The Rise of Tourism

As the number of tourists flocking to the Middle East region rises, so to do the number of astonishing and impressive projects and developments. With an increasing impact on infrastructure and mounting pressure to become more sustainable, how is the region responding and how does it plan to maintain its thriving tourism industry?

Rohit Talwar, CEO of think tank Fast Future, specialises in looking at the future of travel and tourism and is particularly interested in the Middle East, Asia and Africa. His report The Future of Travel and Tourism in the Middle East – A Vision to 2020, is an eye-opening study predicting unprecedented opportunity and investment. With current estimates suggesting that over the next 20 years, upwards of US$3.63 trillion will be going directly into hotels, leisure airlines, airports, cruise lines, rail projects, tourism promotion and the supporting infrastructure, Talwar predicts a huge transformational effect. “You only have to look at Dubai 20 years ago and compare that to today to see what is possible,” he comments. “So long as the demand can be generated and service levels maintained, this will become a critical sector for the region and help reduce dependency on oil and gas.” This fast growing sector will generate jobs for locals and expatriates and the sheer scale and imagination behind many of the projects will set new standards in the industry worldwide.

Perceptions about the region will change as people globally begin to understand what is on offer. “The region is looking to attract leisure tourists, business people looking to trade with and serve local markets, businesses wanting to invest and individual investors – mainly in real estate,” suggests Talwar. “We have to differentiate between tourists from outside and those from within the region – the latter flows are already well established.”

However, the level of awareness outside the region varies widely – Egypt and Turkey are already well known propositions, Dubai is increasingly on the map, Abu Dhabi is on the up, as is Oman. And it is thought that destinations such as Qatar, Kuwait, Bahrain, Saudi Arabia and the other Emirates will all grow in popularity given a bit of time. However, the region is doing a better job at profiling itself in emerging markets across Asia, Africa and Latin America, than perhaps Europe, America and Australasia and should start tapping further into these huge potential markets.

Air Arabia, the first – and so far only – low-fare airline in the Middle East and North Africa region, was established in February 2003 as a response to the significant promise in the region. “The UAE’s successful transformation into one of the world’s leading tourist destinations has been integral to our success,” explains Housam Raydan, Corporate Communications Manager for Air Arabia. Since it’s launch, Air Arabia has undergone an enormous expansion, now serving 39 destinations across the Middle East, North Africa, South and Central Asia. “The vast investment in infrastructure, leisure and tourism have already had a profound effect on the appearance of the region, and will undoubtedly continue to do so. Our own substantial investments in infrastructure in our key hub’s airport are part of this massive investment.”

Challenges

These are of course many critical challenges for the region in delivering its current travel and tourism strategies, including the obvious, such as the well-rehearsed debates surrounding security and safety. Talwar believes that the most important aspect around these issues is to ensure that the industry has contingency plans for how it will deal with the impact – both in terms of visitor numbers and through the viability of projects that are still under construction.

Other issues include enduring that adequate infrastructure is in place to support tourists and travellers, such as efficient transport, water supplies and energy availability. Dubai is certainly taking the lead on infrastructure and therefore the region needs to ensure a co-ordinated approach and response to issues such as road and rail links, water and energy facilities.

Selim El Zyr, President and CEO of Rotana, one of the leading hotel chains in the Middle East region, believes that the money going into the infrastructure in the region is a good thing: “As long as the infrastructure is being developed to adapt to all of these plans then this can only affect us positively,” he says. “However, we do need to ensure that we keep the authenticity and feel of the region.”

Indeed, in a region famed for its hospitality, service quality will be a critical factor for success. “Competition for staff will only increase as new projects come on stream,” says Talwar. “We estimate that the region will require at least 2.5 million staff to service all of its new developments.” As competition intensifies for talent around the globe, long-term solutions are required to ensure a continuous supply of resources 10 to 20 years into the future. Individual operators may be reluctant to go it alone as investment is required at every level of the education system in countries that will be the major suppliers of future staff. “This means building feeder systems comprising nurseries, primary schools, secondary schools and higher education institutions in countries across Asia, Africa and Eastern Europe,” says Talwar. “The issue is no longer whether such a response is required but how best to mobilise it in order to make it happen.”

