Tourism recovers its strength

13 August 2004
The rapid growth in intra-regional travel and the return of European travellers to traditional holiday spots made the Middle East one of the few regions to record a year-on-year increase in tourism receipts in 2003. The Middle East also saw a rise in tourist arrivals - up by 10.3 per cent to 30.4 million last year - accompanied by a rise in per capita receipts.

The region still accounts for just under 3 per cent of world receipts, according to a recent report by the World Tourism Organisation (WTO). However, it remains one of the most dynamic tourism markets in the world. 'Most destinations in the Middle East are looking back on a particularly buoyant winter and spring season after an already strong 2003 revival,' says the WTO. 'Intra-regional tourism continues to thrive, partly fuelled by the reluctance to travel to other regions, but above all by the improvements in tourism supply on offer and the increasingly professional marketing and promotion by the destinations of the region.'


Besides seasonal holidays, the strong rise in tourist traffic within the region is also being driven by annual events such as the Dubai and Qatar summer shopping festivals. More traditional tourist destinations such as Beirut and Cairo are also targeting the Arab market for specific dates in the calendar such as Eid al-Adha. And, despite the conflicts in Iraq and the Occupied Territories, more sophisticated marketing and the development of a strong market for budget travel have made tourism business from Europe and Asia less susceptible to regional knocks. Notably, the crash of a charter plane in Sharm el-Sheikh in January appears to have had little impact this year on the tourist industry in Egypt, which saw a 70 per cent year-on-year increase in visitor arrivals in 2003.

'Destinations with a strong image, such as Dubai and Egypt, are expected to profit from the economic recovery in the major European source markets and their price competitiveness due to exchange rates,' says the WTO. The UAE, for its part, clearly anticipates this trend to continue, with 41 new hotels expected to open by the end of 2008.

Middle East tourist industries are also making more money from their clients. A survey by UK-based HVS International of 120 hotels in the region reveals that although overall occupancy levels increased by only 2 per cent to 67 per cent last year, average room rates rose by 6 per cent to $86. In addition, 2003 saw an average year-on-year increase of 10 per cent in revenue per available room (RevPAR) rates.

The growth is unlikely to be sustainable in certain markets. Kuwait enjoyed a 65 per cent increase in RevPAR last year, but this can largely be attributed to the influx of administrative staff during the coalition occupation of Iraq. The country will continue to market itself as a gateway to the northern Gulf, but the lull in reconstruction work in Iraq is likely to see business travelto Kuwait easing off in 2004.


The increasing sophistication of regional travel markets has led to a marked shift in investment patterns recently, particularly in the Gulf. The vast majority of hotels under development in the region are five-star facilities, but real estate investors are diversifying their portfolios, increasingly opting for mixed-use developments which both help to mitigate risk and provide less volatile sources of revenue than stand-alone hotels. At the same time, greater attention is being paid to the development of branded limited-service hotels within the region: the first Ibis hotel opened in Dubai in 2003, while the US' Starwood Hotels & Resorts is planning to launch its first Westin-branded hotel in the region in Cairo.

The growth in intra-regional travel is also reflected in the growing demand for certain types of accommodation. 'An increased level of investment in serviced apartments is n

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