right distribution channel such as travel agents, tour operators, web portals, meeting planners etc, and the desired positioning and communication strategy

• Implementation of the strategy: Once the strategies have been developed it has to be implemented with efficiency and within the time bounds.

• Evaluation: after implementation the final stage is the proper evaluation of the plan, and based on the evaluation making changes, if required.

References:-

1> Julie V, 2008, Conference on tourism in India: challenge ahead,p-247, available at < http://dspace.iimk.ac.in/bitstream/2259/563/1/247-251+Julie+Vardhan.pdf >

2> Julie V, 2008, Conference on tourism in India: challenge ahead, p-249, available at < http://dspace.iimk.ac.in/bitstream/2259/563/1/247-251+Julie+Vardhan.pdf >

3> Harsha E, positioning a tourism destination to gain competitive edge, hotel-online.com, available at <  http://www.hotel-online.com/Trends/AsiaPacificJournal/PositionDestination.html >

4> Vicki L, How to develop an effective destination marketing plan, Kopphra.com, available at < http://www.kropphra.com/article/how-to-develop-an-effective-destination-marketing-plan >

Qatar: past, present and future strategy

fig 1 : 2022 world cup logo (source: 2022qatarworldcup.info)                                        

In the midst of the global economic slowdown when most of the developing nations in the world recorded slow to substandard growth rate, there was one country that stood out from the rest  and this was Qatar , a tiny state in the Persian gulf. Blessed with huge amounts of oil and gas reserves , Qatar’s GDP is continuously growing with a double digit growth rate. With a GDP growth rate of 12% ,this 132 Billion US Dollar economy is the second fastest growing economy in the world after Ghana (Karvy private wealth, 2011). After analyzing the growth story of Dubai in the previous blog, the author will now attempt to analyze the same for this another success saga from the gulf.

The growth story so far

•  Petroleum and oil reserves:- So far the Qatar’s success story had been driven by its oil and natural gas reserves. Petroleum products contribute half of the Qatar’s GDP, 70% of its govt. revenue and 85% of its export (Jarred Cummans, 2010). According to Oil and Gas journal ,Qatar has a proven oil reserve of some 25.4 Billion barrels. It’s the sixteenth largest crude oil exporter in the world.,also an active member of international organizations like OPEC and GCC. It started exporting natural gas in 1997 only, natural gas today plays much more important role in Qatar’s economy than petroleum. Qatar is the third largest exporter of natural gas next to Russia and Iran. With an estimated reserve of 896 Trillion cubic feet it has 14% of the world’s natural gas reserves. A large chunk of oil export goes to Asian economies, Japan followed by South Korea are the largest importers. (eia.doe.gov, 2011) Most of the oil and natural gas reserves are operated by Qatar Petroleum, the national oil company of Qatar, established in 1974 controlling all the aspects of oil industry in the state. Some of the offshore fields are also operated by foreign countries under PSA (profit sharing screen). Oil was discovered for the first time in 1940, at that time the average production  was 5000 barrels a day (today it  is almost a Million barrel a day) . Qatar started exporting oil in 1952. After getting independence in 1971 the entire oil reserves came under the control of the local governing authorities and in the same year North fields, single largest field for non associated gas was discovered which marked a new beginning for oil and gas industry in Qatar. Subsequently factories were established to produce liquefied natural gas (LNG); Qatar Gas Company was established in 84 to export 6 million tons of LNG to Japan, followed by Ras Laffan with an annual capacity of 10 Million tons In 93. Pipelines were established to pump gas to Turkey, Pakistan etc. (Qatarembassy.net)

• Al Jazeera:- Though petroleum had played a very important role in shaping up the success story of Qatar, there had been many other considerable achievements in the past few decades. One of them had been the establishment of “Al Jazeera” which was established in 1996 with the help of a financial aid of 137 Million US dollars from the Emir of Qatar, Sheikh Hamad Bin Khalifa Al Thani. The media agency owned by Qatar Media Corporation, had been started as an Arabic news channel for the Middle East region but later on  expanded into various, regions and languages. The news channel had been lauded for its media activism, high degree of transparency and independence. The news channel had played a very important role in promoting and reflecting the Arab viewpoints on major international issues, and influencing other media channels in the region for adopting transparency and freedom.

