Kamal Ghorui
A month into the Gulf conflict, early economic strain is surfacing in the United Arab Emirates, with companies in hospitality, travel, events and food & beverage beginning to cut costs through layoffs, pay reductions and unpaid leave, according to an ET report.People tracking hiring trends said the adjustment has already started at the firm level and could broaden if hostilities continue. The conflict, which began on February 28, has disrupted travel flows and business activity across the region.“Job losses and salary reduction are already happening in some companies in the UAE since last week,” said Sarah Brooks, managing director, Fikrah HR. “It’s across many companies and industries unfortunately, some are hospitality, retail, and food & beverage.”For India, the shift carries a second-order impact: weaker employment conditions in the UAE could dent remittance inflows, a key support for the current account. The Gulf nation contributes roughly a fifth of India’s global remittances.Companies appear to be reverting to playbooks used during Covid-19—cutting variable costs while trying to retain staff. “They are providing unpaid and annual leaves, air tickets to facilitate team members travelling home. Fewer are being laid off, they are working to preserve employment knowing that business will return and the team would be needed in time,” Brooks said.
Pressure concentrated in hospitality, events
The initial shock has been most visible in customer-facing sectors. “About 60% of the impact is on the hospitality industry and the events segment, while the remaining 40% is spread across other sectors,” said Amruta Heblikar, founder, Virtual Key.“Salary reductions are already happening. In many companies, pay cuts range from about 20% to even 50%. The situation is getting worse by the day.”Several F&B operators are holding decisions on deeper cuts until mid-April, when they expect clearer visibility on demand.Even with a cessation of hostilities, recovery may lag. “Right now, businesses are not thinking about achieving revenue targets or budgets. It is more about survival,” Heblikar said, adding that a return to normalcy could take another quarter after the war ends.Company-level actions point to stress building beneath the surface: a five-star hotel in Dubai Marina recently let go of 300 employees; a cloud kitchen operator cut around 100 roles; a restaurant in Downtown Dubai reportedly reduced headcount; and another F&B chain halved salaries, asking staff to accept revised pay or exit.
Spending slows, tourism takes the biggest hit
Transaction data suggests a broad-based cooling in demand. Biz2X estimates overall consumption has fallen 25–30% since the conflict began.“The steepest decline has been in tourism, travel, hotels and high-end restaurants, where transactions have fallen by as much as 60%,” said Rohit Arora, CEO and co-founder, Biz2X and Biz2Credit.Redseer Middle East said discretionary consumption has also weakened. “There is no domestic offset for a $59 billion inbound tourist economy. Physical F&B is caught in the middle,” said managing director Sandeep Ganediwalla. “About 20% of residents have cut spending on dining, while tourist-driven footfall in premium restaurant clusters has also declined.”He added that categories such as electronics, furniture and apparel have seen a 35–38% drop, signalling stress in non-essential retail.
Investment-linked sectors begin to feel the pinch
The slowdown is spilling into real estate and business services that depend on new company formation. “Another major area being hit is real estate and business setup companies,” said an HR executive. “I work closely with two large corporate service providers in Dubai, each employing around 300–400 people. They have started laying off staff or sending employees on reduced pay.”With fresh investor inflows drying up, commissions have stalled and, in some cases, salaries have been cut by about 50%, the person said.Industry executives said events have largely been put on hold for the next three to four months, removing a key source of demand for hospitality and ancillary services.As uncertainty persists, firms across sectors are shifting from growth plans to cash preservation, with labour adjustments emerging as the first visible sign of a broader economic slowdown.
