Travel and Tour published on Thursday, February 21, 2019, this article on Saudi Arabia that aims to attract 1.5m tourists by 2020 all according to its Prince Mohamed Bin Salman’s Vision 2030. In this prince’s vision, diversification of the economy is emphasised and Tourism as a segment of it, is aimed at increasing the State revenue.
Tourism has turned out to be the
central development theme in Vision 2030 for Saudi Arabia, and as the Kingdom
gradually opens its doors to tourists from around the world, its own citizens
are also considered as one the fastest growing segment in the global travel
With travel bookings in the Kingdom
considered the largest in the Middle East and North Africa (MENA) region, worth
more than $25 billion each year, the power of the Saudi traveller is strong,
which was reflected in recently concluded Jeddah International Travel and
Tourism Exhibition (JTTX), where thousands of Saudis, including women, attended
The show is touted as the largest
travel trade show in Kingdom, featuring outbound destinations for Saudi
tourists and travel companies showcasing various lucrative options.
The JTTX ninth edition was formally
inaugurated by Prince Saud Bin Abdallah Bin Jalawi, Advisor to Makkah Governor
and also secretary at Jeddah Governorate. The show was held under patronage of
Prince Mishal Bin Majed, Governor of Jeddah.
More than 200 exhibitors from 29
countries took part in JTTX which was held at Hilton Hotel. There were stalls
displaying a wide range of tourism facilities such hotels, resorts, airlines,
travel technologies, medical and educational tourism.
A majority of the Kingdom’s tourists
travel to the UAE, Bahrain, Malaysia, Indonesia, Singapore, Turkey and the UK
as top holiday destinations.
However, new destinations like Kerala
in India, Sri Lanka, Azerbaijan and Georgia emerge as new destinations for
The show also featured eight new
destinations: Hong Kong, Finland, Spain, Mauritius, Morocco, Kosovo, Vietnam
and New Zealand with Tunisia being the guest of honor of the event.
Ouarzazate, Merzouga, and the Sahara desert (aka sand, camels, and more sand)
When most people think of Morocco, they probably don’t know too much about the country. Maybe they conjure up vague images of deserts or colorful market squares, or some couscous and a man wearing a fez. All of these do exist in some fashion, although Moroccan culture is definitely more rich and varied than its stereotypes. But the standout symbol that most people associate with Morocco is a camel, and the typical Bedouin nomad, scarf-wearing people that ride them into the desert, à la The Arabian Nights. I’m usually not one for overly touristy experiences, but I had heard that the Sahara desert was an unforgettable experience. To that effect, a few friends and I headed to Ouarzazate and Merzouga, two cities near the edge of the Sahara desert, this past weekend. Once there, we did the typical touristy camel trek into the desert, stayed overnight in tents to look at the stars, and headed back early in the morning. This trip had been on my Morocco bucket list for a while, and I’m glad to say that it didn’t disappoint.
We departed from Marrakesh early Saturday morning, and headed through the high Atlas mountains. I was surprised by how much green vegetation there was growing high in the mountains. Sometimes you could even see snow at the top.
Passing through the Atlas mountains
Our goal was to reach Kasbah Ait Benhaddou, a small village that was an historic outpost along the caravan route between Marrakesh and Merzouga for desert traders. It is now a UNESCO world heritage site, with lots of red clay buildings. Sadly, it was a bit of a disappointment, as the city has almost entirely been made into a tourist stop, with lots of people selling overpriced scarves and trinkets. It has also been a filming site for lots of Biblical/Middle Eastern blockbusters, including Jesus of Nazareth, Lawrence of Arabia, and Gladiator. The view from the top was still pretty awesome, though.
After Ait Benhaddou, we made a quick stop in Ouarzazate, which has also been a film set for many famous movies. There’s even several film studios and a movie museum that has parts of old film sets. We also briefly drove through the center of town that’s known for its Rose Festival, which mainly manifested through a lot of small roadside shops selling violently pink rose-scented products.
That evening, we dumped our bags and slept at a small auberge (like a hotel) near the Dades Valley. The next day, we again started early, and went for a short hike through the Togoda canyons. On one roadside stop, we saw “الصحراء صحراؤنا” (The Sahara is our Sahara) carved into a mountainside, an ever-present reminder of Morocco’s claim over the Western Sahara.
