Environmental Analysis
With the hospitality industry growing at a steady pace in the UAE and the market penetration of
a couple of Indian players, we wanted to analyse the UAE hospitality industry for our
international expansion. Here are some key points from the PESTEL analysis that we
conducted for this:
1) Political: The UAE has a stable government with a focus on tourism, which contributes 10%
of its GDP. It has not witnessed any terrorist incident, owing to which the political stability, and
thus the hospitality, of the country remains unaffected. As a result of this, the UAE ranks closer
to 1 in the political stability index. For instance, in the case of Sri Lanka and the UK, we have
witnessed the same happen in the recent past.
2) Economic: Economic factors remain a key factor behind the high demand in the tourism
sector in the UAE. The job market has continued to grow stronger, which has led to an increase
in consumer spending. The country has a high GDP per capita, and foreign labour being a
significant driver of the economic growth of the country also pushes the travel and tourism
sector. This, in turn, leads to stable growth in hospitality and leisure. However, one thing to
note here is that it is still a very fossil fuel-reliant economy.
3) Social: Citizens of the UAE live a comfortable lifestyle owing to high per capita income and
employment rate. The country has a mix of different cultures and traditions, thanks to
globalisation. Religion is a very important component of the UAE society; it forms the basis of
their political system, culture and general way of life. For instance, native women here are
expected to follow a specific clothing style. However, this has not impacted inbound or outbound
tourism until now.
4) Technology: The youth population in the UAE has been seen to be more tech-savvy
compared with most other countries, with an internet penetration rate of over 90%. Most of the
latest technologies are already present or are adopted.
5) Environmental: The UAE has a desert climate, i.e., hot and dry, which impacts tourism for
4-5 months of the year. However, this has seen a visible change with value seekers identifying
this duration to travel for cheaper to the UAE. Also, its proximity to the sea offers flexibility on
trade routes.
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