Flip through the latest issue of Gulf Weekly.
THE Middle East and North Africa (MENA) region is witnessing significant investments into its travel and tourism infrastructure, but there are yawning gaps in the system that could impede the marketability of many destinations.
Some $327 billion worth of projects are either under way or planned, which, by 2020, should add 200 hotels and 100,000 rooms. Airport capacity is expected to increase by 300 million passengers and aircraft fleet size would go up by 150 per cent.
The UAE accounts for 85 per cent of the Gulf’s tourism projects, a survey shows. Dubai accounts for more than 50 per cent of the value of the UAE’s tourism projects with over $123 billion in investment, followed by Abu Dhabi with $83 billion.
Oman has $16.6 billion ongoing tourism projects, followed by Qatar with $8.47 billion. Bahrain has $5.66 billion worth of projects under way and Saudi Arabia has invested $4.48 billion.
These investments are expected to help lift the region’s T&T (travel and tourism) infrastructure ranking, which stands close to mid-range as a whole, with the UAE leading the pack, according to the World Economic Forum’s Travel and Tourism Competitiveness Index 2007.
Overall the UAE has the strongest showing in the region, ranking 19th, ahead of countries such as Greece, Ireland, Barbados, Malaysia and Italy. Tunisia is 34th and Qatar is 36th. Jordan at 46th, rounds out the Arab world’s representation in the top 50.
But would the current levels of investment be enough to take full advantage of the region’s tourism potential?
Studies have shown that mere investment in tourism projects would not make a region attractive. Tourism is not a standalone enterprise. There are allied sectors that have to be developed to make tourism a selling proposition. Money has to be found to be invested in basic infrastructure facilities that ensure brisk connectivity, hassle-free land transportation, technological access and service quality.
Bahrain has become one of the most popular tourist destinations in the Middle East with over two million tourists a year. Most of the visitors are from Gulf States. Bahrain is an excellent introduction to the Gulf because of its authentic Arab heritage and reputation as relatively liberal and modern. The ancient civilisation of Dilmun, which dominated trade between Mesopotamia and the Indus Valley Civilisation, was centred in Bahrain. Dilmun prospered because it had fresh water.
But present day population growth and the high rate of consumption would make water a scarce commodity in the Kingdom in the not too distant future.
For projects, at the current pace of development, utilities—water in particular—will not be sufficient to cater to all the planned developments. The World Bank forecasts a gradual reduction in water availability for the whole region, potentially reaching 50 per cent of current levels by 2050, as desalination technology remains expensive.
According to Booz Allen Hamilton, in-country land and air transport networks are not developing fast enough and therefore are limiting tourism benefits. These limitations imply a shorter average visitor stay, loss of opportunity to showcase diverse tourism offerings and share tourism benefits with remote locations, declining average spend per day in single locations over the duration of a long stay and potential leakage to other markets of a portion of both visitor days and spend for long-stay tourists.
In the absence of a well-developed urban bus transport infrastructure, taxis are the predominant mode of transport for tourists within Bahrain. However, service, price and standards are not well regulated, with many taxis not using meters. Meanwhile, a quality bus infrastructure and fleet adapted for tourists is non-existent. Tourism also requires a network of good roads and an efficient traffic system to ensure unhampered access to far flung destinations.
For the region, air transport connectivity remains low, with most airports underserved in terms of international network and flights. The negative impact of this on sector growth includes a “capped” growth potential for traffic from source markets, generally higher fares on routes with limited flight options, more difficulty in attracting tour operators and creating tour packages, and a reliance on charter flights, which are focused on limited peak seasons, says Booz Allen.
Planned capacity expansions, though positive, will magnify the connectivity challenge, requiring airports to find the right strategic positioning, that is, do they want to be a global or a regional hub, an international destination, or else a regional origin and destination airport? They also will have to enhance service levels and revenues in order to attract more airlines and destinations, and thus passengers to ensure long-term sustainability. This means providing seamless, quick, smooth-running processing all the way from check-in, information systems, and security to duty free and restaurant purchases, boarding and baggage handling.
Across the MENA region, technology is still underleveraged in travel and tourism services, partly due to low ICT penetration generally. For example, just 1 per cent of ticket sales in MENA are made online, versus 15 per cent in Asia-Pacific and 27 per cent in Europe. This is not only because low ICT penetration in general, but also due to low credit card penetration (only five per cent in Saudi Arabia), as well as cultural preferences favouring human interaction over electronic transactions.
The region also trails the world in global initiatives to apply modernising technology to airlines and airports processes and services. For example, the introduction of e-ticketing is taking much longer than expected, raising doubts on the ability of all regional airlines to meet their commitment to IATA’s “Simplify the Business” programme, which includes 100 per cent e-ticketing by the end of 2007, common-use self-checking systems, RFID for baggage handling, bar code for boarding passes, and e-freight among others.
The answer to all these issues is formulation of a tourism policy that visualises the future needs of the country and allocates a major share of the oil export surplus for infrastructure and basic amenities projects. In developing the infrastructure, the private sector can be tapped to invest in projects on a Build Operate and Transfer (BOT) principle.
Talking Business
K S Sreekumar
sreekumar@tradearabia.net