It was almost evening when we arrived in Merzouga, with just enough time for us to drop our bags and head out to meet our camel caravan. We then trekked for about an hour and a half through the Erg Chebbi dunes (the second highest sand dunes in the world), just in time to disembark at our camp and climb the dunes to watch the sunset.
My camel’s name was Omar, and at first, our relationship did not get off to a good start. He made his displeasure known by grunting loudly as I climbed onto his back, although he eventually settled down once we started moving. Riding a camel is not exactly the most pleasant experience– it’s a bit bumpy, and sometimes I felt like I was going to fall off, but luckily there was a pommel on the front of the saddle you could hang on to. However, the view was absolutely amazing– the sand dunes rolled on in all directions, looking like frozen waves. It almost felt like we were on the moon, since the landscape was so dry and alien. We climbed to the top of a dune, which was much harder than I expected, and gave me a great appreciation for the camels’ two-toed, padded feet that kept them from slipping in the sand. As the sun set, you could see the sand slowly change color, going from gold to yellow to a light pink glow.
Our Berber guides cooked us dinner, and we sat around a fire to look at the stars (although unfortunately, there weren’t many since it was cloudy). It was pretty amazing to walk out out of the tents and be surrounded by silence and sand in every direction.
The next day, we left the camp at 5:30 a.m. Omar voiced his frustration about our early departure with another moan, and I agreed with him, although I was slightly less vocal about it. The good thing was that this gave us time to watch the sun rise over the dunes. We made it back to Merzouga for a much-appreciated shower and breakfast.
The last part of our journey, however, was a bit of a long haul. In a series of long bus rides, we made it about 675 kilometers (about 420 miles) from Merzouga back to Agadir, which I think has got to be a record for the longest I’ve traveled by car in a single day.
The people of the MENA region originating role in the history of human civilization is notably known by being one of the cradles of civilization. The three of the world’s major religions originated in the region — Judaism, Christianity, and Islam. An article of AMEinfo dated January 18, 2018 goes on to show how Egypt with down to earth tactics has come to elaborate what is really obvious to many.
The global economy teetered along not as nicely as many in the MENA would want it for the past 2 to 3 years, but a growing number of economists are now convinced that the next financial crisis being around the corner, there is no other way but diversify one’s economy. That is if one has something sound and deserving to as it were display. Egypt does quite well according to this article.
Despite the economic and security problems that plagued the country in the past few years, Egypt finally figured out a way to position itself on top!
In November, Cairo emerged as the top hotel market to record higher occupancy, daily rates and revenue per available room among MENA cities, according to advisory firm Ernst & Young (EY).
“Hotel occupancy in Egypt’s capital city jumped 14.6% to 77.9% in November 2017 from a year earlier, while average daily rates (ADR) rose 15.6% and revenue per available room (RevPar) surged 42%,” as reported by EY.
There must be a good reason behind Egypt being capable to beat the UAE, the latter accustomed to being number one in hospitality.
Fly like an Egyptian
The Ministry of Tourism adopted a flight incentives programme in November 2016 to stimulate flights to Egypt, according to media reports.
The program requires companies running regular low-cost flights to average 22 flights per week with at least 80% of the seats occupied to receive $2000 per flight.
Also, the tourism ministry reduced in 2016 the requirement of filling charter flights to qualify for incentives to 50% capacity from 70% for flights to El-Alamein, Marsa Matrouh, Luxor and Aswan.
Also, in 2017, Egypt’s tourism ministry approved another increase in incentives for charter airlines carrying passengers on international flights coming to Luxor, Aswan, Marsa Matrouh, Taba, and Alamein, according to Al Ahram Online.
It said that the incentive has been increased to $3,000 from $2,000 per flight.
Quartz, a business news website, revealed that the government also pressed hard with security reforms, while spending millions of dollars upgrading security at its airports.
“Officials have also publicized the high-profile visits by Germany’s chancellor Angela Merkel and Hollywood star Will Smith to the pyramids as a way to boost the sagging tourism sector,” it said.
It added that the government also launched a campaign dubbed Wahashtouna (“We have missed you” in Arabic) in order to attract more visitors from the Arabian Gulf.
All of these incentives were translated into positive figures for the tourism industry in Egypt.
