A fragile recovery

09 January 2003
In the aftermath of 11 September, a collective sigh of dread was heaved by the Middle East tourism industry. For a sector already damaged by economic gloom and the disintegration of the peace process, the new threat of recession and war seemed poised to destroy a thousand thriving businesses.

But during the early months of 2002, tourists started to return to the region. In general, the recovery was slow but undeniable; from country to country, the messages were more mixed.

The most recent data collected by the World Tourism Organisation (WTO) is for 2001, so the figures have to be moderated to account for what had been a relatively good first three quarters of the year before the industry collapsed in September.

The number of tourist arrivals in the Middle East fell by just 2.5 per cent to 22.7 million, while arrivals in North Africa actually grew by 6.6 per cent.

The discrepancy underlines the diverse nature of the region's tourism industry. Worst hit was Egypt, which suffered a 15 per cent fall in visitor numbers in 2001 compared with 2000 - a trend that had actually started when the Palestinian intifada broke out the previous autumn. The star performer was Tunisia, which registered a 7 per cent growth over the same period. Dubai - the youngest and, arguably, most dynamic of the region's destinations - told the WTO it saw a 24 per cent increase in the first quarter of 2002 over the fourth quarter of 2001.

The WTO put things succinctly in a September report on Middle East tourism: 'The hammer blow of 11 September caused a 10.7 per cent decrease in the last four months of 2001, leaving the year's overall result down 2.5 per cent, compared with a world tourism decline of 0.6 per cent. In the context of the many problems which the region had to face during 2001, this can be seen as a relatively good performance.'

How far this fragile recovery can be sustained is another matter. New terrorist attacks in Tunisia, Bali and Moscow indicated that Islamist terror groups were once again returning to an old strategy: go for the tourists. As if this was not bad enough, Washington pulled its sights away from Afghanistan and retrained them on Baghdad. The Middle East is once more being shown in the worst possible light as a tourism destination.

Historically, the region has proved itself adept at overturning this reputation with an enduringly strong and diverse set of attractions: year-round sun, marvellous tourist sites and genuinely friendly people.

Changes to the tourism industry have helped too. With the advent of cheap air travel and internationally accessible holiday destinations, tourists have become increasingly sophisticated creatures. They understand that an isolated assault does not render a country dangerous. Egypt learned in the 1990s that it is possible to bring tourists back, in even greater numbers, just a year after horrendous attacks.

'We are not expecting a big increase in room occupancy for 2003. In fact, we would count it a success if occupancy stayed the same as in 2002,' says Jirayr Kececian, Middle East and Africa director of sales and marketing for Starwood Hotels. Kececian says occupancy remained flat in 2002 compared with 2001, with a strong recovery between June and September balancing out the bleaker months early in the year.

Terrorism is a problem, but Kececian says the length of time between attacks and the return of tourists is becoming ever shorter. Of more concern is the Iraq crisis, which may keep tourists away for the next few months.

However, Kececian points to one factor that is influencing market trends more than any other: the global economy. 'Booking trends have significantly changed because of the poor economy,' he says. 'In Europe, booking times have dramatically decreased because people are less able to budget in advance. And because long-haul flights are more expensive, we've lost a lot of business from the US.'

The long-haul sword is double edged. Although US bookings are dropping off, more Europeans who had planned holidays in the Far East or Americas are now prepared to regard the Middle East as an exotic, but affordable, destination. In addition, there has been a strong increase in internal Middle East travel as Arabs avoid the West for fear of anti-Muslim sentiment.

Inter-regional travel has been hyped by Middle East tourism boards. It has, indeed, played a significant role in the nascent recovery. However, visitors from within the region are likely to spend less than those from overseas. Those who are avoiding the West for fear of revenge attacks are also likely to return there once the perceived risk has abated.

The relationship between economic and security issues pertaining to the tourism economy is best measured by comparing the Middle East with other destinations.

The data shows that the Middle East and North Africa (MENA) effectively maintained their market share from 2000, registering 4.8 per cent of world tourism arrivals in both 2000 and 2001. The region increased its share of global tourism receipts to 3.3 per cent in 2001 from 3.2 per cent in 2000. This increase was largely due to a sharp growth in travel to North Africa, while the rest of the region slightly declined.

What do these figures mean? Given that the MENA region could reasonably be expected to suffer more than other regions as a result of security fears, it is clear that the most important concern for tourists is the economy. Tighter personal income across the world has actually hit other regions' tourism figures far harder, with the Americas suffering a 7.8 per cent decline in tourism receipts in 2001, and Northern Europe enduring a 12 per cent fall.

There are other issues at stake too. The region has learned to market itself more effectively and has become intimately involved in global efforts to help the tourism industry recover. Egypt sells itself on beaches, desert and the glory of the pharaohs, distancing itself from the conflict happening on its eastern border.

Dubai has aimed for a higher class of tourist, marketing itself as an exclusive retreat for the jet set. The strategy has allowed it to shed the traditional perceptions of the Gulf and the Arab world - and with them the Western perceptions of violence, intolerance and danger.

Improving associated facilities has proved one of the more successful elements of the strategy. The success of Dubai has been enhanced by, for example, the development of Emirates into an international airline. Oman is also improving its facilities with a view to creating a high-class version of the adventure holidays enjoyed in Syria or Yemen.

Diversity gives the region's tourism sector extra strength. Saudi Arabia, which will never become a prime destination for package or resort-style holidays, is becoming more astute at targeting natural customer groups such as pilgrims and GCC nationals. In contrast, Lebanon boasts a stylish Mediterranean atmosphere with the kind of bars and casinos that appeal to many Europeans.

The importance of developing these attractions cannot be underestimated. As the message of economic diversification and job creation is preached across the region, tourism has become a vital part of all countries' economic plans. Qatar and Saudi Arabia have launched tourism masterplans, while Oman has revised its visa regulations to make things easier for potential visitors.

Middle East states have also participated closely in the efforts to encourage a post-11 September tourism recovery. The chairman of the WTO's recovery committee, which was set up after the attacks, is Egyptian Tourism Minister Mamdouh Beltagui. The 40-strong committee includes a further three Arab public sector representatives and three private sector representatives, ensuring the committee does not overlook the impact of today's political upheaval on regional tourism.

Despite these efforts, the tourism industry will find the coming months painful. The trick for the region's businesses will be to ride out the political and economic storms buffeting the region and wait for the sunny holiday weather of tomorrow, because those that survive will be able to claim the best places by the pool.

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