As jobs are created and money comes into the region further development will be fuelled and new strains will be placed on infrastructure. “The region’s tourism planners must make tough decisions about who they want to target because whether I spend $100 per night or $10,000, I will put roughly the same pressure on infrastructure in terms of consumption of water and energy, waste production and transport demand,” explains Talwar.

Working together

In his report Talwar also mentions that it is important for countries and states to retain a healthy element of competition, but he also believes that collaboration could help many areas. He says for example that some locations have an average stay of less than two days but by teaming up competitors could increase the number of multi-location stays and attract visitors to two or three different destinations on one trip.

And working together would not just improve stay lengths but improve infrastructural development, which is not only critical to tourism but overall growth, economic development and industrial diversification. Talwar uses China and India as an example. In the 1970s, the countries had roughly similar sized economies, but in the period that followed China pulled ahead and now has a GDP roughly three times the size of India’s, and the gap between them is still growing. Whilst there are all sorts of reasons as to why this is the case, the bottom line is that over 20 years China saved more the 20 percent of its GDP than India and invested 20 percent more of GDP in infrastructure. This infrastructure paved the way for economic growth, job creation and the generation of wealth.

“The rapid pace of development across the region is predicted on the provision of effective infrastructure encompassing transportation, communications, energy, water, sewage, hospitals and education facilities,” says Talwar. “A prolonged infrastructure gap will slow the pace and drive up the costs of developing new projects, place greater strains on the existing infrastructure and potentially deter foreign business and leisure travellers.” The Dubai government estimates that traffic congestion costs alone are around US$1.3 billion, or just 3.5 percent of Dubai’s US$39.7 billion GDP.

Sustainability

There is no doubt that sustainability plays a very important part in infrastructure development today, particularly with the global concerns about climate change and carbon emissions. The region will need to do all it can to demonstrate that it is following through on the many positive initiatives and commitments it has announced. “For all the ambitious plans to deliver, the region must ensure it is meeting global targets for reducing greenhouse gas emissions, driving up resource efficiency and getting far better at managing its overall environmental footprint,” believes Talwar.

As each successive report from respected global agencies suggests, the earth resources are depleting faster than we are replacing them. At the same time the risk of dangerous climate change is rising and, for the Middle East region in particular, the threat of water shortages becomes ever more real. In the face of these increasingly real environmental threats a region-wide response may be the only viable solution. Such a response would need to encompass environmental monitoring and early warning systems, flood defence mechanisms and large scale water engineering projects to meet the demands of a rising population and growing visitor numbers.

Talwar cites the Masdar eco-city in Abu Dhabi as a landmark development, thanks to setting new global standards in city-wide environmental performance. Masdar proves that individual developers now have the opportunity to make a major contribution to sustainable building by ensuring that new developments are built to global best practice standards for resource consumption, water usage, emissions and energy demand. Dubai has also taken a lead towards sustainable and environmentally friendly projects with the imposition of green building standards and the Blue Communities initiative, a project to help start defining standards and guidelines for coastal development. The imperative now is to drive forward on these kinds of initiatives and deliver sustainable growth.

Potential

In Talwar’s report he says that a wave of innovation has swept over the tourism sector, creating exciting, never-seen-before developments like the Hydropolis and the Palms. Talwar believes that we will continue to see a continuous range of new and unusual offerings coming to the market between now and 2020. “Once these new developments are completed, older ones will be renovated,” he predicts. “As competition intensifies, the owners and operators will have to generate new innovations both in terms of product offering and marketing to keep visitor numbers up.”

The response to this the region is developing a variety of tourism propositions ranging from religious tourism to adventure travel as well as the opportunity to visit futuristic developments. The range of offerings, from natural experiences to manmade marvels continues to grow and so for each country the potential is improving. Talwar highlights Oman’s natural beauty, Egypt’s history and Saudi Arabia’s religious centre as continuously driving the growth in tourist numbers.

