Strategic Destination Branding Critical Discussion: Dubai

by Johannes Terler

Didactic Concept Study Tour 2012 WS 2012 Master Program: Entrepreneurship & Tourism Major: Marketing Management in Tourism MCI University of Applied Sciences Innsbruck

Critical Discussion on the development of Dubai based on Balakrishan, M.S. (2008). Dubai a star in the east. A case study in strategic destination branding. Journal of Place Management and Development, 1 (1), 62-91 and on the authors own findings and experiences during the visit of Dubai as part of the study tour.

Dubai: Is being #1 enough?

When speaking of megalomania of a destination it is definitely Dubai that pops up first in our minds. No other destination on the globe has ever been undergoing such rapid regional development as Dubai. With skyscrapers shooting out of the desert sands like mushrooms and multi-million attractions being completed within an unbelievable speed of time. For a long time it seemed like only the sky is the limit and with the introduction of the tallest building in the world, the Burj Khalifa, even that wasnt so sure anymore. Then however the global financial crisis hit the pearl of the Middle East. Foreign investments were radically reduced and many prestigious projects under development were put on hold. And as a final result the real estate market declined after 6 years of steady growth. The super-speed engine of the Arab world started to stutter and for the first time the global audience realized, that even the place of apparent endless financial supply is not safe from a downturn. That was in 2010. Now, two years later the question arises: How did the destination adapt to this setback? And more over, how did it affect their overall destination branding strategy? In order to better address to the unique situation of Dubai today, it is important to understand its historic development. Less than 60 years ago, Dubai was a sleepy little fishing and pearl diving village at the Persian Gulf. It was Sheikh Rash Bin Saeed Al Maktoum who facilitated the change for the region by implementing his vision of using the strategic geographic location to transform Dubai into a trading hub of the Middle East. In order to achieve that goal, he had to borrow millions of dollars from Kuwait. His dynamic dedication was supported by the first discovery of oil in 1966 and shortly after that in 1970 the Jebel Ali port the worlds largest man-made port was completed. In 1971 Dubai, Abu Dhabi and the other five emirates of the region decided to form the nation of the United Arab Emirates in order to better use synergies and to foster economic development. In the following decades the flourishing economic development of the region was fueled by massive oil exports. The flows of money coming into the region were used to further expedite trade, and so free trade zones were established. It was only in the late 1990ies

when Dubai first started to actively focus on tourism development in its strategic planning, especially in combination with the rise of Emirates as a main contributor of passenger air travel to the region. What followed were years of extensive infrastructure development. Investors from all over the world flocked in and dozens of projects were jump-started in a minimum amount of time. The cityscape was an ever-changing process with new hotels, resorts, shopping malls, attractions, theme parks, office blocks and residential towers appearing almost overnight. Important here is to point out the common quality focus in almost every project: high-end luxury in all its variations the best often became just good enough, as money was rarely a deal-breaker. In February 2007, Sheikh Mohammed then revealed the Dubai Strategic Plan 2007-2015, in which he openly presented his vision for the future of Dubai. The core message was simple: making Dubai a globally leading Arab city and a Global City with services being a key contributor to its growth, knowing the fact that that in the near future oil, their major exporting good of the past, will run out. The vision is separated in various sectors. First the economic drivers that should support this vision are pointed out. Here tourism, transport, trade, construction and financial services are stated. Further the encouragement of tourism is highlighted. In 2007 tourism already contributed 18% directly and 29% indirectly to Dubais GDP. These shares should continue growing by a special focus on attractions and activities for families (Sports City, Dubailand, etc). Another point mentioned is the retail spending, defining Dubai as a shopping paradise with luxury goods as a core element. Therefore especially designed shopping extravaganzas such as the Dubai Summer Surprise or the Dubai Shopping Festival in winter are essential. Moreover the plan underlines the importance of strengthening the service sector. As of 2007 already 74% of Dubais GDP comes out of the service industry. Finally the plan explains the ongoing facilitation of Dubai as a global transit hub. The new Dubai World Central International Airport is currently still under construction but should become the worlds largest airport within a few years.

