Technical Risk in the Uae: Internal/ External

TECHNICAL RISKS

Internal

Saturation of the tourist accommodations. The rapid expansion of the tourism industry in the United Arab Emirates has increased the demand for construction of new hotel and resort accommodations. As a result of this growing popularity, one difficulty that may arise is an overwhelming increase of such facilities concentrated in the most prevalent tourist areas. The most popular tourist destination of the U.A.E. is Dubai, which is also known as the region’s commercial center. To highlight the recent influx of visitors to the area, approximately 2.8 million visitors travelled to Dubai in 2000, and approximately 6.3 million hotels guests were attracted to the area in 2008. There were 256 hotels available in 2000, and over 340 hotels operating as of 2008 (1). More facilities are required to accommodate the growing demands of increased tourist traffic, but how can these establishments attain success by expanding technological resources?

Strategies for managing risk. In order for hotels to maintain marketability amidst this saturated environment, hotels need to identify new strategies for differentiation. A successful method for handing this risk is to offer more contemporary facilities to attract guests. A 2008 executive summary of hotel establishment statistics reveals that 94% of hotel guests visit from areas outside of the U.A.E.(2). Traditional lodging facilities of the United Arab Emirates do not serve alcoholic beverages in accordance with cultural standards. Although these establishments have been losing revenue from foreign travelers to competitors who do offer alcohol (3), dry hotels could increase their appeal by offering modern conveniences to guests such as complementary wireless internet access and state-of-the-art fitness facilities. There also have been an increased number of four and five star properties constructed to attract visitors who value luxury. Well-known American hotel companies, such as Ritz-Carlton and Four Seasons (4), could increase their popularity in their locations in Dubai by offering exclusive access to the most advanced technology available, such as 3D television, in addition to the amenities regularly offered to guests.

Safety of travel. The transportation systems of the United Arab Emirates have been expanding and modernizing throughout the past decade in response to growing business interests and tourism demands. A serious risk associated with the expansion of the infrastructure of the area is the high rate of traffic accidents and fatalities. This risk is particularly hazardous for tourists visiting the United Arab Emirates because the expectations and behaviors of drivers from various areas of the world differ, increasing the likelihood for dangerous conditions. Several main causes for accidents include drivers travelling at high speeds, unmarked speed bumps on highways, and unsafe road conditions caused by wind blown sand (5). In light of these risks, precautions must be taken to ensure the wellbeing of both residents and visitors travelling on local roads.

Strategies for managing risk. The National Transport Authority and the Roads and Transport Authority of Dubai have joined together in order to address a mutual priority to reduce the frequency traffic congestion and accidents (6). Previously, the region lacked a cooperative partnership between the two transportation authorities, and now aims to share resources and information for analyzing statistics related to accidents. Successful methods for managing these risks include initiating driver safety programs for residents and offering shuttle bus and tour bus options for visitors so they may travel safely while abroad. Additionally, the country may consider constructing a railroad system to accommodate the transportation needs of both tourists and citizen, as there is currently none.

Utility Service. A prevailing challenge to the tourism industry in the United Arab Emirates is the harsh, arid climate of the area. The region annually receives very little rainfall, and experiences temperatures exceeding 100 degrees Fahrenheit during the summer months (7). To ensure the comfort and safety of both local inhabitants and tourists, it is imperative for water and electrical needs to be met in a continuous, uninterrupted manner.

Strategies for managing risk. The Dubai Water and Electricity Authority (DEWA) is responsible for providing businesses and homes with basic water and electrical utilities. To manage the risk of possible water and power outages, D.E.W.A. recognizes the importance of supplying these utilities efficiently and consistently, and has been successful in this endeavor by staying current with emerging technologies to promote the organization of resources and the highest levels of productivity. Saeed Mohammed Al Tayer, CEO of D.E.W.A., stated, “Infrastructure plays a fundamental role in development, whether of a business, a city or a society.” (8)

External

Differences in telecommunication regulations. The culture of the United Arab Emirates is significantly more conservative than most countries. As a result, the Emirati Telecommunication Regulatory Authority imposes strict requirements for communication disclosure, stating, “the country’s security could be endangered by encrypted data transiting through foreign servers to which they have no access” (9). Recently, such an issue arose with Canadian based Research in Motion, maker of Blackberry™ smartphones. T.R.A. officials claim that without the ability to monitor correspondence sent from users, crimes may be committed and those responsible could not detained for such behavior. It was proposed that as of October 11, 2010, users would no longer be able to use Blackberry™ messenger, email, or web browsing on their devices, although regular phone capabilities would still be accessible. Although a compromise has been reached between Research in Motion and the Telecommunication Regulatory Authority to prevent users from experiencing interrupted service capabilities (10), an issue of this kind presents a risk for the tourism industry because visitors may be discouraged from travel to this area. Additionally, criticisms from Emirati businessman Maisoon al-Iskandarani highlight another important issue: "Dubai as it is doesn't have a good reputation right now. Do you really want to add to that, so people say 'even technology-wise they're behind?’ If anything, they should bring in extra services.” (11) Similarly, US State Department spokesman P.J. Crowley states, “We think it sets a dangerous precedent. You should be opening up societies to these new technologies that have the opportunity to empower people rather than looking to see how you can restrict certain technologies.” (12)

Strategies for managing risk. Communication companies offering service in the United Arab Emirates must be sure to adhere to the country’s existing disclosure requirements, and ensure that appropriate access is granted to government agencies so that adequate monitoring and regulation of data may take place. For example, the company Apple, maker of the iPhone 4, released the smartphone in the U.A.E. without including the application ‘Facetime,’ a video chat feature. The company did so to prevent their device from being incompatible with the culture’s communication requirements and to avoid potential difficulties with the sale of the phone in this area.

1 Department of Tourism and Commerce Marketing. “Hotel Statistics Summary 1999-2008.” Dubai Tourism. 2008. www.dubaitourism.ae
2 Department of Tourism and Commerce Marketing. “Analysis 2008, Dubai Hotel Establishment Statistics.” Dubai Tourism. May 2008. www.dubaitourism.ae
3 Oakley, Louise. “Dry hotels are losing 30% on the bottom line.” ArabianBusiness.com. Sept. 26, 2010. www.arabianbusiness.com
4 Stokes, Deborah. “Desert Oddity.” The Financial Post (Canada). June 17, 2006
5 “United Arab Emirates Country Specific Information.” U.S. Department of State. 2009. www.travel.state.gov
6 “Development of intelligent transportation systems in the country to reduce traffic congestion and reduce accidents.” National Transport Authority. May 20, 2010 www.nta.gov.ae
7 “Dubai Weather and Climate.” Dubai Hotels. 2006. www.dubaihotels.ae
8 “Dubai utility’s uninterrupted supply critical for city’s development.” Business Intelligence Middle East. October 9, 2010. www.bi-me.com
9 “BlackBerry services suspended.” Reporters Without Borders. August 2, 2010. www.en.rsf.org
10 “United Arab Emirates will not ban Blackberries.” BBC News. October 8, 2010
11 “UAE BlackBerry crackdown will affect visitors.” The New Zealand Herald. August 3, 2010.
12 “U.S. says UAE BlackBerry ban sets dangerous precedent.” Reuters. August 2, 2010. www.reuters.com