In addition to these, the range of iconic developments found from Bahrain to Abu Dhabi will prove powerful attractions in their own right. Dubai is spearheading this effort, with a target to increase total tourism numbers from seven million to 15 million visitors, and hotel rooms from around 30,000 to 124,000 by 2020. This is underpinned by major initiatives such as the US$110 billion Dubailand leisure development and reclaimed land developments, such as the Palm Islands and the World. In addition, Emirates airline is investing over US$60 billion on around 250 planes, Jebel Ali is being developed as the world’s biggest airport with eventual capacity for 120 million passengers, and Dubai International Airport is being expanded to handle 70 million passengers.

Rotana’s El Zyr believes that in terms of tourism potential, the United Arab Emirates is hogging the limelight. “In Dubai, for the last 15 years, hoteliers have experienced continuous growth and the government has always been exceptionally aggressive in planning and developing the emirate,” he explains. “The projects in the pipeline and those under execution are countless. Abu Dhabi seems keen to jump on the bandwagon and benefit from this encouraging climate, and while there was much speculation as to the route the emirate would take, but it is becoming clear that the Abu Dhabi strategy is different to that of Dubai. The city is positioning itself as an exclusive destination targeting a special niche of clientele, and not the masses.”

The outlook is extremely optimistic for the region in terms of its prospects and the potential for further innovation and development. “As the propositions develop the pressure will increase both to differentiate the offering but also to collaborate on a range of issues from multi-centre stats to infrastructure development and environmental management,” concludes Talwar. “The region will have to take a co-ordinated approach to securing future service sector talent and to ensuring that the proposition is socially, environmentally and economically sustainable.”

FAST FACTS

• Forecasts suggest annual tourism and tourism revenues could increase 89 percent over the next 10 years
• The region will buy 870 aircraft by 2027
• Travel and tourism will create over 1.5 million new jobs – equivalent to the total UAE population
• Last year’s Formula One race alone generated almost US$400 million in direct income for Bahrain
• Egypt attracted 9.1 million visitors in 2006, and is targeted 16 million by 2014. Key developments include the US$350 million Grand Egyptian Museum – the world’s largest with around 150,000 artefacts
• Part of Kuwait’s 2020 tourism plan is a major new tourist resort on Failaka Island, 20 kilometres off the coast of Kuwait City. The island’s 24 miles of coastline will consist of US$3.3 billion worth of hotels, shops, residences, a golf course and restaurants
• Qatar will have 40 new hotels by 2009
• Saudi Arabia is investing US$4.8 billion to build more terminals at Jeddah’s King Abdul Aziz Airport
• Syria aims to double annual visitors to 7 million by 2010 and generate an income of US$5 billion
• Turkey aims to increase tourists from 14 million in 2003, to 30 million by 2010, raise tourist income from US$11.9 billion to US$30 billion and double tourism employment from 1.5 million to 3 million
• A US$230 million project to transform Abu Dhabi International Airport into a Middle Eastern hub and handle 20 million passengers a year will complete by 2010
• Dubai’s strategic plan aims to maintain double-digit GDP growth in order to deliver US$108 billion per capita GDP of US$44,000 by 2015
• Yemen attracts 350,000 tourists annually and more than 10 world-class hotels and resorts are being built to keep pace with tourist demands

A work in progress…

The Pearl-Qatar is a man-made island covering 985 acres of reclaimed land offshore of the Arabian Peninsula state of Qatar. The project is the country’s first international real estate venture, its largest real estate development and the first to offer international investors freehold. It is a four-phase development, comprising of 10 distinct, themed districts to be developed over five years, housing beachfront villas, elegant town homes, luxury apartments, exclusive penthouses, 5 star hotels, marinas and schools, as well as upscale retail and restaurant offerings. The target completion date is the end of 2011.

