Even as there’s pressure on the Gulf Cooperation Council (GCC) countries to curtail spending and prioritize projects, the tourism sector has remained above such considerations and is driving the diversification plan. In the run up to the mega-ticket events in the region, like the 2020 World Expo in Dubai, the local governments have their eyes set on building capacity of tourism and hospitality sectors to position the region as a global tourism hub. And there are valid reasons for showing the increased confidence in the sector.
According to the UN World Tourism Organization (UNTWO), destinations around the world welcomed 1.1 billion tourists between January and October 2017, a seven percent increase on the same period last year. The Middle East showed extraordinary growth of over seven percent. As per the latest research by the World Travel & Tourism Council, the direct contribution of travel and tourism to the Gulf GDP is forecast to rise by 3.8 percent to $53.4 billion in 2017-18 from $51.4 billion in 2016-17.
It is expected to grow by 4.6 percent per annum to $83.9 billion by 2027. “These robust results, the best we have seen in many years, reflect the sustained demand for travel around the world. The number of tourists will reach 1.8 billion in 2030, calling for increased focus on international tourism and travel,” said Taleb Rifai, Secretary-General, UNWTO, at the UNWTO/UNESCO Conference on Tourism and Culture held recently in Oman.
While Hajj pilgrimage in Saudi Arabia and shoppers’ paradise UAE continue to give fillip to the GCC tourism industry, attempts are on to develop other key cultural, leisure and entertainment attractions to make the most of favorable conditions. Most recently, the UAE granted visas on arrival to Chinese and Russian visitors; Oman launched new simple e-visa service; and Saudi Arabia plans to issue tourist visas online for travelers from 65 countries in the first quarter of 2018 as part of its efforts to increase the number of international tourists.
Upbeat hospitality sector
The UNWTO forecasts the region to host 195 million international tourists — almost triple the present volume of 72 million — by 2030. The ever-increasing tourists have driven the expansion of the hospitality sector. There are currently over 550 hospitality projects (representing approximately 156,000 rooms) worth over $55 billion under various stages of planning, design and construction in the GCC. The UAE and Saudi Arabia take the lion’s share with 280 and 130 projects, respectively. Also, hotels projects worth over $14 billion are expected to be awarded this year.
In 2017, Dubai’s hotels had the highest daily occupancy of 86.2 percent and an average daily rate (ADR) of $216 followed by Muscat (68.7 percent occupancy and $181 ADR) and Doha (68 percent occupancy and $180 ADR). However, the profile of tourists is increasingly changing. Besides Europe and Russia, Asia is emerging as the fastest growth market for the regional tourism. To broaden the revenue generation, there’s a need to explore the mid-market tourism segment and offer good value-for-money hospitality.
“Hotel investors need to rise to the challenge of changing traveler demands and specific requirements of groups such as millennials, families, halal travellers and those from emerging markets such as China and India,” says Haitham Mattar, CEO, Ras Al Khaimah Tourism Development
Authority (RAKTDA).
As a result, hotel developers and operators are exploring the mid-market hotels in the three to four-star segment. Gulf hoteliers, including Emaar’s Rove and Rotana’s Centro, have opened up to mid-scale segment to create new revenue channels. France’s Louvre Hotels plans 5,000 rooms across 40 properties in the budget-friendly segment by 2020 in the Middle East.
Focus on mobility
The increasing tourist footfall in the region also calls for smoother mobility and better connectivity. Hence, hectic activities are being witnessed in the transport sector. At least 1,424 projects worth $392.2 billion were under various stages of construction in November 2017, compared to $369.8 billion in the first 11 months last year. According to the BNC Network, a construction projects’ analyst, the transport sector constitutes six percent of all active projects in the region, with railways accounting for more than half of the total projects worth $207.5 billion.
Saudi Arabia’s Haramain high-speed rail connecting Jeddah to Mecca has become operational and will give boost to religious tourism. Comprising 35 passenger cars, the train will offer two-way trips every half an hour between Al-Masjid al-Haram (Mecca) and Al-Masjid an-Nabawi (Medina) at a speed of 300 km-per-hour. The high-speed rail stretches to 450,000-km and is expected to transport some 60 million passengers annually.
The ambitious pan-GCC Railway Network, slated to be completed in 2021, also promises to give a fillip to tourism as mobility from one nation to another becomes easier than ever. Other smaller railway projects are currently underway across the region. Dubai Metro’s Red Line, one of the longest driverless metro lines in the world, is also being upgraded to transport some 25 million expected visitors during the World Expo 2020.
“The GCC nations are planning to make their economies more sustainable by improving infrastructure that will help the cross-border trade, tourism and public mobility that are essential for diversification. Once all transportation projects are complete, these will change the way people move within the region,” says Avin Gidwani, CEO, BNC Network.
New hotspots
Besides building capacity and upgrading infrastructure, GCC countries are realizing their unique tourism potentials. Being home to the two holiest places in Islam — Mecca and Medina — the Kingdom of Saudi Arabia is in a natural position to exploit its tourism potential.
The recently unveiled Red Sea project, an ambitious plan to develop 125 miles of west coastline and 50 reef-fringed islands into a tourist hotspot, could add $4 billion and 35,000 jobs to Saudi Arabia’s economy every year. The phase one of the project will start in autumn 2019 and complete in 2022. The Kingdom is also building Al Faisaliyah, a city almost the size of Moscow, west of Mecca by 2050 – and Entertainment City, a project covering 334 sq-km, that will include a safari area and Six Flags theme park.
The UAE is the first choice of international travelers in the region. It is, therefore, building theme parks and museums to help attract a greater number of tourists. Abu Dhabi opened the Louvre in November, the second such universal art museum in the world after France, and the authorities are working on finishing the Guggenheim Museum, the largest in the world, 12 times the size of the New York gallery.
Warner Brothers World Abu Dhabi Indoor theme park is set to open this year on Yas Island. In Dubai, DXB Entertainments is building Six Flags theme park, which is set to open in 2019. It will be the third attraction in addition to the existing Motiongate, Legoland Dubai and Bollywood Parks Dubai. Oman Convention and Exhibition Centre has made the Sultanate the most preferred choice for holding international meetings, conferences and exhibitions. The Oman Tourism 2040 Strategy aims at reviving the old heritage and cuisine to infuse culture into tourism to make it a crucial economic pillar for national income.
In addition, the focus is on stimulating the domestic tourism market. Saudi Arabia has lifted a cinema ban and announced women will be allowed to drive from next June. The change in consumption pattern will also go well with the Kingdom’s decision to create an entertainment authority to ramp up local spending on music concerts, movies festivals, etc.
“A number of factors will drive growth in the tourism market, including the ongoing effort to attract global and regional holidaymakers and business travelers alike,” says BMI Research, a unit of the Fitch group.
With their liberal visa policies, increased connectivity and upcoming mega projects, the GCC countries are well-poised to cement their position further as the most popular tourist destinations in the world in 2018.