Ahram Online reveals that Egypt’s tourism revenues jumped 123.5% year-on-year to $7.6 billion in 2017.
“The number of tourists who visited Egypt in that time jumped 54% to 8.3 million,” it said.
Also, Hossam El-Shaer, chairperson of Thomas Cook’s agent in Egypt Blue Sky Travel Agency and owner of the Sunrise Inn, was quoted in the media as saying that the arrivals through Thomas Cook to Egypt increased 10% in 2017 compared to the same period a year earlier.
“The number of tourists coming through Thomas Cook to Egypt would increase to 880,000 by the end of 2017 and to 1.5 million by the end of 2018,” he said.
He explained that the increase in arrivals will include tourists from England, Germany, Poland, the Czech Republic, the Netherlands, and Belgium, going to Hurghada and Marsa Alam.
While Egypt’s figures were positive, Dubai is not on the same wavelength.
A reported 11.58 million international overnight visitors arrived in Dubai during the first nine months of 2017, according to TTG MENA, a travel website.
But occupancy in November in Dubai fell 1.3% to 88.2%, ADR dropped 1.4% and RevPar declined 2.8%, according to EY.
A case of oversupply
Dubai is feeling the strain of oversupply.
“The coming few years will see a number of mid-scale hotels open, which will lead to the diversification of the hotel market and will result in the city becoming a more attractive place to visit to a broader range of visitors. However, it is also likely to result in further declines in average financial returns going forward,” Jones Lang LaSalle (JLL) reports.
“A further 1,800 keys were added to the market in Q3, bringing the total stock of quality hotel rooms in Dubai to almost 82,200 keys, primarily focused on four- and five-star properties.”
Meanwhile, Abu Dhabi’s occupancy surged 6 per cent to 88.6 per cent because of the Louvre opening and the Formula One race in the emirate, as reported by EY.
A recent report by Knight Frank Consultancy reveals that while average occupancy levels have remained constant or even increased in the majority of emirates, these have been offset by downward trending average rates, resulting RevPAR declines across the board.
“Visitation to the UAE has continued to increase, but in light of a more cash-constrained guest profile, hotels have had to price more competitively in order to maintain market share,” it said.
There has never been this much talk about tourism and plans to generate revenues through its development in the MENA countries prior to the drastic drop in the price of oil. Non-oil-exporting MENA countries tourism spreading in a certain way with relative success is as of now challenged. That of the oil-exporters countries but with a difference. These latter countries seem to have uncovered the Pandora’s box of the green and sustainable development that is gaining ground in the world.
In the meantime, per an Ecofin Agency post, Tunisian tourism seems to be regaining some colors in 2017. Having been for two years negatively affected following the Islamist attacks, the tourism sector came out doped as it were this year, official figures indicate. As at 20 December 2017, the number of foreign tourists who had set sail for the country of jasmine, increased by 23% compared to 2016. According to the data provided by the Presidency, a total of 6,731,000 tourists visited to date this country of North Africa.
The revenues generated by the tourism activity increased by 16.3% to 2.69 billion Tunisian Dinars ($1.9 billion).
An fDi article by Jason Mitchell dated December 14, 2017, goes on to elaborate that tourism per say is, as it were, not enough and these days; it ought to be green and sustainable for it to have a future. Here is this post.
The tourism industry’s growth has evolved beyond simply increasing visitor numbers. Countries prioritising a sustainable agenda could become the new investment magnets, provided initiatives are responsibly managed, as Jason Mitchell discovers.
A growing number of countries only want foreign firms to invest in their tourism sectors if they make a strong commitment to sustainability. During the past few years, ‘sustainable’ or ‘responsible’ tourism has become a hot topic in the global tourism sector, one of the biggest industries worldwide with annual revenues of $2300bn directly and $7600bn indirectly. One in 10 people on the planet are employed in tourism directly or indirectly.
It is an industry that is growing fast: between 5% and 7% annually, according to the UN World Tourism Organization (UNWTO). Between January and August 2017, destinations worldwide attracted 901 million international tourist visitors, up 56 million on the same period in 2016.
Countries across the globe are developing sustainable tourism strategies. The UNWTO suggests these should have three principal objectives: first, protection of the natural environment; second, conservation of the cultural heritage of host communities; and third, helping to advance the local economy in a fair and far-sighted fashion.
