Middle East tourism to soar despite global economic gloom

The economic upheaval that has been wrought by the credit crunch and high fuel prices is projected to slow international visitor increases at hotels worldwide to just 3%-4% this year, according to a new study by Deloitte, the auditing and consulting firm.

By contrast, international visitor numbers in the Middle East are expected to grow by 6%-10%.

The region achieved remarkable tourism numbers in 2007 from which to build on, as it boasted the largest increase in visitor numbers in the world, the largest rise in air passengers, and the briskest pace of growth in the hotel industry.

About 51 million people visited the Middle East last year, a 13% rise over 2006.

Air traffic to the region was up 18%, the fourth straight year of double digit increases.

ME hotel business booms

Hotels are reaping a windfall from this growth, as the region now has the highest absolute occupancy and average room rates in the worldm, at 74.3% and $181.

Business travellers are the key drivers of the region's booming hotel business, as more than a quarter of fortune 500 firms now have a base in Dubai, leading to a strong demand for hotel rooms from the corporate sector.

Another factor boosting hotel occupancy rates in Dubai is its emergence as a key player in the meetings, incentives, conference, and exhibitions (MICE) industry, with more than 100 major international exhibitions being held in the emirate.

With occupancy soaring in the region, hotel companies are scrambling to build hotels to accommodate the demand. For example, InterContinental Hotels Group has 11 hotels in the pipeline in the Middle East and Africa.

Meanwhile, Hilton plans to double its portfolio of 43 properties in the region within five years.

Deloitte predicts that if the rest of 2008 follows the pattern set in the first quarter, hoteliers will see a five-year run of double digit growth.

Tourism investment on the rise

Tourism contributed 2.4% to the region's GDP in 2007, a figure that Deloitte projects to grow as countries such as the UAE take major steps to reduce their dependency on oil revenues and boost tourism.

Dubai is spending $4.5bn to expand Dubai International Airport in preparation for the 60 million passengers it expects to welcome by 2010. Meanwhile, work has begun on Dubai World Central - Al Maktoum International - which will be the largest airport in the world. The price tag for this project is estimated at $10bn.

But the UAE is not the only country in the region investing heavily in its tourism industry. Tourism contributes over 8% to Saudi Arabia's economy, and the kingdom is planning massive investment in tourism products and services in hopes of building on its 51% rise in international visitors in 2007.

Tourism in Jordan, which lacks the oil wealth of its neighbours, is the second-largest private sector employer and contributes 10% to the country's GDP. The kingdom plans to invest 4% of its tourism revenue back into the industry, in a bid to double tourism arrivals to 12 million by 2010.

Egypt aims to boost annual visitor numbers from 8 million to 12 million by 2012, and it moved rapidly towards that goal last year with a 22% increase in tourist arrivals. The country is witnessing particularly strong growth from emerging source markets, such as India and China, which were up 34.6% and 56.6% respectively.

See also:
Saudi tourism strategy takes shape
Travel industry has yet to feel the impact of high oil prices