Experts look to 2021 for Mena tourism recovery

03 January 2021
Governments across the Middle East and North Africa are working on several initiatives to bump up visitor numbers in the new year

This package also includes:

Weak economic growth looks set to persist
Expo 2020 forges ahead with confidence
Challenging outlook for GCC construction

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The impact of the Covid-19 pandemic has been felt across the Middle East and North Africa (Mena) region. Data released by the World Travel & Tourism Council (WTTC) at the end of October 2020 revealed that with no changes in barriers to global travel until the end of 2020, the region will see 4.7 million jobs lost and a $175bn decline in the contribution of the travel and tourism sector to the region’s GDP.

However, while there is a lot of uncertainty in the market, the Mena Hotel Market Survey conducted by Canada-based Colliers forecasts that a recovery will have started in the fourth quarter of 2020 and continue into 2021.

“We are optimistic for a steady upturn in demand across most major markets in the region next year,” says James Wrenn, associate director of hospitality services for the Mena region at Colliers. “Markets such as those in the UAE with a strong focus on the international leisure segment should lead in terms of clawing back lost market demand on account of Covid-19.”

Positive signs

There have been signs pointing to this upturn. Hotels in both the Middle East and Africa regions recorded their highest absolute occupancy level in October 2020 since February, according to data from US consultancy STR.

Philip Wooller, area director for the Middle East and Africa region at STR, says occupancy has been climbing steadily since October, with local carriers opening to more destinations. “We expect the region to continue showing occupancy increases during the traditionally strong winter season, especially after the recent announcement of a UK-UAE travel corridor,” he adds.

“While leisure demand strengthens, the next phase is the prominent return of corporate business, followed by group demand and events such as GITEX [6-10 December 2020] and Arabian Travel Market [ATM], now scheduled for the middle of May 2021.”

Faster recovery

The Colliers forecast assumes a faster recovery for the UAE and Saudi markets, with the former expected to benefit from the build-up to Expo 2020, which is now expected to start in the fourth quarter of 2021.

For Saudi Arabia, the forecast in 2020 assumes restricted pilgrim access to Mecca and Medina during the Ramadan and Haj periods. Both countries are expected to continue benefiting from ongoing tourism initiatives, upcoming megaprojects and domestic tourism, according to the Colliers report.

Many cities and countries relied on domestic tourism during 2020 and the question is whether that will be enough to bolster the region’s figures, and whether the trend will sustain itself over the months ahead.

“As international travel found itself in the ever-changing crossfire of quarantine rules and Covid-19 case counts [in 2020], staycations became one of the primary drivers of occupancy during the pandemic,” says STR’s Wooller.

He adds that countries in the Middle East have done an overall good job generating the domestic demand, and the staycation boost has helped hotels in the region to move the occupancy trend in the right direction. “However, the region is a great hub of international travel and will hope to see high international demand as countries around the world start to open in the upcoming quarters,” says Wooller.

According to Alex Dichter, senior partner at US-based McKinsey & Company, a full recovery in air travel demand is not expected before 2022 and could be delayed beyond 2024. This is not necessarily related to the economic fallout but to government restrictions and consumer fear, Dichter told the Future Hospitality Hybrid Summit in Saudi Arabia in October 2020. 

Separating domestic from international outbound tourism, the latter will take longer to recover, said Dichter, with a lot of that driven by the closing of borders but also permanent capacity reductions in the aviation industry, where wider long-haul aircraft have been grounded. 

Domestic travel

Domestic tourism definitely grew in 2020 during the pandemic and was a “welcome replacement” for lost room nights from overseas travellers, says Colliers’ Wrenn. “However, as international travel is set to rebound in 2021, with countries and regional bodies putting in place more user-friendly entry-exit policies and procedures, as well as the positive news around the availability of a vaccine, we do foresee that domestic tourism demand may retract as an overall percentage of the business mix in hotels,” he adds.

“However, given the likelihood that corporate travel may take some time to recover, hotels will certainly look to retain a high portion of domestic leisure business especially during weekends and local holiday periods,” says Wrenn.

McKinsey’s Dichter also notes that business tourism will be harder hit than leisure. “We do expect real changes in attitudes towards business travel,” he said during the October Saudi summit. “We’ve had a bit of a perfect storm coming into this with many businesses increasingly concerned about their carbon footprint and Covid-19 created a catalyst for us to try new technologies. We’ve been talking to every chief human resources officer that we can about their company’s plans for travel and most of them are telling us that they have a task force focused on learning how to travel differently.”

Speaking at the Arabian Hotel Investment Conference 2020, Christopher Hewett, vice-president of hospitality at the UAE’s Al-Hamra Group, brought up the domestic travel market. 

“We have come to value the domestic market more than maybe historically,” he said. “There was a very strong focus on the international segment because they were driving long average length of stay, they were generating 70-80 per cent of room nights. But we have seen that the domestic market is valuable.”

Government initiatives 

Tourism bodies across the region have launched several initiatives to push visitor numbers up.

Colliers noted in its survey that Dubai’s Department of Tourism & Commerce Marketing launched two campaigns in early 2020, including #WeWillSeeYouSoon and #TillWeMeetAgain to engage with tourists during the lockdown period, following it up with #ReadyWhenYouAre in July 2020, when the emirate opened for tourists.

Meanwhile, Saudi Arabia reopened heritage site Al-Ula for visitors within the kingdom in November, and the Tourism Ministry has partnered with the local Social Development Bank to create funding systems for tourism projects. 

Moreover, after suspending umrah for seven months, Saudi Arabia restarted access to pilgrims on 4 October.

During the first stage, 6,000 local pilgrims were allowed to perform umrah. The capacity was increased to 20,000 pilgrims a day by 1 November and foreign pilgrims were also permitted to enter.

Israel ties

Additionally, the UAE and Bahrain have signed a peace deal with Israel to normalise relations and focus on trade, business and travel. On that note, the 2021 edition of the ATM exhibition is expecting a huge influx of exhibitors and visitors from Israel and further afield. 

“The interest shown by Israel’s Tourism Ministry as well as other travel professionals based in Israel and international operators specialising in tours to Israel has been extraordinary,” says Danielle Curtis, Middle East exhibition director for Arabian Travel Market. “This is a brand new market for both inbound and outbound operators, and will provide a much-needed boost to regional and international travel. 

“However, it is not just about direct travel between Israel and the UAE and Bahrain. Due to the burgeoning international flight network between [Israel’s] El-Al, [the UAE’s] Emirates, flydubai, [and] Etihad, and [Bahrain’s] Gulf Air, there will be massive potential for two-centre holidays or stopovers, either during inbound or outbound legs.”

Meanwhile, Oman has resumed issuing tourist visas, albeit after a second lockdown was imposed in October 2020. However, tourists must apply for their visa through a hotel or tourism firm. 

Travel pass

Meanwhile, the global air travel industry is also looking for ways to accelerate international travel and tourism.

The International Air Transport Association (IATA) revealed in November 2020 that it is in the final phase of creating a ‘travel pass’ that can hold users’ test and vaccination certificates. The pass can be shared with relevant airlines and authorities and could allow for seamless travel amid strict requirements. The document is planned to be launched in the first quarter of 2021.

“IATA and International Airlines Group have been working together in the development of this solution and will undertake a trial to demonstrate that this platform, combined with Covid-19 testing, can reopen international travel and replace quarantine,” the travel body said in a statement.

“These are very important initiatives,” says Colliers’ Wrenn. “We see the recovery being led by the leisure segment and making it easier for international tourists to visit your country is imperative in the extremely competitive world of international leisure travel.” 

By Devina Divecha

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