“Sustainable or green tourism is the future of tourism,” says Andrea Nicolas, managing director of Green Tourism, a Scotland-based company that runs an accreditation programme for companies committed to responsible tourism. “If you destroy the environment or the destroy the local community, you destroy the product.”
Dr Taleb Rifai, secretary general of the UNWTO, agrees. “We cannot have five-star hotels in three-star communities,” he says. “There cannot be islands of luxury in very poor communities. We cannot have local people just employed as servants. I think we must distinguish between mature economies and developing countries. In the developed world, people are already very sensitive towards the natural environment. In the developing world, this sentiment is not so strong as people are new to foreign travel and feel they have a right to it.”
Many governments view tourism as one of the key ways to advance their national economies, but they want to ensure that the natural environment is in no way blighted and that any economic gains are shared with the local community.
“Costa Rica is a country whose main attraction is nature,” says Mauricio Ventura, the country’s tourism minister. “We do not want mass tourism. During the past 30 years, we have spread the benefits of tourism around the country to 32 tourism development areas. People throughout the country have seen the social and economic benefits. Costa Rica has become a brand name committed to sustainable tourism; everyone who wants to invest here must comply with the essence of that brand.”
Costa Rica is one of the countries most dependent on tourism. The sector accounts for 27% of jobs and generates revenue of $4bn annually, or 29% of all the dollar inflows in to the country. For two decades, Costa Rica has run a voluntary accreditation programme for tourism businesses, called the Certification of Sustainable Tourism. Mr Ventura’s ministry is in the process of launching a more sophisticated version of the programme suited to larger hotels, entertainment complexes and car rental companies.
The country also plans to modify its incentive rules for foreign investors, which will place more emphasis on sustainability. Investors will receive greater incentives if they employ a larger number of people from the local community or install solar panels, for example.
Slovenia is another country that sees tourism as fundamental to its future economic development but that wants to avoid mass tourism. Its annual tourism revenues amount to €2bn and it expects that to rise to €3.7bn by 2030. In 2016, it attracted 4.3 million foreign tourists. More than 65% of the country is covered by forests and it has 30,000 kilometres of watercourses.
“Tourism is a priority for us,” says Darja Radic, former secretary of state for tourism for Slovenia and now a consultant. “It is one of the main ways in which we can create jobs in the countryside. Slovenia is a hidden corner of Europe but is slowly becoming more visible. We do not want the number of tourists we attract to increase dramatically, but we would like each tourist to spend a greater sum. We want to develop the sector in a slow and carefully planned way.
“Clearly, we want to attract foreign investment in our tourism industry but that could be in business sectors or infrastructure that underpin the industry: for example, green transportation, waste management or efficient energy.”
In 2015, the Slovenian Tourist Board introduced its own accreditation programme, which grants bronze, silver or gold awards to tourism businesses.
The Seychelles, an Indian Ocean archipelago of 115 islands, is an example of a country that has had to put the brakes on its hotel development because it wants to ensure that it has all the infrastructure in place to meet the needs of its growing tourist numbers. It expects 350,000 international visitors in 2017, compared with 304,000 in 2016.
“Conservation of the natural environment is very important to us,” says Sherin Francis, chief executive officer of the Seychelles Tourism Board. “About 50% of our land is protected and we will only grant building permits if the plans meet rigorous environmental standards.
“A moratorium on new hotel development until 2020 has been put in place, as we want to make sure that our airports, road and electricity grid can cope with the expanding tourist numbers. There are lots of opportunities for foreign investors in these industries or in green energy or the construction of ports and marinas. We just want to ensure that we have a bit more control over the pace of growth.”
Risk and reward
Tourism is often seen as way for a country to get rich quick. Some countries, such as Sri Lanka, have managed to improve their economies markedly through advancing the industry. Its ‘visitor exports’ – spending within the country by international travellers – rose by 26.4% between 2010 and 2016. However, countries such as Myanmar have seen the adverse consequences of promoting the industry with a ‘gold rush’ mentality. Visitor exports soared by 73.5% between 2010 and 2016.
