Sharjah Hospitality Sector Amidst COVID-19

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The Novel Coronavirus (COVID-19) has challenged the ways human beings have been living. With travel bans and restrictions on social gatherings, the tourism sector has been badly affected. United Nations World Tourism Organization (UNWTO) revealed a fall of 22% in international travel in the first quarter of 2020 and predicted a further decline of 60-80% over the whole year. There has been an immense loss in revenues and millions of jobs worldwide. In the absence of any vaccine and limited medical capacity to treat, the recovery of the tourism sector can only be speculated. As outlined by UNWTO, the recovery seems more positive in Africa and the Middle East with most experts foreseeing recovery still in 2020. “Experts in America are the least optimistic and least likely to believe in recovery in 2020, while in Europe and Asia the outlook is mixed, with half of the experts expecting to see recovery within this year” (UNWTO, 2020).

Among the seven emirates of the United Arab Emirates (UAE), the emirate of Sharjah is the third largest emirate after the capital Abu Dhabi and popular tourist destination Dubai. The emirate of Sharjah is known for its heritage and culture which are represented through unique architecture of its mosques, more than twenty museums, and a wide range of cultural events organized by various government authorities. Sharjah for its efforts in preserving and promoting history, architectural wonders, and continuous support for cultural development was awarded the title of cultural capital as well as the Capital of Arab Culture for 1998 from UNESCO. The official tourism authority, Sharjah Commerce and Tourism Development Authority (SCTDA) develops and promotes tourism in the emirate through initiating various campaigns, participating in national and international roadshows and providing licenses and training to tourism and hospitality organizations. Figure 2 shows a consistent increase in the international tourist traffic to Sharjah, in the last five years.

 

Figure 2: Increase in international tourist traffic in the emirate of Sharjah

 

There are 104 hotel properties in Sharjah (Table 1), out of which 31% are 5-Star and 4-Star hotels. There have been major developments in the hospitality sector in Sharjah in the last 5 years. Since 2018, there were 12 hotel projects with 2335 rooms were in pipeline. Presently Sharjah has 24 hotel projects with 4,058 rooms by 2025.

Table 1: Hotel properties (category wise) in the emirate of Sharjah

 

Official Classification

Number

5 Star

11

4 Star

22

3 Star

12

2 Star

09

1 Star

10

Deluxe

06

Standard

07

Basic

27

Total

104

          Source: SCTDA, official data

The first confirmed case of COVID-19 in the Middle East was announced by the United Arab Emirates (UAE) on 29 January 2020. As per the COVID-19 Community Mobile Report generated by Google on April 5, the mobility to retail & recreation and parks dropped significantly in March and April months (Figure 2).

 

Retail & Recreation

 

-61 %

 

compared to baseline

 

 

 

 

Mobility trends for places like restaurants, cafes, shopping centers, theme parks, museums, libraries, and movie theaters.

Parks

 

-58 %

 

compared to baseline

 

 

 

Mobility trends for places like national parks, public beaches, marinas, dog parks, plazas, and public gardens

Figure 2 Mobility changes in UAE on April 5, 2020

(Source- Google COVID-19 community mobility report, UAE)

The UAE hospitality sector received the hardest hit due to all these developments. The overall performance of the hotels in UAE declined in Q1 2020, with many of the emirates showing double digit decreases in both ADR and occupancy levels (Table 2).

 

Table 2: UAE hotels occupancy and ADR change

 

Q1 2018

Q1 2019

Q1 2020

Occupancy change (%)

Dubai

 +1%

 -1%

-20%

Abu Dhabi

 +6%

 -3%

-13%

Sharjah

 +3%

-12%

-17%

Ras Al Khaimah

 +2%

 - 9%

  -4%

Fujairah

-11%

-18%

 +3%

ADR Change (%)

Dubai

  -3%

-10%

-11%

Abu Dhabi

  -6%

+11%

-20%

Sharjah

 +4%

 -10%

  -6%

Ras Al Khaimah

 +3%

  +8%

  -1%

Fujairah

  -5%

+14%

-11%

Source: MENA hotels quarterly review, Q1, 2020. Colliers International

 In an exclusive interview with the top officials from SCTDA, major initiatives/measures/steps taken up by SCTDA for Hotels during the crisis were revealed. SCTDA prepared precautionary operating guidelines during COVID19, exempting hotel establishments from the municipal fees of 5% for a period of 3 months, starting 1/4/2020. The hotel establishments were also exempted from the fees of the Sharjah Commerce and Tourism Development Authority, which amounts to 5% for a period of 3 months, as of 1/4/2020. They were also exempted from the accumulated previous violations for the Sharjah Commerce and Tourism Development Authority, during the year 2019 until 3/31/2020. In addition, several inspections were carried to ensure comprehensive precautionary methods to prevent the emergence of COVID-19.

In a recently conducted study, we found that overall the hotel sentiments in Sharjah during Covid-19 are negative towards the performance. The General Managers believe the recovery might take 6 – 12 months or more since gaining customer confidence would be time consuming. All managers agreed on moving to the next level in terms of maintaining hygiene, encouraging contactless transactions and enhancing customer care. Digital marketing strategies have larger role to play in these circumstances.  The managers are utilizing this time to strengthen customer relationship through personalized messages and to strategize and prepare for pre-recovery phase as the lockdown is being lifted by the UAE Government. The new norms and procedures are being recommended which the hotels are ready to cope with. All these steps have certainly helped the Sharjah hospitality sector to deal with the crisis effectively. The hotels are reopening with better hygiene and precautionary measures. Regular sanitization of rooms and facilities are being conducted by trained professionals mitigating spread of the virus. Contactless transactions are introduced by many hotels. Local customer has emerged as the new market with staycations gaining popularity. We are hopeful that all such initiatives will strengthen customer confidence to revive the sector from current crisis.

Author: Dr. Mohit Vij
ASSOCIATE PROFESSOR
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