After a disastrous year in 2011, Tunisia’s tourism sector has rebounded strongly over the past 12 months. Receipts from tourism are up to more than 90 per cent of 2010 levels, while the total number of overnight stays and the number of arrivals increased about 39-45 per cent compared with 2011, according to the latest figures from the tourism ministry.

Tourism revenue is a crucial part of Tunisia’s service-led economy. The sector contributes 7 per cent of the country’s gross domestic product (GDP) and is a vital source of inward investment and foreign exchange reserves. Tunisia is a net importer of hydrocarbons, and the country’s production of phosphates, which contributes an estimated 25 per cent of GDP, has collapsed to little more than a quarter of its capacity in the two years since the fall of the regime of Zine el-Abidine Ben Ali in January 2011.

“Tourism is a crucial sector and the government will do everything it can to ensure its recovery,” says Sami Zemni, professor in political and social sciences at Ghent University’s Center for Third World Studies in Belgium.

Sudden collapse of Tunisia’s tourism sector

The collapse of the tourism sector in 2011 was both abrupt and deep. The number of visitor arrivals fell 30 per cent, from 6.9 million in 2010, to just 4.8 million in 2011, according to government figures. Receipts dropped 33 per cent, to TD2.3bn ($1.5bn) from TD3.5bn, while the number of overnight stays decreased 40 per cent. Arrivals from Spain dropped 79 per cent and those from France and Germany were down 42 per cent. The tourism sector shed an estimated 3,000 jobs.

Tourism is a crucial sector and the government will do everything it can to ensure its recovery

Sami Zemni, Ghent University’s Center for Third World Studies

The economic crisis in Europe meant that the tourism sector was on a downward trajectory even before the political instability of the past two years. Net transfers from tourism fell 6.5 per cent in 2009 and a further 4.3 per cent in 2010, according to the latest Article IV report, the Washington-based IMF’s annual assessment of the country’s economy, published in September 2012.

Tunisia is still in a state of political transition. The introduction of a planned new constitution has already been postponed and the parliamentary elections that are due to follow have been pushed back from March 2013 to June. Analysts say there may be further delays. On 12 December, Fitch Ratings, an international ratings agency, downgraded Tunisia’s long-term foreign currency rating from BBB- to BB+ with a negative outlook due to the slow political transition.

Under the circumstances, the strong rebound in tourism numbers during 2012 is impressive, particularly given the muted nature of the economic recovery in Europe. Europeans typically account for more than 50 per cent of total arrivals to Tunisia. Tourism receipts increased 30.4 per cent year-on-year to TD3.2bn, just 9.9 per cent below 2010 levels. The number of arrivals was up 29.4 per cent to 5.95 million, 11.3 per cent below 2010. The total number of overnight stays, meanwhile, increased by 45.2 per cent to 30 million, still 15.8 per cent down on 2010.

“Tourism is clearly rebounding, which is important for Tunisia because it’s an important source of employment and foreign currency receipts,” says Amelie Roux, director of Fitch Ratings in Paris.

In 2011, the tourism sector in Tunisia directly supported 191,500 jobs or 6 per cent of total employment, according to the London-based World Travel and Tourism Council. When indirect jobs are included, the figures rise to 415,500 or 13 per cent of total employment.

UK tourists in Tunisia

The upturn has been particularly strong among tourists from the UK, who account for about 5 per cent of total visitors. Between January and November 2011, the number of visitors from the UK to Tunisia dropped 35.5 per cent to 218,347, from 338,737 for the same period in 2010, according to the Tunisian National Tourist Office in London. But in the first 11 months of 2012, the figure rebounded by 45.7 per cent to 318,138, just 6 per cent down on 2010.

2012 has been a good year. We are only about 5 per cent down from 2010, which was a record year

Sonia Tanoh, Tunisian National Tourist Office

“It was a difficult year in 2011 because of the revolution and the transition to a democracy, which is not easy for a country that does not have that habit,” says Sonia Tanoh, spokesperson for the Tunisian National Tourist Office. “But 2012 has been a good year. We are only about 5 per cent down from 2010, which was a record year.”

It is understandable that the turbulent political scene deterred visitors to the country in 2011. An estimated 338 people died and another 2,174 were injured in the uprising that led to the ousting of Ben Ali in January 2011, according to figures published by an official government commission in May 2012.