• Marketing itself as a brand-  it is another area where Qatar had got some considerable success. Like Dubai, Doha had been marketed as a great place to do business. Doha had hosted some major sports events like Asian games 2006 and every year since 1993 is hosting Qatar Open/ Qatar ExxonMobil Open which had been attended by top notch players like Rafael Nadal, Roger Fedrer, Andy Murray and Boris Becker etc. Doha had unsuccessfully bid for Summer Olympics 2016 and had won the bid for conducting football world cup 2022. In November 2001 it hosted the ministerial level meeting between WTO members regarding trade negotiations. The meeting is famously known as Doha Development round. Other important events that showcase the passion and zest of residents of Doha along with its splendour  are Qatar Masters golf, Doha cultural festival and Qatar masters golf etc.

Social and political Reform

The govt. apparatus at Qatar is comparatively liberal and forward looking. The current ruler Sheikh Hamad had taken some steps for political reform after coming to power in 1995. These reform majors can be considered as a step forward for a region where the institutions of democracy and civil liberty are still in its inception phase. Other social reforms include granting permission to religious minorities such as Christians, Buddhists and Hindus for public worship. Similarly some concrete reforms have been made in the economic sphere as well. One of such reform is opening up the mobile telecommunication market. In March 2009 Vodafone was allowed entering the lucrative market which had so far been the monopoly of the state run QTel. Though 100% ownership is not allowed for foreign investors but sectors like education, tourism and agriculture had been exempted from the clause. (Bertelsmann Stiftung, 2009)

The way ahead

Qatar seems to have a very strong way ahead. Abundant gas reserves, efficient and visionary government and a strong social infrastructure will design the further growth trajectory for Qatar.

• Social infrastructure: - thanks to the efficient usage of the oil revenue for various welfare and development schemes, Qatar had got a very strong social infrastructure that will provide supporting pillars to the country’s future ambitions. It has a, literacy rate of 89% which is one of the highest in the region, high life expectancy of 76 and ranks 33 out of 182 nations in the Human Development Index. The govt. wants to transform Qatar from a petroleum based economy to a knowledge based economy. It had formed the education city outside Doha which is home to six leading US universities. Another remarkable fact is that 70% of the students in these universities are female. (Bertelsmann Stiftung, 2009)

• Qatar has huge gas reserves which will ensure uninterrupted supply of capital for various developmental activities in the coming years.

• Tourism industry in Qatar is growing at an annual rate of 6%. A large part of the tourism revenue comes from the business tourism segment. In 2010 some 180 MICE (meetings, incentive travel, conferences and exhibitions) events were scheduled in Doha. (Technicalreviewmiddleeast.com, 2010) New 4 star and 5-star hotels are expanding their operations in Doha. Qatar has presently 66 hotels where as by 2011, 45 new hotels and hotel apartments are expected to be built. (DininginDoha.com, 2011) Other than business tourism Doha also has some great avenues for sports, leisure and lifestyle tourism. Opening up of the Doha international airport, completion of metro lines in the next five years and inauguration of Doha international convention bureau in 2012 will give further boost to the tourism industry in Qatar.

• Qatar is emerging as a new destination for intercontinental travel, thanks to the geographical location which is strategically placed between East and the West and North and the South, coupled with a very efficient state run airline, Qatar airways.

• Qatar has won the bid for conducting 2022 Football World cup. As a part of its preparation it is investing hugely in infrastructure as well as other tourism facilities. It had accelerated its 100 Billion US dollar infrastructure expansion plan. It is going to construct 12 new state of the art football stadiums, along with 80,000 new hotel rooms. It is also going to invest 20 billion US Dollars in road improvement program where as 25 Billion US Dollars in a railway project. Organizing the most famous sporting event will not only boost “Brand Qatar” / “Brand Doha” but will also be beneficial for the real estate and tourism sector of the whole Middle East region. Before Qatar winning the bid, it was predicted that by 2020 the total number of tourist visiting Middle East will increase to 67 Million from 36 Million at present. But after Qatar winning the bid this number will surely rise up further. (worldfootballinsider.com, 2011)

Qatar which has the second highest per capita income and is one of the fastest growing economies in the world seems to have a bright future ahead. Huge amount of petroleum and natural gas reserves along with the diversification of the economy into various sectors such as education, tourism and real estate will give a huge boost to the overall economy. But there are still few areas of concern that might be  detrimental to an emerging Middle Eastern economy like Qatar in achieving its full potential.

