Domestic spends have increased 13 per cent in 2015 over the previous year, while overall card spends in the UAE grew by 9 per cent, according to a report by Network International, the leading payment solutions provider in the Mena region.

The report, based on credit and debit card transactions in the UAE, found that spending by UAE-issued cards has remained by far the largest in value over the past two years and has remained steady between Dh9 billion ($2.45 billion) and Dh10 billion per month.

David Mountain, chief commercial officer, Network International, said: “The UAE economy, driven by diversification into non-oil revenues, has borne resilience to current market dynamics, as indicated by our analysis of card-spending data over the past year. Our analysis indicates some strong trends that can be leveraged by retailers and merchants in the UAE to bolster marketing strategies.”

Network International’s full year 2015 consumer spending report indicates that domestic spenders were the highest spending group in the UAE last year with the US, Saudi Arabia, Qatar and Kuwait also making it to the top spenders list.

GCC spending increased by 15 per cent last year while North American spends showed a 12 per cent growth. Among the top seven tourist spenders, Qatar displaced Russia to take the fourth spot overall in the UAE.

Macroeconomic trends affect spends

The appreciation of the dollar (and thus the dirham) had a negative effect on tourist spends from non-pegged currencies, with repercussions especially dominant in Asian and European spending. US spending however, being independent of the exchange rate fluctuations grew by 13 per cent.

However, the average per purchase spend of US cardholders decreased in all sectors (except travel and duty free) as major hospitality and retail chains devised attractive deals/discounts to lure American customers to visit and spend in Dubai.

Similarly, the steep decline in oil prices along-with the devaluation of the Russian rouble saw Russian spends drop to nearly half as much when compared to 2014. Chinese card spends also declined by 13 per cent in 2015 as compared to 2014.

The one exception here is the United Kingdom where spends grew by 9 per cent in 2015 vs. 2014 even though the British Pound (GBP) depreciated against the UAE Dirham (AED) in 2015.  

France and Australia were displaced from their 9th and 10th ranking (respectively) in terms of highest spends by Nigeria and India in 2015 (vs. 2014). Australia’s heavy dependence on China for the consumption of its natural resources and depreciation of the Euro are one of the major factors which led to a decline in tourist spends of Australians by 12 per cent and French by 14 per cent in 2015.

The Big Arab Appetite

UAE residents showed the highest increase in spending in the F&B and hotel sectors. They spent 23 per cent more in restaurants in 2015. Other GCC countries also contributed heavily to this industry with Qataris leading the way with a 50 per cent increase in F&B spends, followed by an equally impressive 48 per cent increase in spends by cards issued in Saudi Arabia. Lebanese cardholders remained the highest per purchase spender from 2014 in this category.

Staycations bolster hotel spends

Growth in 2015 spends in the hospitality sector was driven by UAE ‘staycationers’ (+10 per cent) as well as visitors from Saudi Arabia (+ 12 per cent) and the United Kingdom (+14 per cent) which offset the flat spending by US cardholders and a strong decline in European visitors including Germans (7 per cent), French (12 per cent), Austrians (36 per cent), and Russian tourists (35 per cent).

Overall, hotels witnessed a 4 per cent growth in spends in 2015 vs 2014, however the purchase spend declined this year, indicating a lower Revenue per Available Room (RevPAR) of hotels in the UAE.

Domestic and GCC spends help stabilise clothing sector

While the clothing sector did not experience any growth in volumes in 2015, domestic spends increased by 4 per cent, offsetting a 9 per cent decline in international spends. The major growth in spends in the UAE’s clothing sector came from cardholders in Saudi Arabia (19 per cent), Qatar (15 per cent) and Egypt (30 per cent), while spends from Nigeria almost quadrupled in 2015 vs. 2014.

Supermarket spends increase

Supermarkets spends are unsurprisingly dependent on domestic consumption, and grew 9 per cent in 2015 as compared to 2014. However, there was a 4 per cent decline in per purchase spend of the sector from Dh212 to Dh203. – Reuters