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.
The International Monetary Fund in its recent report on Saudi Arabia informed that the country whilst reconsidering the speed at which it is taking steps towards austerity, it is nevertheless avoiding slowing down its economy, to notably not increase its unemployment rate. This report holds that although the budget deficit is shrinking, it is doing so at a high cost to the economy. Before adding that : “Riyadh has been cutting spending while raising taxes and fees to curb a huge state budget deficit caused by low oil prices. Last December it published a plan to eliminate the deficit, which was a record $98bn in 2015, by 2020.” Tourism in Saudi Arabia as a palliative equivalent to oil exports related revenues has been reiterated as such for very long but was never taken this seriously.
It is to be noted that with the prospects of oil prices remaining low for the foreseeable future and the global economy possibly opting out of anything to do with fossil fuel type of energy soon, it would be up to the country itself to find other means of replacing those revenues. For that, the country is developing a whole strategy; perhaps one of the rare few that could seriously be envisaged at this stage. Tourism has been plucked out as a good earner and it will not take much in order to expand this sector’s role in the economy.
This of course will be limited in terms of earnings and employment as shown below in the WION graph. And if more earnings and employment were sought, there bound to be difficulties arising from the conservative establishment.
It consists of developing or furthering the already on-going religious tourism. Projects to develop and diversify the Red Sea coast infrastructure and offer it as a world tourism destination have been announced. The following WEF’s article is a good description of this move.
With The Red Sea Islands being developed, Saudi Arabia is hoping to bring more tourism in. Image: REUTERS/Suhaib Salem 03 Oct 2017
Saudi Arabia is putting vast sums of money behind its ambitions to nearly quadruple the number of visitors to its holy sites by 2030.
It is spending $26.6 billion to expand the Grand Mosque in Mecca in order to accommodate more pilgrims during the haj week, plus another $3.6 billion on a hotel nearby that with 10,000 rooms would be the world’s largest.
When associated projects such as the Mecca-Medina rail link are included, it is estimated that Saudi Arabia is spending $80 billion on Mecca alone.
The Grand Mosque in Mecca is undergoing a $26.6 billion expansion. Image: REUTERS/Suhaib Salem
Further funds are being spent restoring and improving historical and religious sites across the country, as the government aims to more than double the number of Saudi heritage sites registered with UNESCO by 2030.
Life after oil
The spending on Saudi Arabia’s religious and historical sites is part of a drive by the country’s leaders to wean the country off its dependency on oil.
Saudi Arabia is, with Russia, the world’s joint largest oil and gas producer.
To wean the country off its oil addiction, Saudi Arabia’s Crown Prince Mohammed bin Salman bin Abdulaziz last year launched a roadmap for diversifying the country’s economy, called Vision 2030.
It includes plans to invest in infrastructure, education and a variety of business sectors outside of oil and gas.
A large portion of the plan will be funded by next year’s sale of less than 5% of state-run oil company Saudi Aramco – widely predicted to be the largest IPO in history, valuing the company at around $2 trillion.
One of the non-oil and gas sectors identified for growth in the Vision 2030 plans is tourism.
Shopping generally in the Middle East in 2016 statistics showed despite all predictions, an unabated upward trend and is now being taken fairly seriously by the countries of the GCCs leadership in their drive towards diversification of their respective economies. In the shopping infrastructure and profusely omnipresent throughout the numerous malls and most exclusive Shopping Centers in the GCC are the top notch locally franchised brands of imported luxury range of clothing, jewelry, shoes, etc. mainly from Europe.
Dubai, for instance has over the years become the ultimate champion city in the range and variety spread of facilities starting with its airport Duty Free area and culminating with its planned Expo 2020.
Meantime, more retail space is being provided in Dubai as well as throughout the GCCs like these shown here below as the newest 9 malls that were developed and / or completed last year. These are listed according to their size.
Mall of the World, Dubai,
To be fully completed before 2020
Nakheel Mall, Dubai
To be completed this year
Mall of Saudi, Riyadh,
To be completed in 2022
Al Diriyah Festival City Mall, Riyadh
Completion date not known to date.
Mall of Qatar, Doha
Already completed in 2016 and open to the public
Doha Festival City Mall, Doha
Completed and open to the public in 2016
Mall of Oman, Muscat
To be completed in 2020
City Center of Ishbiliyah, Riyadh
To be completed in 2018
The Pointe Mall, Dubai ,
Completed in 2016
An article of TradeArabia of 4 days ago, gives a good account on the latest in the domain and is rpublished here below.
London may have recently been named as the world capital for luxury store openings in 2016, but when it comes to a place that is vying to be the ultimate destination for luxury shopping tourism, the Middle East is set to take this crown.
Despite cities such as Paris, London and New York, the UAE has established itself as luxury shopping paradise with more than 50 shopping mega malls, regular shopping festivals, and leading designer goods, available tax-free.
And thanks to the latest tourism figures, with Dubai alone pulling in 14.9 million visitors in 2016 and Dubai International Airport still being the world’s busiest airport, with expectations of traffic at over 89 million in 2017, this surge of travellers in the region is cementing its appeal as a luxury shopping haven.
And other destinations are also rising up the ranks. In Abu Dhabi – the capital of the UAE – guest stays were up by 8 per cent in 2016, with over 4.4 million tourists clocking up a staggering 12 million guest nights, with the UK ranking number one in terms of the amount of tourists visiting from Europe. This increase in foreign tourists represents a new record for the capital of the UAE.
In addition to a long list of luxury brands and a wide variety of retail choices, the UAE’s shopping centre’s have also been globally recognised for their distinctive amenities such as one-of-a-kind ski slopes and their proximity to the iconic Burj Khalifa, the tallest building in the world. This also includes Yas Mall, which has been built on an island, and is home to the Yas Marina Circuit which sees record numbers of international visitors attend for the Formula One every year.
And when it comes to retailers, it seems the market is also booming. The UAE, is perceived as a key long-term entry market for companies, with many entering the market or expanding their stores in the region, resulting in more intensified competition on the international global shopping stage.
With an expertise spanning six decades, one of the leading player’s in the world of beauty, fashion and gifts, The Chalhoub Group, is helping to lead this retail evolution for luxury shopping tourism globally. Its specialty department store, TRYANO in Yas Mall, bears testament to this.
With over 20,000-sq-ft of retail space and a collection of over 250 coveted international and local brands, shoppers visiting the store, which runs across three levels, experience a ‘Sculpture Garden’, a deconstructed ‘Greenhouse’ and the ‘Fountain of Youth’, an interactive digital fountain that comes to life in streams of dancing LED lights that glitter and pulse to echo visitors’ movements
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