(LONDON) -- The Middle East lodging industry, considered the healthiest in the world, is about to be hit by the recession bug, predicts Alex Kyriakidis, Global Managing Partner of Tourism, Hospitality and Leisure at Deloitte.

Alex Kyriakidis

"Despite tourist arrival and hotel performance growth to September,    tourism volume in the United Arab Emirates will slow due to the current economic conditions facing the important European outbound market," says Kyriakidis.

The analysis was shared during the Deloitte Global Tourism, Hospitality and Leisure industry meeting and lunch, the first to be held in the Middle East.

"Europeans have seen a decline in the value of their investments and real estate," the Deloitte analyst says.  "Combined with the unfavorable exchange rates between European currencies and the dirham, which has increased the cost of visiting the emirates by at least 25%, the UAE faces a challenging time in maintaining the growth enjoyed over the past three years."

Still, he says, "The long-term development vision of the UAE must continue and current conditions should not cause panic. No one is immune from the global economic crisis.

"The key is in broadening the UAE tourism offering to meet the needs of today's tourists. There will be increased emphasis on value for money and the UAE will be competing for the European visitors - who account for over 40% of tourists - with Egypt, Turkey and the Far East as destinations which have not been affected by the strengthening of the dollar."

He says the mid and limited service market is currently "an underdeveloped sector in the UAE's hotel supply and should be addressed promptly. Hoteliers should also look to different sales channels such as tour operators to broaden the distribution base."

Kyriakidis added: "Another way of introducing more tourists to the emirates is to continue developing a diverse range of attractions such as theme parks, cultural attractions, museums and nature reserves to widen the appeal to different types of tourists such as families."

Rob O'Hanlon, Tourism, Hotel and Leisure partner at Deloitte Middle East, assures the industry,  "Hotel performance remains very strong in Abu Dhabi with revenue per available room (revPAR) up 45% while Dubai's revPAR grew 6.7% year-to-October 2008 according to STR Global.

"To ensure that hotel performance remains solid, an increased marketing effort for the UAE as a whole is important. The other part of the puzzle is to align this strategy with the route expansion plans of Emirates and Etihad airlines, key drivers of the UAE's tourism traffic."

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