Qatar has following areas of concern that has to be contained. These are:-

• Qatar is still very slow in implementing economic reforms. It needs to speed up the process its process of economic liberalization.

• Qatar is still far away from the modern principals of democracy and social activism. Thanks to its high per capita income, today there hardly seems any concern for such things among the Qatari population. But in the light of the latest uprisings in neighboring countries like Tunisia, Egypt and Bahrain such state of political turmoil cannot be discounted.

• Gender inequality is still very high in Qatar. Out of 130 countries it holds 119th rank in terms of gender equality. (Bertelsmann Stiftung, 2009)

• Like Dubai, Doha also markets itself as a great place to do business. Though at paper it appears to be as exciting as Dubai, it surely lacks the cultural platform which Dubai has. Dubai is the most cosmopolitan and liberal place in the Middle East where business men, professionals and tourists from all around the world  visit , mingle and grow. This kind of charm is missing in Doha which is at many times, deterrent for many young talents. “Brand Doha” still needs a long way to go in order to catch up with “Brand Dubai”.

• Due to ongoing infrastructure projects and economic expansion plans Qatar is witnessing constant inflow of expatriates. This is increasing the cost of living at Qatar. Today Doha, 49th costliest city in the world according to one report, can be considered as the second most costly city in Middle East after Abu Dhabi. (Xpatulater.com, 2011)

• Even though the governing authorities at Qatar are trying to showcase political acumen and challenging the traditional thinking by, building ties with various nations such as Israel and USA etc, showing some degree of secular credentials and bringing some degree of liberty such as allowing liquor in some of the selected restaurants, nonetheless there are religious cum cultural circles which are not open to such changes and are opposing it.

• Besides one car bomb attack in 2005 there had hardly been any case of terrorist attack on the western populace leaving in Doha, nonetheless Qatar is rated high on the transnational terrorism ( on a scale ranging from low to critical ) due to general nature of the region. (Consider Qatar)

Reference-

1> Karvy private wealth, 2011, the world’s fastest growing economies, available at < http://karvywealth.blogspot.com/2011/01/worlds-fastest-growing-economies.html 

2> Jarred C, 2010, ETFs to Invest in the World’s Fastest Growing Economy, Qatar, available at < http://seekingalpha.com/article/216178-etfs-to-invest-in-the-worlds-fastest-growing-economy-qatar >

3> Eia.doe.gov, 2011, country analysis briefs: Qatar, available at <  ttp://www.eia.doe.gov/cabs/Qatar/pdf.  >

4> Qatarembassy.net, History of oil discovery, available at < http://www.qatarembassy.net/oil_history.asp >

5> Bertelsmann S., 2009, BTI 2010- Qatar country report, p-2 to 4, available at < http://www.bertelsmann-transformation-index.de/fileadmin/pdf/Gutachten_BTI2010/MENA/Qatar.pdf >

6> Bertelsmann S., 2009, BTI 2010- Qatar country report, p-2 to 4, available at < http://www.bertelsmann-transformation-index.de/fileadmin/pdf/Gutachten_BTI2010/MENA/Qatar.pdf >

7> Technicalreviewmiddleeast.com, 2010, Qatar’s tourism sector set for main revenue growth, available at < http://www.technicalreviewmiddleeast.com/news-a-development/business-a-management/160-qatars-tourism-sector-set-for-main-revenue-growth.html >

8> DininginDoha.com, 2011, investment pouring in Qatar’s hotel industry: QTA chief, available at < http://www.diningindoha.com/news-view.php?id=73 >

9> Worldfootballinsider.com, 2011, Qatar 2022 world cup to boost tourism sector, available at < http://www.worldfootballinsider.com/Story.aspx?id=34141 >

10> Bertelsmann S., 2009, BTI 2010- Qatar country report, p-14, available at < http://www.bertelsmann-transformation-index.de/fileadmin/pdf/Gutachten_BTI2010/MENA/Qatar.pdf >

11 > Xpatulater.com ,2011, International cost of living ranking, available at < http://www.xpatulator.com/outside.cfm?aid=240 >

12 > Consider Qatar, Business conditions in Qatar, p-3, available at < http://www.export.gov/middleeast/country_information/qatar/ConsiderQatarGuide.pdf >

