GCC hospitality boom: what you need to know

April 24, 2017 2:11 pm


The total value of 1,153 hospitality projects in the six members of the Gulf Cooperation Council (GCC) exceeded $148.4 billion (AED544.62bn) in the first quarter of 2017, according to a new report by project research and intelligence provider BNC Network.

The GCC’s hospitality industry constitutes seven per cent of all active projects in the region’s urban construction sector. In dollar terms, hospitality projects account for 13 per cent of the total estimated value of the region’s urban construction sector, the latest BNC Intelligence shows.

The report reflects the growing focus on developing the tourism sector by the governments of Gulf countries, such as Saudi Arabia, UAE, Oman, Qatar, Bahrain and Kuwait, which are gradually trying to diversify their revenue base and reduce dependence on hydrocarbon, according to BNC.

Mega events increasing travel

Avin Gidwani, CEO of BNC Network says: “With upcoming mega events such as Expo 2020 in Dubai and the [FIFA] World Cup in Qatar, the GCC governments are obviously preparing themselves for major global events that require additional hotel and tourism facilities that also will help them diversify revenue sources.”

Gidwani noted that the regional tourism sector will get a major boost in the years to come, thanks to the ongoing economic integration process and also because the GCC countries are preparing to develop a common market and physical infrastructure – such as the GCC rail networks to connect the major cities.

He added: “People from one city will travel to the other for overnight stays and return without having to [deal with] cross-border formalities – such as [in] the European Union. The region is preparing for such heavy tourism traffic. There will be a time when people will board a train from Ras al-Khaimah [in the UAE] to perform Umrah [an extra, optional pilgrimage that does not count as the once-in-a-lifetime Hajj] in Makkah [in Saudi Arabia] and return to Ras Al Khaimah a day later.”

Tourism continues to grow

A major influx in hospitality projects in the GCC is not without reason. Travel and tourism is one of the fastest growing sectors in the world.

In 2016, the travel and tourism industry contributed an astonishing $7.6 trillion to the global economy – that’s 10.2 per cent of global GDP. It also generated a total of 292 million jobs, which means that one in ten people work in the sector, according to World Economic Forum (WEF).

The numbers of international arrivals are just as impressive, reaching 1.2bn in 2016, 46m more than in 2015. And this number is only expected to get bigger, reaching 1.8bn international arrivals by 2030.

But as we look ahead, who will be travelling in 2030? It is clear that the big winners will be Africa with 90 million outbound tourists (157 per cent increase) and the Middle East with 81 million outbound tourists (125 per cent increase).

UAE comes first

The UAE continues to be one of the world’s most competitive economies for travel and tourism, according to the report from WEF.

It ranks the UAE the 29th most competitive globally. The UAE is followed by Qatar in the overall ranking for the Middle East, with Bahrain, Israel and Saudi Arabia bagging the rest of the top five.

Rounding up the top ten most competitive economies for travel and tourism in the region are Oman, Jordan, Iran, Lebanon and Kuwait.

Here is what major GCC economies are doing to continue the upward curve of development:

The UAE, which welcomed millions of foreign guests in 2015, has been ranked number one in the Middle East region for business environment, safety and security, human resources, transport infrastructure, ICT readiness and international openness by WEF.

The UAE’s business environment has been ranked fifth best overall, while its safety and security has been rated second best in the world, next to Finland.

It was announced early this year that the UAE will grant visas on arrival to visiting Russians, among the biggest contributors to travel and tourism spending in the country.

Saudi Arabia

By 2027, travel and tourism sector is expected to contribute more than 11.1 per cent of Saudi Arabia’s total gross domestic product (GDP).

The total contribution of the sector was SAR244.6bn ($65.2bn), 10.2 per cent of GDP in 2016, and is forecast to rise by 6.4 per cent in 2017, and to rise by 4.7 per cent per annum to SAR412.0bn ($109.9bn) over the next ten years, according to the latest figures from World Travel and Tourism Council (WTTC).

Plans are afoot to increase household spending on cultural and entertainment activities inside the country, from 2.9 per cent to 6 per cent.

Qatar

Some 46.1 per cent of all visitors to Qatar last year came from other Gulf countries, according to TRI Consulting.

Building the capacity of local companies and promoting the country’s world-class venues are among Qatar Tourism Authority’s (QTA) main strategic thrusts to further enhance exhibition and business events as an important boost to Qatar’s tourism sector.

Last year, Qatar announced plans to begin offering visas on arrival for people from China, as well as India and Russia.

Bahrain

Among GCC nations, Bahrain might not be the one most advertised as travel and tourism destination. The unofficial knowledge is that Bahrain gets the majority of its tourists or weekend visitors through Saudi Arabia, as nationals cross the King Fahad Causeway connecting the two countries to spend the weekend in Bahrain.

However, newly released figures forecast that the Bahrain tourism industry will reach $1bn by 2020 – meaning the nation must be attracting travellers from beyond Saudi Arabia.

The Bahrain Tourism and Exhibition Authority (BTEA) is spearheading a robust marketing campaign through which the kingdom expects to welcome 15.8 million visitors by 2018 – representing a 36.2 per cent increase on current visitors’ numbers.

Tags:

Hina Latif
By Hina Latif
Journalist
Hina Latif has over six years of media and publishing experience under her belt, spanning multiple magazines and a newspaper in the UAE. She studied creative writing at the University of Oxford and has a Master’s degree in Journalism.



AMEinfo EXPERTS