Colliers International White Paper
Based on the latest report issued by The World Tourism Organization (UNWTO) in May 2020, “Impact Assessment of the COVID-19 Outbreak on the International Tourism”, the COVID-19 pandemic has cut international tourist arrivals in the first quarter of 2020 to a fraction of what they were in 2019. International tourist arrivals dropping by 22% in Q1 2020, potentially declining by 60%-80% for the whole year 2020.
This translates into a loss of 67 million international arrivals and about USD 80 billion in receipts globally. Based on the UNWTO report, the expected forecast for the overall international tourist arrivals for 2020, are projected to decline between 58% to 78% by year end, assuming the lifting of travel restrictions and opening of borders by July and December 2020, respectively.
This projects a potential 100 to 120 million direct tourism jobs at risk. This places 2020 as of the worst performance for international tourism since 1950 and puts an abrupt end to a 10-year period of sustained growth. Based on the survey conducted by Colliers MENA Hotels team in April 2020, 79% of hotel owners in the MENA region decided to partially or fully close their hotels due to low occupancy rates and 54% of respondents expect the market to take about 6 to 12 months (from the start of recovery), for the hotel market to return to 2019 occupancy levels. Even once the travel restrictions are lifted, the travelers will have to adopt to new “normal”, which will require COVID testing, social distancing and many other ‘new normal’ practices and policies.
Global Medical & Wellness tourism Market
Based on latest available data, the Global Market Size reached $4.22 trillion by 2017, representing a growth of 12.8% from 2015-2017. To revive MENA travel, tourism and hospitality sectors, governments, private investors and operators will need to focus on beyond traditional medical tourism and spas and offer a wide range of services that encompass healthcare and wellness services highlighted below to achieve sustainable recovery and growth attracting local, regional and international tourists.
On 28 May 2020, The World Tourism Organization (UNWTO) released a set of guidelines to help the tourism (and hospitality) sector to emerge stronger and more sustainably from COVID-19. The UNWTO guidelines highlight “the need to act decisively to restore confidence and, as UNWTO strengthens its partnership with Google, to embrace innovation and the digital transformation of global tourism”.
“The guidelines provide both governments and businesses with a comprehensive set of measures designed to help them open tourism up again in a safe, seamless and responsible manner”. Highlighting the importance of restoring the confidence of travelers through safety and security, the UNWTO protocols the guidelines are designed to reduce risks in each step of the tourism value chain.
These protocols include the implementation of check procedures where appropriate, including temperature scans, testing, physical distancing, enhanced frequency of cleaning and the provision of hygiene kits for safer air travel, hospitality services or events. Based on an intimate experience in MENA, Colliers believes that provision of tertiary care healthcare facilities offering minimal care in case of emergencies will further boost the confidence of travelers to visit.
For main cities, such as Dubai, Abu Dhabi, Riyadh, Jeddah and Cairo, tour and hotel operators can affiliate with local hospitals that are known to provide good quality of care. For resorts outside the main cities, similar to the costal resorts in Egypt, Jordan, Oman, the UAE and more recently in KSA (Red Sea Project, Qiddiya Entertainment City and Amaala Red Sea Riviera) hotel operators may have to combine to provide the support facilities. This may take the form of shared capital cost to establish a suitable healthcare facility; as with hotel branding consideration could be given to healthcare brands that would enhance the attraction of the overall destination.
Once established, to improve profitability, the facility would also serve the permanent catchment population alongside tourists and those owning holiday homes. Another option for establishment of healthcare facilities could be Public Private Partnership (PPP), where such facilities are considered as “public good” and governments provide regulatory and financial incentives to attract private investors and operators. To make the tertiary care hospitals more profitable and hence attractive to investors and operators, other health and wellness “packages” could be offered as part of “tourism packages”.
These have the additional positive impact on tourism and hospitality sectors as wellness tourists can often extend the length of stay. Typical wellness packages would include; beauty, cosmetic, weight loss, fitness / skills treatments, diet and nutrition treatments, rehabilitation treatment (trauma, accident and mental health) and other health driven wellness treatments as highlight on the next page.
Retirement Homes & Senior Living
Globally, the share of and absolute number of elderly individuals is growing faster than the number of people in any younger age group. Consequently, the share of senior citizens in the total population is increasing throughout the world. Currently, around 150 million people globally are over the age of 80 years and almost 1 billion are over the age of 60 years, which are expected to increase to 425 million and 2.1 billion respectively by 2050.
In the MENA region, the population above 60 years is expected to increase to 150 million by 2050 from the current level of 20 million. Retirement homes and/or senior living facilities offer a wide range of lifestyle options with varying degrees of medical services. In the recent past, retirees from developed nations have increasingly started to expatriate to sunny destinations which are 3 to 4 hours away from home and offer a better cost-of-living and quality of life.
Many countries in the MENA region, such as the UAE, Egypt, Jordan, Oman and more recently the KSA (Red Sea and Neom) can target this segment of the market by offering quality retirement homes / senior living at affordable price. However, as highlighted before, the provision of tertiary care healthcare facilities offering minimal care in case of emergencies is essential to boost the confidence of target segment, as one of the main deciding factor to choose a destination to retire is quality of healthcare provision as the older one gets the likelihood of accessing the healthcare facilities increases.