“Some governments, particularly in the developing world, see tourism as a quick fix for economic growth,” says Libby Owen Edmunds, an Indonesia-based sustainable tourism specialist. “But this can happen to the detriment of the natural environment or the local community. Governance has been an issue in [Myanmar], for example. There was no time to prepare for the sector’s expansion. Land has been taken away from local people for hotel development or fisherman have been displaced.”
She adds that tourism ministries can be under a lot of pressure to get tourism numbers up, but their plans can backfire if they do not follow sustainable tourism strategies. In Myanmar, for example, the number of hotels almost doubled to 1300 between 2010 and 2015, with foreign firms committing to invest $2.7bn in the sector during that period. But today many of the hotels stand half-empty and it is believed that tourism visitor numbers plunged to 2.9 million last year from 4.7 million in 2015.
Tourism is one of the fastest growing industries worldwide and presents incredible opportunities for foreign investors, not just in new hotels and resorts but in all the associated infrastructure. However, it is vital that the growth is managed, so that the natural environment is protected and local communities do not feel threatened.
Saudi Arabia under the leadership of its young crown prince Salman looks as if undergoing tremendously frantic changes that were for a long time resisted to. This article published by AME info of October 26, 2017 is written by Hadi Khatib. This latter is a business editor with more than 15 years’ experience delivering news and copy of relevance to a wide range of audiences. If newsworthy and actionable, you will find this editor interested in hearing about your sector developments and writing about it. Saudi Arabia has elected to relieve itself from “addiction” to its oil dependence by opting for large and strategic developments projects. One of these is this dream Red Sea on shore mega smart city ; here is how Hadi Khatib sees it.
The picture above is of Saudi Crown Prince Mohammed bin Salman and Klaus Kleinfeld sign documents after Kleinfeld was appointed as NEOM’s Chief Executive Officer, in Riyadh. Reuters UK.
Something about the Red Sea is luring Saudi money away from now shelved mega projects and into greener pastures, but there is nothing wrong with fluid ideas like these to prove that the Kingdom is making a clean break from an oil-dependent past.
NEOM is not just another city development. In fact, it’s a $500bn super mega project on the Red Sea coast located at a strategic junction linking 3 countries, Saudi, Egypt and Jordan, and connecting Asia, Europe and Africa.
NEOM is raising eyebrows from observers who can’t fathom where the money will come from, during times of rationing resources and austerity measures.
First, is this wishful thinking?
A dream in the making
It was during the Future Investment Initiative, an event by Saudi’s Public Investment Fund (PIF), that Saudi Crown Prince Mohammed bin Salman said: “This project is not a place for any conventional investor […] This is a place for dreamers who want to do something in the world.”
Klaus Kleinfeld, former CEO of Siemens and Alcoa, was picked to be at the helm as CEO of NEOM.
Giving a hint of the funding’s source, the Crown Prince indicated the country’s sovereign wealth fund PIF as well as local and international investors who will jump in the fray.
The PIF has now approximately $230bn of assets under management (AUM), but Yasir Al Rumayan, Managing Director of PIF, told Bloomberg at the same event that the Kingdom’s fund aims to have at least $2trn of AUM by 2030.
He added that the sovereign wealth fund was targeting investment returns of 8 to 9 per cent.
An event statement described the project as a 26,500 sqkm zone, to be powered entirely by renewable energy. It will focus on energy and water, biotechnology, food, advanced manufacturing and entertainment.
This project portrays Saudi in a completely new light and positions the Kingdom as an international partner in innovation, trade and sustainability.
This follows a July 2017 announcement that another Red Sea project will cover 50 islands and 34,000 square kilometers and be developed to attract luxury travellers from around the globe and be as well financed by the PIF. “The project will create as many as 35,000 jobs and contribute $4 billion to Saudi Arabia’s gross domestic product,” said a PIF statement then.
This attraction towards seaside developments makes sense from tourism and investment perspectives and cements the strategic direction of the Kingdom away from oil and into investment-fueled schemes.
After all, from building an entertainment city to lifting the ban on women drivers, providing full ownership rights to foreign companies operating on Saudi soil and the right to purchase a ten per cent stake in Saudi owned companies, lifting the ban on VOIP, and IPO-ing five per cent of Aramco’s shares, we’re looking at the tip of the iceberg for just some of the projects that Saudi is undertaking to diversify its income.
But at what cost?