For several months thereafter, reports about Tunisia were dominated by news of the sometimes violent attempts by the country’s fundamentalist Muslim Salafists to impose their orthodox views of Islam on others, and the abuses perpetrated by Tunisia’s police and security forces as they attempted to curb social unrest. “Given the downturn in Europe and stories in the press of Salafists using pulpits to preach their message and haranguing a couple having coffee together, the average person is going to say they’re not going to go there,” says one economist covering Tunisia.

But aside from ongoing demonstrations, the relative calm of recent months has led to a growing confidence among tourists that they will be safe in the country. “Up to now not one foreigner has been killed in Tunisia since the revolution,” says Zemni.

Alongside a concerted marketing campaign by Tunisia’s government in key European markets, it is this growing confidence in the stability of the country that has enabled people to look beyond reports of social unrest and industrial action. “We’ve had good feedback from visitors,” says Tanoh. “People are expressing themselves in the same way that they do in any other country – like in France, where people take to the streets if they are not happy. But they don’t touch the tourists, and people realise this.”

Islamist fears

In the early months of the transition, there were concerns that a government and legislature in which Ennahda, an affiliate of the Muslim Brotherhood, is the largest party could spell the end of traditional tourism in Tunisia.

In early 2011, the party line was that medical and halal tourism would be developed to replace any earnings lost from beach tourism. But following meetings with commercial stakeholders, Ennahda quickly moderated its stance.

“When you’re in a position where investment and tourism are driving growth you have to be careful about these things, at least until such time as you can wean the economy off them,” says Raza Agha, chief economist for the Middle East and Africa at Russia’s VTB Capital.

Both medical tourism and halal tourism have a role to play in the future development of the sector. Tunisia is one of the world’s most popular destinations for thalassotherapy, a health treatment in which minerals are absorbed through the skin from seawater, algae, seaweed and alluvial mud to help restore the body’s natural chemical balance.

The popularity of health tourism is growing. There are already health clinics in the towns of Sousse, Hammamet, Djerba and Gammarth, and others are being developed. But despite its increasing appeal, health tourism attracts only 160,000 visitors a year, or just 2 per cent of total visits.

An Islamic-leaning government is likely to encourage the development of halal tourism. “There is the possibility that Gulf countries will invest in Tunisia to help develop halal tourism,” says Zemni. “The idea is to have hotels designed to accommodate families with children, with separate pools for men and women, and no alcohol. There are already Turkish promoters in the country building such facilities.”

For the time being, though, halal tourism is in its infancy. “It’s just started, so the share of Islamic tourism is very small,” says Zemni. “The European model of sand and sea is still very much the dominant one. But the plan is to have a mix of halal tourism and conventional tourism.”

The prospects for the recovery of conventional tourism over the next few years are good. In December 2012, the tourism minister announced that French hotel chain Accor plans to build 20 new hotels in the country in the next 10 years, to add to its two existing facilities in Tunis. A visiting delegation from Saudi Arabia in March discussed the development of a new thermal spa project by the Al-Rajhi Saudi investment fund, and a study to promote tourism in Kairouan, the country’s religious capital.

Hotel overcapacity worries in Tunisia

But it is not all good news for Tunisia’s tourism sector. The sharp downturn in fortunes between 2009-11 has created a problem of overcapacity. The combination of empty rooms and reduced room rates introduced to entice tourists to return has left many hotels unable to pay the debts taken during more prosperous times.

“It’s not just a question of the number of arrivals, but also of the performance of the hotels themselves,” says Roux. “A lot of hotels are performing quite poorly, and a large share of bank loans to hotels are impaired.”

The combination of sluggish growth in Europe and a political transition in Tunisia that is set to continue for at least another six months means that the full recovery of the tourism sector is likely to be slow. Earnings are not expected to return to 2010 levels until 2014 and will only reach 2008 levels a year later, according to the IMF.

The recovery is also inextricably linked to the country’s political fortunes. A more stable political scene is likely to encourage a continued upturn in tourism, the economic benefits of which will help promote social stability.

But an escalation in social unrest is likely to hamper the sector’s recovery and could exacerbate the polarisation of politics. The government will hope that the relationship is a virtuous circle rather than a vicious one.