As we know today, it didnt take much time before the first signs of a slightly different future for Dubai appeared. In late 2008 the first waves of the global economic crisis also reached the otherwise success blessed Persian Gulf coast. Money was not so abundant anymore and gradually more and more foreign investors cut off its supply. As a consequence many developments had to be put on hold and Dubai had to borrow money from Abu Dhabi and the United Arab Emirates government to at least complete some projects, such as the Palm Jumeirah artificial islands. Ultimately in 2010 the real estate bubble started to burst, leaving hundreds of uninhabited properties and many abandoned half-finished residential and office towers. Many of those who came to Dubai for the fast money were already gone and throughout the region places started to look like unfinished construction sites. But is it really all that bad? Did Dubai fail as a destination project? Definitely not. When I was able to experience Dubai myself for the first time in October 2012, I was deeply impressed, not only by the massive skyscrapers, but also by its elaborated infrastructure in general. At a place that was mere desert not very long ago, you can now find an highly-branched road and highway system, a functioning metro line and boardwalks between a versatile range of shopping, entertainment and amusement facilities, hotels and resort worlds. It all looked very futuristic, however it was hard to find a clear theme within the city as destination. It seemed like all attention was focused on creating anything the human mind can imagine and money can buy. The idea of Dubai became clearer once we visited the DTCM, the Department of Tourism and Commerce Marketing, where we got an introduction into the history and current developments of Dubai. Soon we heard that all these developments, the constant pursuit of the superlative (biggest, tallest, most expensive, etc..) derive from the clear vision of the ruler of Dubai, Sheikh Mohammed bin Rashid al-Maktoum, to become the ultimate number one, the world leader, in basically everything. Every single step taken in the progress of Dubai follows this clear direction. And when you want to become the best in everything, there is one thing you cannot accept: failure. As we know today, all the glitters is not gold in Dubai, however it was interesting to see how
5

carefully constraints, setbacks and eventually failure is being swept under the carpet. It would be a shame to talk about it publically. In the Arab culture, failure makes you lose your face and is considered as one of the worst things that can happen to you. Success is highlighted, mistakes are not mentioned in the end that of course creates a blurred picture of the truth. From a destination branding point of view, focusing only on the characteristics of tallest, biggest, richest, unique is a very dangerous approach, as those features are short-lived differentiators. When building a destination image, it is vital to build it on the promise of something more tangible and concrete than a title that can be easily passed on. However Dubai is facing deeper-rooted challenges that may hinder a successful branding development. First and foremost it is the high number of expatriates living in the destination. 82% of the people living in Dubai are not from there, but come from more than 120 other nations. From destination marketing theory it is known, that the people of a destination play a key role in creating a positive image. It is the lived pride of the locals for a destination that give soul to a place. How can you establish that pride if the broad majority of your population is mainly living in the city, but not living the city? Another challenge is to find the right balance between the traditional Arab culture and its laws and the international, western-oriented culture. How much internationalization can a destination bear before giving up its traditional roots completely? A critical point is also that the majority of its current investors, are business people from the neighboring Gulf states. This means that the investment portfolio is rather regionally spread than internationally. Given the fact that neighboring countries are one of the most important source markets in tourism (first and foremost Saudi Arabia), this circumstance does not surprise. In times of global economic instability however, more international investments would also mean a reduced risk. But I think one of the main challenges that Dubai as a tourism destination faces today, is the transformation from being a global transit hub to a place to
6

come and stay. Throughout the history and especially within the recent years, Dubais rapid development benefited from its strategically important geographical location, operating as a connecting gate between the west and the east. This means however that people come and go, and hence only a few of them stay there longer as actually necessary. This notion is underlined by the fact, that despite intensive regional development and vast investment in recreational and business facilities, the average guest night between 1999 and 2007 only changed from 2.5 to 2.7 day. Sheikh Mohammed is of course very much aware of this fact and tries to fight this challenge drastically, by developing and building new concepts for culture, sports and entertainment, such as Dubailand, Culture Village, Sports City, Festival City. As a target group for those new projects, Dubai puts high focus in making families their major visitors share, as they normally stay longer than the business or city traveller and also spend more money. The most recent challenge the Dubai tourism had to address, was the impact of the global financial crisis. Developments had to adapt to the new situation, the pace had to be reduced and recalculations had to be made. It suddenly became harder to find foreign investors for new projects and so the growth rate started to stagnate. This challenge can however also seen as an opportunity, to hold breath and analyze why some things didnt work out as planned. At this point of time it would have been already time to look how the brother Emirate, Abu Dhabi, is handling the situation and to learn from their success in more moderate development. In my opinion Dubai is currently situated in a critical step of its development process. It tries to downplay the economic troubles and to maintain the picture of a financial safe haven in order to lure deterred foreign investors back into the country. The standstill of many prestigious projects has forced Dubai to reschedule its development plans. In terms of branding the problem of city is that its currently associated with too many images, and no clear emotional attachment. The vision is clear and despite the economic setbacks, Dubai will also continue to grow in the future. However I think it simply needs to slow down a bit and allow a natural development process. So far every
7

development was pressured by time, and failures were simply swallowed down without being analyzed carefully. As mentioned in the article, destinations must start focusing on the service experience and all customer touchpoints, especially on the people as they help deliver the experience. Thats why the six Ps checklist (purpose, people, performance, product, positioning and process) could be really helpful for Dubai to enhance their branding strategy. It allows to deeply analyze the current state of the brand, to detect strengths and weaknesses and consequently to develop a meaningful strategy. Being number one of the world is an ambitious plan, however it does not function as a sustainable differentiator. What Dubai needs, is a clearly focused message that creates one unique image of the destination. Only then long-lasting branding success can be guaranteed.