Middle East war costs tourism sector $600mn a day, FT reports

The conflict engulfing the Middle East is costing the region’s tourism industry an estimated $600 million a day in lost visitor spending, according to projections from a global travel industry body.

Flight cancellations, airspace closures and mounting anxiety among prospective travellers are battering the region’s tourism economy after Tehran launched retaliatory strikes against several Gulf states following US and Israeli attacks on Iran.

“Even short-term disruptions can quickly translate into significant economic losses for destinations, businesses and workers across the region,” Gloria Guevara, president of the World Travel and Tourism Council, which produced the estimate, told the Financial Times.

Travellers moved swiftly to cancel regional holidays. According to reservation data compiled by analytics group AirDNA from platforms including Airbnb and Vrbo, more than 80,000 short-term rental bookings in Dubai alone were cancelled in the week ending March 6.

Before the conflict erupted, the World Travel and Tourism Council had projected that international visitors would spend approximately $207 billion across the Middle East this year.

Cities such as Dubai had flourished by marketing themselves as synonymous with luxury, year-round sunshine and security. Some of the world’s most opulent hotels now find themselves caught in the crossfire. Debris from missile-interception systems rained down on Dubai’s Burj Al Arab, while Accor’s Fairmont The Palm on Palm Jumeirah sustained a direct hit.

Major regional hubs — Abu Dhabi, Dubai, Doha and Bahrain — typically handle more than half a million air passengers each day. Yet five days of flight cancellations across the region stranded an estimated four million passengers last week, according to aviation data provider Cirium.

Hundreds of evacuation flights subsequently departed from Middle Eastern airports to repatriate the tens of thousands of visitors who remained stranded.

Dubai resumed flights last week, restoring roughly a quarter of its services by Thursday. Qatar reopened its airspace over the weekend, only to close it again on Sunday; a handful of flights operated on special permits by Tuesday.

Holiday destinations across the Middle East have previously demonstrated resilience following periods of conflict. Revenue per available room — a key performance metric in the hospitality industry — plunged sharply in Qatar within a week of Israel striking Doha last September, but returned to growth in under a month, according to data from hospitality analytics firm CoStar.

Some analysts expect business travel to rebound, given the region’s strategic position as a transit corridor between Europe and Asia, while leisure travellers may look elsewhere. “If you’re personally searching for somewhere to take your family on holiday, you can easily pivot to another destination that ticks all the boxes,” said Matthew Pohlman, a partner at Goodwin, a law firm specialising in hospitality and leisure.

Others are more sanguine. Richard Clarke, an analyst at Bernstein, offered a measured assessment: “There’s a reason this region is popular. Demand won’t be strong while explosions are continuing… but I think people will come back as soon as this is over. Travellers have shorter memories than investors.”