"Staycationers" are helping local car hire companies stave off the impact of the global travel industry slowdown. Vehicle rental companies across the Emirates are seeing a rise in business as economic fears and job insecurity prompt more people to holiday at home and hire cars instead of buy them.
Despite the economic hardship businesses suffered as a result of the financial crisis, the car rental sector is bucking a trend that is punishing many other travel industry businesses. Car hire revenues reached Dh669 million (US$182.1m) last year, a 6 per cent increase over the Dh631m worth of rentals the previous year, according to the market research company Euromonitor International.
Some hire companies are reporting even better results. The 742 car rental operators in the UAE performed 2 million transactions using their combined fleet of 45,600 cars, according to Euromonitor.
"Our rental revenues are up by almost 10 per cent as compared to 2009, as are the number of cars rented," said Sumit Chopra, the general manager for National Car Rental.
At the Dollar Rent a Car arrivals desk at Sharjah Airport, the manager Shariel Asazo is also being kept busy and not just by people flying into the airport.
"We are an airport location but lately there are a lot of people who rent from here just walking in from around Sharjah, not flying in from elsewhere," she said.
The car-hire sector is expected to continue expanding through to 2014, according to Euromonitor, with the value of the industry predicted to reach Dh880m by then.
Figures from the World Tourism Organisation show more than 31 per cent of UAE residents are choosing domestic tourism over travelling abroad, compared with 11 per cent a year earlier. Residents took 3.6 million domestic holiday trips last year, a 15 per cent increase on the 3.1 million taken in 2008.
Dubai was the leading destination with domestic tourists making about 1.6 million holiday trips to the emirate, followed by Abu Dhabi with 1.3 million trips.
Travel agencies report a rise in demand for local packages from increasingly cost-conscious customers. "Since last summer we have seen a growing numbers of people looking for domestic holiday packages," said Omeed Askari, a sales executive for Al Rais Tourism, a domestic holidays arm of Al Rais Travel. For many, a domestic holiday has been an eye-opener.
"We stayed in Al Ain last year because we couldn't afford to travel abroad but I absolutely loved it," said Dina Jaffar, a Sharjah resident. Before the economic downturn, many residents preferred to travel to Europe and Asia for their holidays. When the downturn hit, it forced people to cut down on expenses. That included choosing cheaper domestic holidays, which in turn helped the local tourism and car rental sectors.
"In difficult times, you have to find ways of saving money but still enjoy a decent holiday," said Daniel Khokhar, a Sharjah businessman. "So we just rented a car and drove to Oman to spend few days there."
Continued economic uncertainty is also prompting more consumers to postpone expensive car purchases.
"It's to do with the downturn, with people not wanting to commit to buying if their job is insecure," said Kim Perks, Euromonitor's communications executive for the MENA region. Most people use bank loans to buy cars and residents are hesitant to sign up to a prolonged financial commitment during a time when the economy and their employment are still on shaky ground.
UAE consumers spent a total of $3.14bn on new and used vehicles last year, a 2.7 per cent drop from the previous year, according to Euromonitor. While global car sales grew by 13 per cent in the second quarter of this year from the same period a year earlier, that represented a significant slowdown on the 25 per cent increase recorded in the first three months of this year, according to a report by Scotiabank Group. The drop-off was attributed, in part, to a sharp fall in car sales in Europe.
business@thenational.ae
The Kingfisher Secret
Anonymous, Penguin Books
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
COMPANY PROFILE
Name: Qyubic
Started: October 2023
Founder: Namrata Raina
Based: Dubai
Sector: E-commerce
Current number of staff: 10
Investment stage: Pre-seed
Initial investment: Undisclosed
Brief scores:
Liverpool 3
Mane 24', Shaqiri 73', 80'
Manchester United 1
Lingard 33'
Man of the Match: Fabinho (Liverpool)
COMPANY PROFILE
Name: Lamsa
Founder: Badr Ward
Launched: 2014
Employees: 60
Based: Abu Dhabi
Sector: EdTech
Funding to date: $15 million
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
The%20specs
%3Cp%3E%3Cstrong%3EEngine%3A%3C%2Fstrong%3E%20Twin-turbocharged%204-litre%20V8%0D%3Cbr%3E%3Cstrong%3EPower%3A%20%3C%2Fstrong%3E542bhp%0D%3Cbr%3E%3Cstrong%3ETorque%3A%20%3C%2Fstrong%3E770Nm%0D%3Cbr%3E%3Cstrong%3ETransmission%3A%20%3C%2Fstrong%3EEight-speed%20automatic%0D%3Cbr%3E%3Cstrong%3EPrice%3A%20%3C%2Fstrong%3EFrom%20Dh1%2C450%2C000%3Cbr%3E%3Cstrong%3EOn%20sale%3A%20%3C%2Fstrong%3ENow%3C%2Fp%3E%0A
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
BACK%20TO%20ALEXANDRIA
%3Cp%3E%3Cstrong%3EDirector%3A%20%3C%2Fstrong%3ETamer%20Ruggli%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarring%3A%20%3C%2Fstrong%3ENadine%20Labaki%2C%20Fanny%20Ardant%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%20%3C%2Fstrong%3E3.5%2F5%3C%2Fp%3E%0A
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