Analysis of MICE Industry in Abu Dhabi

                                                Source: Manchester City webpage                                       

In the past few blogs the author has analyzed the rapid emergence of Middle East  as a favorable destination for MICE (meetings, incentive travel, conferences, exhibitions) related activities. One of the state that is making huge strides in developing itself as a word class destination for business tourism is Abu Dhabi. In the past few years it had conducted some world class events like World green tourism congress, World health care congress Middle East, Formula 1 grand prix, Red bull race, Rally Abu Dhabi to name a few and is considered as second best MICE destination in Middle East next to Dubai(HotelierMidddleEast.com, 2010) . Travel websites like lonely planets and Frommers have voted Abu Dhabi among top 10 business destinations in the world (HotelierMidddleEast.com, 2010). In the following blog the author will attempt to do a detailed SWOT (strength, weakness, opportunity and weakness) analysis for the MICE industry of Abu Dhabi.

Strengths:-

• Infrastructure:- Abu Dhabi has got a very strong infrastructure to support its blooming MICE industry. It has got state of the art convention centers, hotels, airlines and logistic facilities. At the fore front of conducting business events in Abu Dhabi is the ADNEC (Abu Dhabi national exhibition center). Established in 2007 it has a total area of 73000 SQ Meter with sitting capacity of 6000 and additional standing capacity of 8000, it is the biggest convention center in UAE. In 2008 in conducted 73 (with 1.5 million visitors) events where as in 2009 it conducted 119 events (ADNEC website, 2010). Other than ADNEC hotels like Emirate palace and YAS hotel have built their own facilities to conduct business events. Emirates palace have auditorium and a ball room with a capacity of 1100 and 2400 respectively. (Rebecca B, 2009)

• Govt. authorities: - none of the business can take off in a nation until unless the govt. authorities are not serious enough. Fortunately one of the biggest strength of the MICE industry of Abu Dhabi is the extremely pro active govt. authorities. MICE activities are at the top of the Socio-Economic agenda of the govt. of UAE/ Abu Dhabi. Abu Dhabi tourism authority (ADTA) is investing hugely both in infrastructure as well as marketing to project Abu Dhabi as a world class tourist destination. Some of the major steps taken by ADTA are as follows: -

a) It came up with “ Advantage Abu Dhabi” campaign which is basically a venture capitalist kind of apparatus that provides financial as well as non financial support to various meeting planners and professional conference organizers( PCOs) in organizing meetings and business events in Abu Dhabi across 12 strategic sectors which include petrochemicals, aviation, education, transportation, logistic, media , financial services etc. (abudhabitourism website, 2009)

b) In 2007 in order to boost MICE business ADTA formed a MICE advisory committee which consisted of players from various related industries such as convention centers, hotels, tourism development and aviation etc. This industry advisory committee will provide a common platform for various players to communicate with each other and work for better infrastructure development, product development, bid opportunities etc. (ameinfo.com, 2009)

c) ADTA is taking strong initiatives to market Abu Dhabi across the world. Deals are signed with various countries, offices are opened across the globe and marketing campaigns are conducted at various parts of the world.

• Abu Dhabi is among the major petroleum producers of the world. This gives it a natural advantage in conducting meetings and events related to the petroleum industry. On the fore front of  oil and gas exhibitions is Abu Dhabi international petroleum exhibition center (ADIPEC).

• Other than convention centers and hotels Abu Dhabi has a wide ranges of places to visit which includes state of the art malls, shopping centers of leading international fashion brands, golf courses, clubs, spas, restaurants, mosques etc.

• Clean environment, crime free society and a stable political system.

Weakness

• Like its cousin state Dubai, Abu Dhabi is also very expensive. In the latest “Mercers costliest cities of the world list” it holds 50th position where as previous year it was having 26th position.

• Abu Dhabi lacks moderately priced economical accommodations. It has some of the best luxury hotels in the world but lacks  3star/ 4 star hotels often preferred by many business travelers. Though recently it is coming up with such decently priced accommodations such as the Aloft hotel at ADNEC, Holiday Inn, and other 3star/4star hotels on YAS islands. (Rebecca B, 2009)

Opportunities:-

• GIBTM: - GIBTM or Gulf incentive business travel and meeting exhibition is the part of five 5-star exhibitions conducted for the meeting industry across the globe by “Reed International Exhibition”. Conducted every year at ADNEC Abu Dhabi it provides a strong platform for the various buyers and sellers of MICE industry to interact with each other and discuss business. It helps in showcasing the strength of Abu Dhabi’s MICE industry to the whole world. Such events are bringing as well as will be bringing much more businesses in the nearby future.

