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Will international media criticism hurt Dubai businesses?

United Arab Emirates: Monday, April 27 - 2009 @ 15:58

In a recent online town hall meeting Dubai’s ruler, Sheikh Mohammed bin Rashid Al Maktoum, responded to the criticism that the emirate has come under in the UK and US press by saying that the city would be judged on its actions rather than rumours.

‘Dubai’s success in introducing a unique developmental model has gained remarkable international recognition. As you know, success implies a certain burden that cannot be avoided,’ Sheikh Mohammed wrote in answer to journalists’ questions.

‘The international focus on Dubai is absolutely normal. During crises, people turn their attention to those that have a successful track record. The current crisis has brought Dubai’s developmental model with all its successes into a tough test.

‘It is truly sad to find international publications that have usually boasted about factual and precise reporting issuing articles based on rumours and baseless speculation…When a city or country decides to integrate itself as an effective international player, it should not expect an easy journey full of roses and good wishes.’

Business fallout

Despite the negative press reports playing on how the greater financial crisis has affected Dubai’s economic sectors, especially the real estate market that had proved the driver behind the emirate’s rapid growth, analysts say that foreign companies looking to do business in the emirate are unlikely to be affected.

‘I don’t see there being any direct effect from these articles in the New York Times or Wall Street Journal or UK,’ Philippe Dauba-Pantanacce, Mena Senior Economist in Standard Chartered’s Global Markets division told AME Info.

‘There are two levels of international market player; investors who are on the stock markets short term or financing bonds, and the big companies from Asia, the EU and the US. The first may react to media coverage, but it is unlikely – and difficult to pinpoint whether it is due to this or the general downturn.

‘For the latter, if you are a big firm you will look beyond press coverage at the situation on the ground and then make an informed decision, you would not base any decision just on reports.’

Expatriate workforce

As an individual, however, you are much likelier to be influenced by negative media perceptions. Mike Hynes, Managing Partner at Dubai-based recruitment firm Kershaw Leonard, says that while professionals looking to come to work in the UAE from the UK or US will have seen the reports, the results will depend on how far advanced their plans actually are.

‘It has to have had a certain impact,’ said Hynes. ‘People tend to believe very much in what they read in the papers. People who have committed to come will still come, but people who were thinking about it may do more research now. The reports are exaggerated, but some parts may be true – on the other hand you would have to have a very strong moral compass not to come because of that.’

Tourism effect

Perhaps the sector most likely to feel a direct effect from the fall out from the articles is the tourism industry, which has relied to a certain extent on visitors from the UK to boost numbers.

To a certain extent the effects that might have been felt by the industry have been negated by more pressing concerns, including current financial pressures being felt in those regions and the rapid change in exchange rates, which have made the UAE a far more expensive proposition than previously, for markets with much less disposable income.

‘Negative press comments on a tourism destination are clearly never welcome,’ Robert O’Hanlon, Tourism, Hospitality and Leisure Partner at Deloitte Middle East told AME Info.

‘However, the impact on guest bookings is, in most instances, not quantifiable. In addition, the speed with which tourists have returned to destinations that have experienced negative publicity due to bombings, such as Egypt and Lebanon, are clear examples of the resilience of tourists in the modern era.’

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Monday, April 27- 2009 @ 15:58 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.

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