Every time we hear about Dubai we learn of a newly announced record breaking project – the tallest building, the biggest shopping mall, the biggest airport, the biggest hotel and so the list goes on. We also hear about the most extraordinary projects, such as The World islands, a 50,000m2 ski dome overseeing the desert and the latest, a 360 degrees rotating building.
Dubai seems to be on a quest to occupy as many pages of the Guinness Book of World Records as it can and it is surely on the right track. Every new project seems more surreal than the last, giving Dubai the reputation of being a Disneyland for grown ups. These projects have partly assisted Dubai in promoting itself as a brand which in 2006 has attracted over 6 million tourists and which is on course to attract 15 million by 2010.
It is fair to say that the world has never seen anything like it. Sheikh Mohammed Bin Rashid Al Maktoum has managed to develop this small trading village into what is today the fastest growing economy in the world and a blueprint copied by other Middle Eastern cities. To sustain this development, Dubai has the fastest population growth in the world, with a projected population growth of over 2 million in the next 3 years in a city with less than 1 million inhabitants today.
Tourism in the UAE is the economy's fastest growth area and Dubai again takes the prize for the fastest-growing holiday destination in the history of the travel business. Dubai hotels enjoy one of the highest RevPARs worldwide attracting many hotel investors and operators. In 2007 HVS identified that around 58 new hotels will be opened in Dubai within the next 2 years, a Pandora's box full of job opportunities for hoteliers who are looking for fast career progression in this land of opportunities.
There are many sceptics who question if this growth is sustainable and if hoteliers will continue enjoying the same attractive RevPARs in a few years time. All geopolitical factors remaining unchanged, there seems to be no sign of a significant downward trend although the impact of so much new supply will surely result in some softening of rate. Sheikh Mohammed, who runs Dubai as if he were the CEO of the corporation Dubai Inc, has got an excellent business track record in developing Dubai and creating value for its investors.
On the other hand, along with the success usually come challenges of sustainability and amongst the greatest challenges facing Dubai is how to tackle the already imminent manpower shortage. It seems that amidst the development frenzy where the focus has been on identifying the next WOW factor project, very little time has been spent in thinking about the single most important asset of any company – the people who work for it. Dubai Inc is looking to more than double its workforce to create and support this growth. To achieve this, Dubai Inc needs to be a preferred employer.
In the past, Dubai attracted expatriates by offering them a high quality of life, an attractive expatriate package and interesting career opportunities. Of the three key selling points, it is perhaps only the last that is most relevant today.
Dubai offers today much more to its residents than it did five years ago – discos, ski domes, shopping malls, bars and far more freedom overall. However, it does not offer many of the conveniences it used to and quality of life as a selling point for assignments in Dubai is now harder to realise. Today, an expatriate moving to Dubai is faced with a number of issues they didn't face previously. There is a real shortage of affordable housing and there is a serious schooling problem with waiting lists at some international schools of over a year long. Dubai has become the most congested city in the Middle East due to poor infrastructure and the number of cars on the roads rising by 10% per year.
The expatriate coming to Dubai expecting to enjoy the sun and the sea will be disappointed to hear that, because of constant labour shortage, expatriates moving to Dubai are often overworked and have very little leisure time. Most people still work a six day week, even though this has officially changed for most senior management. Even if the UAE stands out amongst the Gulf nations for its good governance, many expatriates are still put off by the fact that there is no parliament, no elections, no minimum wage, no free press not to mention the fact that some employers ask you to surrender your passport to make sure you do not leave the country.
Dubai is certainly becoming a business centre and people can become rich during its transformation. However, if we take the average manager or senior executive, financially they were better off in Dubai five years ago than what they are today. Inflation in the UAE in 2007 averaged 10% due to rising petrol prices.
The US Dollar is weak when compared to the Euro and, especially for newcomers, housing is becoming unaffordable since housing prices in one year can increase as much as 100%. Despite the escalating prices, salaries in the hospitality industry have mostly remained unchanged as mentioned in a recent study published by HVS Executive Search. It seems as if many companies are still trying to get the best at the lowest possible price – but this cannot be sustained in the long-term given the difficulty Dubai is already facing finding quality staff when the bulk of new hotel openings have yet to occur.
In terms of career opportunities in the Middle East – Dubai is the hub. If you are good, the possibilities to grow and develop are immense. The learning curve is massive since people are exposed to an environment where there is constant change and where you always need to find ways to re-invent your product offering in order to keep up. Today, Dubai features prominently on the global map of emerging cities and is listed by some experts among places considered as "world cities". According to James Berkeley, Director at Berkeley Burke & Co, a leading pensions and benefits consultant to the hotel industry, Dubai is being added to the list of Singapore, London, New York and Hong Kong as a growth spot for people's careers.
However, Dubai is not the only city offering expatriates interesting career prospects. In the Middle East there are many other cities competing for the same quality staff that can still offer expatriates the career prospects and commodities Dubai offered in the past such as quality housing, available international schooling and more value for their money. Sure enough, Dubai maybe the sexiest destination in the Middle East, however there are other destinations such as China and India which are also developing fast and are competing for the same talent pool.
The topic of attraction and retention is particularly important when we consider that over 80% of Dubai's population is expatriate, primarily a mix of other Arab nationals, Asians and Europeans who are mostly on a 2 year working visa. High inflation and meager salary raises have resulted in expatriates, mainly blue-collar workers, going to more attractive work destinations or back to their home countries once their 2 year visa expires and their contract is up for renewal. Retention is therefore an issue just as the overall manpower shortage.
Today, companies already have great difficulty finding quality staff. How will it be in 2 years time when another 58 hotels open and when projects such as Dubailand, that is twice the size of Disneyland Florida, will be completed? It is important that the two aforementioned selling points – quality of life and attractive expatriate packages - can still be used by employers when selling Dubai as a destination. Efforts are being made by the government through investing in infrastructure to resolve the congestion problem; introducing cap rates in an attempt to control rising house prices, and becoming less rigid in terms of banning visas.
However, when it comes to making real significant changes, Dubai Inc is not as bold as it is in its various construction projects. Visas may or may not be banned depending on who you know, landlords have found ways to work round cap rates and hence the housing problem remains unsolved, salaries have virtually remained unchanged and there is no protection for employees.
It seems as if the government and hotel companies are trying to squeeze labor costs to get the highest profit margins when what they should be doing is investing in manpower to remain competitive.
There is no magic formula to solve the looming labor shortage but some ideas to tackle the problem could be taking a more flexible approach to compensation and providing benefits to employees such as loaning the first year's rent which has to be paid upfront on signing a lease. Or offering employees an additional bonus once they complete three years employment in order to encourage retention. Or simply removing the visa ban altogether to encourage employees to move freely from one employer to another without forcing them to look outside of Dubai.
It is the people who work for you who usually make a company succeed or fail and therefore it is important that the next WOW factor project is one that will benefit the people who work in Dubai to ensure the future sustainability of Dubai's developments.
Lorenza Alessie is Associate Director of HVS Executive Search in London. Lorenza joined HVS Executive Search from an international recruitment company where she held the position of Director focusing on appointments in the hospitality sector. A graduate in Hospitality Management from the Ecole hôtelière de Lausanne, Switzerland, Lorenza is Dutch and Italian by nationality and fluent in Italian, Spanish and French. www.hvs.com 