• Abu Dhabi has made as well as making huge investments in various sorts of tourism such as sports tourism, leisure tourism and cultural tourism. It is building a cultural district with in the Sadiyat Island, which once completed will be the biggest cultural center in the world. Very recently it had successfully conducted the formula one grand prix. [According to one of the govt. official it had a plan to invest 230 Billion US dollars in tourism sector in the next five years. (guide2dubai.com, 2011) ]Hence it seems various alternate forms of tourism at Abu Dhabi have a very bright future. This will surely have a positive impact on the business tourism as well since various forms of tourism are interdependent on each other.

• Geo graphical location of Abu Dhabi that puts it at the cross road of various business centers of Europe, Asia and North Africa can be an advantage for the Emirate.

• It is assumed that oil reserves at Abu Dhabi will last for another 150 years ensuring free flow of capital needed for the industry.

Threats:-

• The MICE industry at Abu Dhabi will have to fight against stronger and well established players like London, Singapore etc.

• In Middle East region Abu Dhabi is still far behind of Dubai in attracting business travelers. Lot of new places in the region like Doha, Bahrain and Muscat etc are catching up very fast in developing their business tourism facility. These places can put some real challenge to Abu Dhabi.

• Since business tourism is a very lucrative business and it has got huge strategic significance ,many places across the globe are keeping it high on their socio-economic agendas. Places like Cape Town, Sanghai, Taipei, Beijing etc are emerging as strong destinations for business tourism.

• So far most of the talent required for the industry comes from the vast pools of expats. There is always a threat of these populations getting relocated to some other part of the globe. Though the chances are low but this might create some scarcity of talent. (Though recently Abu Dhabi has started taking this seriously and Emiratization of the work force is one of its prime agendums.)

References:-

1> HotelierMidddleEast.com, 2010, Gulf MICE industry has bright future, available at < http://www.hoteliermiddleeast.com/7655-gulf-mice-industry-has-bright-future/ >

2> HotelierMidddleEast.com, 2010, Gulf MICE industry has bright future, available at < http://www.hoteliermiddleeast.com/7655-gulf-mice-industry-has-bright-future/ >

3> ADNEC website, 2010, ADNEC to advance Abu Dhabi’s MICE development agenda at GIBTM 2010, available at < http://www.adnec.ae/press/viewPress.php?id=1269516895 >

4> Rebecca B, 2009, MICE industry takes off in Abu Dhabi, eTurboNews, available at < http://www.eturbonews.com/12842/mice-industry-takes-abu-dhabi >

5> Abu Dhabi tourism website, 2009, ADTA is to assume lead arranger role in an ambitious tourism initiative, available at < http://www.abudhabitourism.ae/en/news/advantage.abudhabi.to.super.mice.segment.aspx >

6> Ameinfo.com, 2009, ADTA forms MICE advisory panel, available at < http://www.ameinfo.com/126173.html >

7> Rebecca B, 2009, MICE industry takes off in Abu Dhabi, eTurboNews, available at < http://www.eturbonews.com/12842/mice-industry-takes-abu-dhabi >

8> Guide2dubai.com, 2011, Abu Dhabi plans a 230 Billion US dollar investment in tourism sector, available at < http://www.guide2dubai.com/808-Abu-Dhabi-plans-$230bn-investment-in-tourism-sector.html >

    

Analysis of the phenomenal growth of dubai in the last four Decades

fig 1: Palm islands (source: www.nakheel.com )                                                        

Dubai the second largest Emirate of UAE (United Arab Emirates) is considered as one of the top notch cities in the world. Known for its unique mix of extravagance, charm and elegance it equally attracts tourists as well as business travelers and professionals from all across the globe. But few decades back it was among the least developed nations in the world with economy primarily dependent on agriculture, animal husbandry and pearl trading. The turning point  for Dubai came in 1973 when oil and natural gas was discovered and from that point there was no looking back for the Emirate state. The following blog by the author will make an attempt in unwinding the success saga of Dubai and try deciphering various factors that helped morphing the desert state into such grandeur.