Dubailand is an entertainment complex under development in Dubai. The development is expected to be a full-featured city divided into seven theme worlds, built on a three billion square foot site. It will include 45 mega projects, each capable of being a standalone destination in its own right, and 200 sub projects. The seven themes are culture and art, sciences and planetariums, sports and sports academies, wellbeing and health, shopping and retail, resorts and hotels and theme parks. Projects currently operational include Autodrome, Polo and Equestrian Club and Al Sahra Desert Resort. The total project should be complete around 2020.

• The Dubai Snowdome, will integrate ice, slopes, and alpine fun into a desert climate. An enormous 246-foot high transparent dome will protect 6000 tons of snow from soaring temperatures. The US$1 billion project will also boast an ice castle, aquariums, spa and a group of penguins. Crystal towers and iceberg-shaped homes allow for themed living.
• Aqua Dunya will be the place to soak up soon and cool off in the pool. The enormous water park is inspired by the tales of Rakaan and his ship, the Desert Pearl. A five-star hotel shaped like a cruise ship will sit moored in a desert oasis.
• The Great Dubai Wheel will be the largest observation wheel in the world when it opens in 2009. It will dwarf the London Eye and allow visitors to see vistas of about 31 miles.
• The Falcon City of Wonders is for those who enjoy one-stop sightseeing – the mega-complex features large replicas of the Seven Wonders of the World as well as the Taj Mahal and the Eiffel Tower. The 100-acre development will take on the shape of a falcon, its wings made of villas.

The Flower of the East is a 1.7 billion Euro, tourism attraction project, on Kish Island in the Persian Gulf. Accommodating a seven-star and two five-star hotels, three residential areas, villas and apartment complexes, showrooms, sports facilities and a marina. The centrepiece of the project is the seven-star hotel in the shape of a flower. Construction begun in 2004 and is expected to be finished by 2010.

The plans for the Masdar eco-city in Abu Dhabi are certainly ambitious. When construction is completed in 2013, the city will use 75 less power than a conventional city and less than half the desalinated water, with zero emissions and zero waste. Produce will come from nearby greenhouses and all waste will be composted or otherwise recycled. Masdar will be a model of an eco-friendly, futuristic, car-free suburb, housing up to 50,000 people.

Dubai – no limit

There is no doubt that Dubai heads up the fast expanding tourism industry in the Middle East. The city’s extensive projects and developments have put it on the world map for tourists all over the world. Here are just a few of the impressive buildings and projects on Dubai’s list of attractions:

• The Burj Dubai, currently under construction, will be the world’s highest building when completed, which is expected to be in 2009
• The Burj Al Arab is a luxury hotel and at 321 metres is the tallest building used exclusively as a hotel. The Burj Al Arab stands on an artificial island 280 metre out from Jumeirah beach, connected to the mainland by a private curving bridge. It was designed to symbolise Duabi’s urban transformation and to mimic the sail of a boat
• The World is a man-made archipelago of 300 islands constructed in the shape of a world map, located four kilometres from the coast of Dubai. The entire development covers an area of nine by six kilometres, surrounded by an oval breakwater. The overall development cost of the development was estimated at US$14 billion. In January 2008, the final stone on the breakwater was laid, completing initial development. The next phase it to hand over the individual islands to developers
• Palm Islands are the largest land reclamation projects in the world and will result in the world’s largest artificial islands. Residents began moving in tot he Palm Jumeirah at the end of 2006, five years after land reclamation began. The Jebel Ali Palm is 50 percent bigger than Palm Jumeirah and will include six marinas, a ‘sea village’, a water theme park and water homes built on stilts that spell a poem written by His Highness Sheikh Mohammed bin Rashid al Maktoum. The third palm, Palm Deira, will become the world’s largest man-made island, housing more than a million people. It is expected to be completed by 2015, although no date has been officially announced.

The Mall of the Emirates is currently the largest shopping mall in the Middle East, with 2,400,000 square feet of shops. It features a 14-screen movie theatre, a gaming arena, and the Middle East’s first indoor ski slope, Ski Dubai, as well as the typical variety of shops.