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Thomas Cook today offered a ray of hope for Dubai, claiming the emirate's attractions as a tourist destination will help it to ride out the financial crisis.
The travel group is the leading provider of holidays to Dubai which is almost totally reliant on tourism. About 95% of its gross domestic product is from tourism and the construction industry that goes with it.
Cook's chief executive Manny Fontenla-Novoa reckons a certain breed of traveller will still favour Dubai.
“Dubai has got problems all of its own. But it has some great things going for it,” he said.
“There is great weather and great beaches. It will slow down for a while but will remain popular.”
The group's strategy in Dubai is to be “asset light” — it arranges deals with hotels including the Dubai Atlantis, which opened last year with a glittering party said to have cost $20 million (£12.1 million), but doesn't own properties. Hotels such as the Atlantis have made Dubai a popular destination for a certain type of well-to-do traveller, with footballers often cited as typical customers.
Some analysts believe Dubai will have to slash prices to keep those tourists coming. Fontenla-Novoa reckons this is “not necessarily” so.
Away from the Middle East, Cook unveiled some confident-looking results for the year to the end of September. Sales are up 6% to £9.27 billion and profit rose 13% to £415 million.
This allowed it to raise the full-year dividend by 10% to 10.75p.
Debts rose sharply from £292 million to an eyebrow-raising £675 million, partly due to the costs of a share buyback programme and acquisitions.
Cook is on the hunt for more deals, in particular in emerging markets such as Russia and China.
Fontenla-Novoa thinks that there are huge opportunities to make money by arranging holidays for the emerging middle-class in both nations.
The enthusiasm of Brits for package deals is undiminished. This year's brief flirtation with the “staycation” has been dampened by the reminder that in England it tends to rain.
Customer research by Cook shows UK consumers are “intent” on taking their holidays abroad next summer, with Turkey and Egypt continuing to grow in popularity.
Mark Brumby of Astaire Securities said: “ The group is delivering but 2010 remains an unknown.
“Winter is selling relatively well but the trend towards later booking is worrisome. A double dip is possible and, with two Budgets, a General Election and a World Cup due, accurately forecasting demand will be challenging.
“Rising interest rates and unemployment and potential sterling weakness will also be unhelpful in what remains a relatively late-cycle industry.”
The shares added 10p to 225p.
Reader views (3)
More from the hypocritical dictators from the Middle East. In Dubai they are very quick to throw into prison any poor soul who falls behind with payments, however minor.
Will they be as strict with themselves for defaulting on loans and payments to building contractors etc?
I think not.
- John Bull, London, 30/11/2009 15:00
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Who cares about Dubai; I am going to Southend next year, as usual.
I would go to Blackpool, but I can't afford the train fare.
- Mickinlondon, london, 30/11/2009 13:05
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Dubai is great if you want to go to a place that is entirely fake, there is very little history, the Dubai museum is probably the only place to go and see what it used to be like
Having said that, if you want luxury hotels and don`t mind paying for them (£20 for a glass of wine, this was from a trip this October, £25 for a burger by the pool) then it`s a fantastic holiday destination, great weather all year round, don`t go in the UK summer months though.
- Originalbob, London, 30/11/2009 12:37
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