• Social and Political apparatus: - natural resources coupled with strong, visionary and stable administration can do real magic and nothing exemplifies this better than Dubai. Dubai as a state was formed in 1971 and since then it has constitutional monarchy. In early 1970s oil and natural gas was discovered in Dubai, and within a very brief time of 1973 to 82 when the oil price was very high  made huge economic development. The oil revenue was invested in developing economic and social infrastructure, providing high salaries, and in other social welfare schemes. This resulted in a very stable and peaceful political and social atmosphere (Mohamed Shihab). The ruling class of Dubai had understood the fact that since the overall oil resources in Dubai is just 1/20th of neighboring Abu Dhabi; state economy cannot depend on oil revenue for a much longer time. Hence they always emphasized on diversification of economy into various other alternative sectors such as trade, tourism, real estate, financial services etc. (Michael Matley and Laura Dillon, 2007 )

Factors that shaped the  growth journey of  Dubai

Oil and natural gas:- Oil and natural gas in Dubai was found in the 60s and since then had played a very important role in Dubai’s economy. In the time of 80’s 55% of Dubai’s GDP came from the oil sector but with time its significance kept on decreasing. It contributed, 10% of GDP in 2000, 5% in 2005 and just 2.1% in 2008. (Paul Holdsworth, 2010). The constant decrease in the contribution by the Oil and natural gas can be attributed to the fact the economy had diversified into various other sectors such as trade, tourism, real estate and finance etc. With the current estimate it can be predicted that the oil and natural gas resources in Dubai will not last much longer.

• Ports:- Dubai is one of the leading port cities in the world. After Hong Kong and Singapore it’s the 3rd largest re export center in the world. The 1st ever port namely port Rashid was constructed in 1972. Then in 1978 the Jebel Ali port was constructed. Jebel Ali is the biggest port in the Middle East and the biggest man made harbor in the world. The port is also surrounded by a major industrial zone having some 5,500 companies from 120 countries and an international airport. The leading port companies in Dubai  were Dubai ports authority and Dubai ports international which later on merged to form Dubai ports world or DP world. DP world operates 49 ports across Dubai and internationally and handles approximately 50 Million TEUs #. (Abdul Basit, 2010)

• Business and commerce:- Dubai has evolved as center of commerce for the Middle East. Dubai’s political apparatus had played a very important role in this transformation. The earlier point discusses about the Jebel Ali free zone where companies from all around the world get tax benefits and hassle free liberal environment to conduct business. Another important step taken was the construction of DWTC (Dubai World Trade Center). The 39 storey building was the pioneer center in conducting business meetings, exhibitions, conferences and corporate events in the Middle East region (though today other centers like ADNEC are catching up fast). DWTC is home to many corporate offices and embassies also, hence played an important role in exposing Dubai to the business and investor communities spread across the globe. Dubai had invested hugely in constructing business parks for dedicated industries. One such park was opened in 1999 namely Dubai Internet City. It is home to the offices of some of the leading software and IT companies in the world such as Microsoft, IBM, Oracle, Sun Microsystems, Cognizant, Siemens etc. Similarly other such business parks include Dubai Media City, Dubai Knowledge Village, Dubai Land, Dubai Health Care city, Dubai Studio City etc. By 2006 more than one fourth of the fortune 500 companies in the world were having its base at Dubai. (Michael Matley and Laura Dillon, 2007 )

• Tourism:- With time Dubai had morphed into one of the biggest tourist destinations in the world. Many people even consider it giving fight to Las Vegas as the tourist capital of the world. With lots of state of the art hotels, spas, restaurants, fashion boutiques, shopping malls and exciting activities like dessert safari, ice skating and camel racing etc it is today one of the most preferred tourist destination in the world. The emirate state was visited by some seven Million visitors in 2007 and close to 10 million visitors in 2010. With more than 450 hotels and lot of projects still under way Dubai targets 15 Million visitors by 2015. Dubai also attracts a lot of business travelers from all across the globe to conduct their meetings, exhibitions and other corporate events in Dubai. The credit for this can be given to the state of the art convention centers like DWTC and the heavy marketing done by the DTCM (Dubai tourism and commercial marketing) in promoting Dubai as a business travel destination. Dubai’s journey as a successful tourist destination started in the mid 90s. In 1997 the Jumeriah group was established which develops and operates luxury hotels in Dubai as well as in other parts of the world. The Dubai govt. had invested in many of the magnificent projects like the Burj Al Arab, Palm Islands, Snow Mountains, and Jumeirah Medina resorts etc. These coupled with heavy marketing and an efficient airline in the form of Emirates airline gave a huge boost to the tourism sector in Dubai. (Michael Matley and Laura Dillon, 2007)