Unfinished and shelved
Reuters published a scathing report this year saying that Saudi was ordering its ministries and agencies to audit unfinished infrastructure and economic development projects worth billions aiming to either shelve, postpone or restructure them.
“Riyadh’s Bureau of Capital and Operational Spending Rationalization, set up last year to make the government more efficient, is compiling a list of projects that are under 25 per cent complete,” sources told Reuters.
Earlier this year, Saudi Finance Minister Mohammed al-Jadaan said that the Kingdom saved $21.33 bn through the bureau’s efficient procedures.
The majority of these developments are leftover works from boom years, when oil money was plenty and attitudes towards efficiency were more relaxed.
“In a report at the end of last year, it (Saudi Government) estimated the cost of completing all capital spending projects currently underway at about SAR1.4trn ($381bn),” said Reuters.
It said that consultants Faithful+Gould estimated that at least $13.3 billion of government projects were at risk of being cancelled in Saudi Arabia in 2017, because of fiscal pressures and changing government priorities.
“The government is likely to prioritize projects with strong social welfare and business justifications […] while less essential projects such as sports infrastructure, transport systems and perhaps nuclear energy could be cut back,” it said.
According to a BNC Report on Ongoing Mega Projects commissioned by the Big 5 Saudi 2017 organizers dmg events, Saudi’s top 10 construction projects are worth a collective $92 billion.
Of these are included Jeddah’s 1km tower, valued $1.8 billion and due for completion by March 2020, as well as Mecca’s Abraj Kudai Development, valued at $3.5bn and due for completion by end 2017, which coincides with Mecca’s own $17bn expansion project.
We read across the local GCC digital and printed Media that the momentum for hotel development is strong in Dubai with the hospitality segment would be facing these day a situation of oversupply with no less than 80 hotels planned to open in the UAE in 2018. This is in part due to a certain residue momentum of the construction boom of years past for residential development that is still strong in Dubai.
Possibly leading to dangers of potential oversupply ?
Dubai Hotels from £13
Jones Lang LaSalle (SA) Pty Limited (JLL) produced a report titled “Q3 2017 Dubai Real Estate Market Overview”. It is a review of the office, residential, retail and hospitality sectors from a real estate stand point.
This long time established in the Gulf region UK company witnessed the construction boom that was frantically happening throughout the GCC countries these last few decades as it is now following the same but in a different conjecture. This is of very reduced oil price and low level fiscal state investment.
Private investment on the other hand, of, in this instance, mid-scale hotels in Dubai, which previously has gone like for all other construction sectors, through a boom, is still going on, as if on some sort of momentum. JLL’s report has notably picked up the resulting general feeling within the industry, that of any further declines in average financial returns going forward and made worse by paradoxically this type of investment.
JLL’s Q3 2017 Dubai Real Estate Market Overview report mentioned that several hotel projects, mainly in the four and five star segments, have come into the market last year and that refurbishment of derelict has become a new trend in the market.
Dubai hospitality majors were reported as if hard-pressed by these market trends as influencing their turnover. They however qualified it as performance remaining unperturbed and it is merely the market adjusting itself and not at all an indication of distress.
We reproduce here the report’s Market Summary
Cityscape remains a good barometer of sentiment towards the Dubai real estate market. The 2017 edition saw increased market activity on the back of stronger sentiment, with a number of developers reporting strong sales within newly launched projects. The dangers of a potential over-supply on the back of sales achieved from more attractive payment terms is however increasing. Generous payment terms and guaranteed rent periods, although attractive to investors, could result in a future ‘real estate bubble’.
One of the most significant announcements at Cityscape 2017 was District 2020, a master planned development of residential and commercial space on the site of Expo 2020. This project forms an important component of the planned long-term legacy from Dubai hosting Expo 2020.
Alternative real estate asset classes was another area of focus at Cityscape, with specific emphasis on the healthcare sector. With the MENA region lagging behind other developed economies in terms of spending per capita on healthcare and the provision of hospital beds,
there are significant opportunities for real estate players to tap into this sector over the next five years.
Dubai is investing heavily in the infrastructure needed to host multiple healthcare institutions, most notably through Dubai Healthcare City, a healthcare free zone offering benefits to both local and international operators. The Dubai Health Authority (DHA) is also striving to ensure the city has the medical infrastructure required to attract an increased share of the growing global market in medical tourism.