Dubai, Party Haven Amid Pandemic, Faces Its Biggest Surge

January 19, 2021

DUBAI, United Arab Emirates — Masks off the minute you step inside. Bars packed and pulsing like it's 2019. Social media stars waving bottles of champagne. DJs spinning party tunes through multi-hour brunches.

Since becoming one of the world's first destinations to open up for tourism, Dubai, in the United Arab Emirates, has promoted itself as the ideal pandemic vacation spot. It cannot afford otherwise, analysts say, as the virus shakes the foundations of the city-state's economy. 

With its cavernous malls, frenetic construction and legions of foreign workers, Dubai was built on the promise of globalization, drawing largely from the aviation, hospitality and retail sectors — all hard hit by the virus.

Now reality is catching up to the big-dreaming emirate. With peak tourism season in full swing, coronavirus infections are surging to unprecedented heights. Daily case counts have nearly tripled in the past month, forcing Britain to slam shut its travel corridor with Dubai last week. But in the face of a growing economic crisis, the city won't lock down.

"Dubai's economy is a house of cards," said Matthew Page, a nonresident scholar at the Carnegie Endowment for International Peace. "Its competitive advantage is being a place where rules don't apply." 

While most countries banned tourists from the U.K. over fears of the fast-spreading virus variant found there, Dubai, home to some 240,000 British expats, kept its doors open for the holidays. Emirates flew five daily flights to London's Heathrow Airport. 

Within days, the new virus strain had arrived in the emirates, but that didn't stop reality TV and soccer stars from fleeing Britain's lockdown and wintry weather for Dubai's bars and beaches — without taking a coronavirus test before boarding. Scenes of pre-pandemic revelry were splattered across British tabloids. Facing backlash, Instagram influencers spotted at raucous yacht parties were quick to proclaim their travel "essential." 

Dubai was glad of the influx. Hotel occupancy rates surged to 71% in December, according to data provider STR. The London-Dubai air route ranked busiest in the world over the first week of January, said OAG, an aviation data analysis firm. 

"People have had enough of this pandemic already," said Iris Sabellano from Dubai's Al Arabi Travel Agency, adding that many of her clients have been forced to quarantine after testing positive for the virus on arrival or before departure. Travelers coming from a select list of countries don't need to get tests before their trips but all must at Dubai's airport. 

"With vaccines coming out, they feel it's not the end of the world, they're not going to die," she said.

For those who do die of COVID-19, long-haul airline Emirates offers to pay $1,800 to help cover funeral costs. 

As the outbreak worsens, it seems the stampede will slow. Israeli tourists, who were coming in the tens of thousands following a normalization deal between the countries, have vanished due to new quarantine rules. A decision to suspend visa waivers for Israelis to the UAE until July took effect Monday. Britain's move to mandate a 10-day quarantine for those returning from Dubai threatens to clobber what's left of the tourism sector.

"Brits make up such an important proportion of tourists and investors in Dubai," said David Tarsh, spokesman for ForwardKeys, a travel data-analysis company. "Cutting that pipeline … is a complete disaster for the city."

British Transport Secretary Grant Shapps tweeted that the government's decision was prompted by the UAE's latest virus data. Beyond daily infections, however, the data is scant. The UAE does not make public information about disease clusters or hospitalizations. 

Amid an aggressive testing campaign, the country has reported more than 256,000 cases and 751 deaths. Analysts speculate the UAE's unique demographics — 90% expatriate, comprising mostly healthy, young laborers — have prevented well-staffed hospitals from becoming overwhelmed and kept the death rate low, at 0.3%.

But that hasn't assuaged Abu Dhabi, Dubai's more conservative neighbor and the country's capital. Without explanation, Abu Dhabi has kept its border with freewheeling Dubai shut, despite promises to reopen by Christmas. Anyone crossing into Abu Dhabi must present a negative coronavirus test. 

Relations between service-heavy Dubai and oil-rich Abu Dhabi can get tense. During the 2009 financial crisis, Abu Dhabi needed to rescue Dubai with a $20 billion bailout. This time, it's unclear whether Dubai can count on another cash infusion, given the crash in global oil prices. 

Even pre-pandemic, Dubai's economy was heading toward another downturn thanks to a shaky real estate market, which has plunged 30% in value since 2014 peaks. The emirate and its web of government-linked entities face billions of dollars in debt repayments. Already the government has stepped in to help carrier Emirates, which received $2 billion in aid last year. Other indebted firms invested in hospitality and tourism may need help, especially with events like World Expo pushed back a year. S&P Global, a ratings agency, estimates Dubai's debt burden to be some 148% of gross domestic product if state-linked industries are included.

Under pressure, authorities have seized on vaccines as the only way to contain the outbreak. Plastered across front pages of state-linked newspapers are stories touting the mass inoculation drive, which officials claim to be the world's second-fastest after Israel, with 19 doses distributed for every 100 people as of Tuesday. 

The UAE is offering the Chinese coronavirus vaccine Sinopharm to everyone, even as its announcement about the shot's efficacy lacks data and details. Demand has overwhelmed supply for the Pfizer-BioNTech vaccine in Dubai, where hotline operators say thousands of high-risk residents remain on a waiting list. 

With the country shattering its infection record for seven consecutive days, Dubai's ruler, Sheikh Mohammed bin Rashid Al Maktoum, declared that widespread vaccination, not movement restrictions, would "accelerate the full recovery of our country." 

But even if Dubai meets its goal of inoculating 70% of the population by the end of 2021, Moody's Investors Service expects the UAE's economy to take three years to bounce back.

"I don't think Dubai's days are numbered," said Page, the Carnegie scholar. "But if the city were more modest and responsible, it would be a more sustainable place."


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