•  Financial sector:- Financial sectors are other important constituents of the Dubai’s economy. In 2005 financial sector contributed 10% to the GDP of the Dubai. There is also a strong correlation between the real estate sector and financial sector. Dubai aspires to be the financial hub of Middle East. The Dubai Financial Market commenced its operation in 2000. It received a FDI inflow of 12 Billion US dollars in 2005.

Why Dubai?

One important question that always strikes is why Dubai had been so successful in making changes so fast where as other Arab states which equally looks attractive on paper could not make such an impact. There are following reasons for that:-

• Speed: - Dubai is well known for implementing its projects with phenomenal speed. From project launch to its implementation things are done with great speed.

• Truly cosmopolitan culture: - Dubai is a place where people from different part of the world came and mingled with each other in a much open fashion. Where as in other Arab states the expatriates were restricted to their own boundaries, in Dubai they mingled well with the locals as well as other expatriates giving an unique cultural edge to Dubai. Other states in the Middle East lack such an exciting cultural platform.

• Safe haven in the midst of a politically disturbed region: - Middle East is high up on the strategic agendas of the whole world because of its natural resources, but at the same time political and socio economic systems of these nations make others a bit apprehensive of them. Dubai was unique in this regard because in between a politically disturbed mosaic it provided a safe and stable place which attracted every one, investors, tourists, professionals , diplomats, sportsmen, artists alike towards itself from all over the world.

• Transparency: - While other gulf states are notorious for their transparency in govt. activities Dubai had tried hard to build govt. institutions which are very transparent and open in its approach.

It was the state of the art infrastructure, open and cosmopolitan culture, stable and efficient government, zero business and corporate taxes that made Dubai as one of the most sought after places in the world. The journey of Dubai in the last four decades is one of the most phenomenal success stories of the world but it had its own drawbacks. In the last two years Dubai had undergone a real estate bubble burst that had impacted its economy badly, fate of many of its big real estate projects seem to be doomed. The Emirate state had constantly been accused of human right abuses of its expatriate workers, as well as lack of quality in many of its projects. Last year with the help of financial support from Abu Dhabi its economy seems to be recovering strong  and atmosphere again seems to be optimistic. Dubai has a long way to go. The given blog analyzed the success story of Dubai so far where as the next one will analyze the future growth prospects and strategy for Dubai.

# The twenty-foot equivalent unit (often TEU or teu) is an inexact unit of cargo capacity often used to describe the capacity of container ships and container terminals

Reference:-

1> Mohamed S, Economic development of UAE, United Arab Emirates: a new perspective, P-250, available at < http://www.uaeinteract.com/uaeint_misc/pdf/perspectives/12.pdf  >

2> Michael M and Laura D, 2007, Dubai Business Strategy: past, present and future, Harvard business school,P-1, available at < http://belfercenter.ksg.harvard.edu/files/matly_paper1.pdf >

3> Paul H, 2010, Oil Makes Up 2% of Dubai GDP Post-Diversification, gulfjobsmarket.com, available at < http://news.gulfjobsmarket.com/oil-makes-up-2-of-dubai-gdp-post-diversification-7861765-news >

4> Abdul B, 2011, DP World container volume hits 
all-time high, Khaleej Times Business, available at < http://www.khaleejtimes.com/biz/inside.asp?xfile=/data/business/2011/January/business_January436.xml§ion=business >

5> Michael M and Laura D, 2007, Dubai Business Strategy: past, present and future, Harvard business school,P-3 to 4, available at < http://belfercenter.ksg.harvard.edu/files/matly_paper1.pdf >

6> Michael M and Laura D, 2007, Dubai Business Strategy: past, present and future, Harvard business school,P-3 to 4, available at < http://belfercenter.ksg.harvard.edu/files/matly_paper1.pdf >