Middle East turns to the tourism industry
With a massive development underway in all over the Middle East region, a bright future lays ahead. The GCC countries are turning more and more to the travel and tourism industry. Oil is running out and the Gulf countries invest their future in the biggest industry worldwide – the tourism industry.
According to the
World Tourism Organization, although diversification of Middle East oil-based economies through tourism is a relatively recent phenomenon, governments in the region have been actively making efforts to tap tourism’s potential. Improved product development, enhanced funding for tourism and an increase in marketing and promotion have all facilitated the task and helped to secure good return on investment.
In addition, according to WTO’s Panel of Experts from the region tourism growth has been stimulated by the public and private sectors increasingly working in partnership.
The World Tourism & Travel Council, in its recent 2006 Travel & Tourism Economic Research for the Middle East reported significant growth for the region. According to the research, in Middle East, in 2006, Travel & Tourism is expected to post US$147.6 bn of economic activity (Total Demand), growing to US$279.4 bn by 2016.
The Middle East's T&T Industry is expected to contribute 2.6% to Gross Domestic Product (GDP) in 2006 (US$27.3 bn), rising in nominal terms to US$58.9 bn (3.1% of total) by 2016. The T&T Economy contribution (percent of total) should rise from 9.6% (US$102.2 bn) to 10.1% (US$189.5 bn) in this same period.
For Middle East, Travel & Tourism activity is expected to grow by 4.4% per annum in real terms between 2007 and 2016.
Furthermore, Middle East T&T Economy employment is estimated at 4,590,000 jobs in 2006, 10.1% of total employment, or 1 in every 9.9 jobs. By 2016, this should total 6,141,000 jobs, 10.6% of total employment or 1 in every 9.5 jobs. The 1,673,000 T&T Industry jobs account for 3.7% of total employment in 2006 and are forecast to total 2,485,000 jobs or 4.3% of the total by 2016.
In Middle East, exports make up a very important share of Travel & Tourism's contribution to GDP. Of total Middle East exports, Travel & Tourism is expected to generate 10.4% (US$66.8 bn) in 2006, increasing to US$112.5 bn (14.2% of total), in 2016.
Middle East Travel & Tourism Capital Investment is estimated at US$21.1 bn or 9.9% of total investment in year 2006. By 2016, this should reach US$39.4 bn or 9.6% of total.
Government Travel & Tourism operating expenditures in Middle East in 2006 are expected to total US$3.8 bn or 2.1% of total government spending. In 2016, this spending is forecast to total US$6.5 bn, or 1.8% of total government spending.
Mega projects are already underway in the region or are planned for the near future and they are focused mainly on building mainly in infrastructure basis and aviation developments.
According to
HVS International, in terms of the development of infrastructure, more than US$40 billion worth of airport development work is currently taking place across the region; this will undoubtedly have a positive impact on the number of international arrivals in the Middle East.
New destinations such as Bahrain, Qatar and Saudi Arabia are focusing on the proper infrastructure and gather experts from all around the world (especially for US) for technical and expert support. So far these destinations attract more business than leisure visitors from the neighbouring countries but they have raised the level and their tourism potential is growing fast.
At this moment Qatar has welcomed approximately 650,000 visitors in 2005, the majority still on business trip, some on leisure. The aim for Qatar is to achieve approximately 1,4 million by the year 2010 and to increase the number of average stay from 1.5 to four days, according to the Qatar Tourism Authority.
Hotel Performance:
- The 25% RevPAR growth in 2005 will be sustained.
- Occupancy may still improve but the already 73% average occupancy levs are the best in the world.
- 80 new hotels are estimated to be added in the Arabia Peninsula alone.
- Priority is given to 5 star hotels but new markets will make their entrance as the middle class in the Middle East region becomes more affluent.
- Develop both high-end and mid-range hotels in the region.
Future Problems:
- Not many staff to support the industry while population growth rates will fall in the entire Middle East region with the biggest decline to be in the UAE.
- Many South Asians work in Middle East but due to the strong development in their home countries the future doesn’t look so bright.
Michael Verikios
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Friday, June 16, 2006