Shortfall of skilled staff could hamper GCC tourism goals

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• Sector growing after Covid redundancies
• UAE and Saudi alone need 86,000 hospitality staff 
• $143bn leisure and hospitality projects planned

The GCC’s tourism sector is forecast to return to pre-pandemic levels in 2022, generating revenue of $26.3 billion, but experts question whether future growth could be stymied by shortages in the region’s skilled hospitality workforce. 

UAE-based investment banking advisory firm, Alpen Capital, said the sector registered a 74.8 percent growth over the past year, adding that it expects a compounded annual growth rate of 6.6 percent up to 2026.

Factors like the upcoming FIFA World Cup 2022 in Qatar and the easing of visa regulations are expected to drive growth, while the pandemic has accelerated demand for mid-scale hotels, serviced apartments and Airbnbs in the region.

• Hotelier recruiting 12,000 workers for World Cup
• Dubai receives 1.7 million tourists in first half of 2022

But there are concerns that a shortfall in skilled hospitality professionals could affect the status of the GCC (ie, Saudi Arabia, Kuwait, the UAE, Qatar, Bahrain and Oman) as a global tourism hub.

Worldwide inflation is also likely to impact consumer spending power, and travel could be impacted by uneven vaccination rates and new coronavirus strains.

“As the GCC advances on its tourism ambitions, it needs to pay equal attention to the ‘softer’ aspects of development – people, technology, and sustainability,” said Cyril Lincoln, executive vice president and global head of real estate finance and advisory at Dubai-based Mashreq Bank.

“The challenge now is not the absence of opportunity, but perhaps the lack of manpower and technical skill sets,” said Lincoln. “Covid-19 sparked unemployment across travel and tourism not just in the region, but globally. 

“As the industry recovers, there are clear indications of pent-up demand – but not all workers may choose to return.”

Sanjay Bhatia, managing director of Alpen Capital, told AGBI: “Given the scale of infrastructure development taking place in the GCC, having a skilled workforce remains a critical success factor. 

“The GCC hospitality sector witnessed a lot of redundancies and salary cuts during the pandemic; however large groups managed to retain their top talent to efficiently run and grow their operations.”

Worrying lack of talent

Greg Wright, managing partner of Food People, a UAE-based food and beverage (F&B) hospitality recruitment firm, said 2021’s ‘great resignation’ hit companies particularly hard, with clients describing the perfect storm of labour shortages, increased fuel and raw material prices.

However, F&B companies in the UAE were less impacted due to diverse international talent pools. 

“While labour shortages are driven by supply and demand, a more concerning trend is the lack of talent… Among the total available pool of available workers, talent represents an even smaller percentage. As a result of shrinking labour markets, finding talent becomes more difficult,” he added.

The comments come as more than $143 billion worth of leisure and hospitality projects are planned and under construction in the Gulf region, a sign that demand for skilled labour is set to rise.

Real estate service provider Colliers says the GCC will require more than 90,000 skilled professionals in its hospitality sector by 2026, of which nearly 86,000 will be needed in the UAE and Saudi Arabia.

Mashreq Bank’s Lincoln added: “Governments need to drive the development of local capabilities, and this can be done by establishing relevant training institutes and university programmes.

“This further aligns with the vision to establish a knowledge-based economy, while also creating business opportunities for international educators in the field.”

Philip Mackenzie, senior consultant for MENA Hotels at Colliers, described how tourism in the area is set to grow in the second half of 2022, forecasting continuing growth of the mid-market hotel sector in particular. “We have seen new hotels aiming at offering a more value-conscious offering,” he said.

“These new entries are expected to round out the market by offering a wider variety of price positioning for what has previously been only available for those willing to pay five-star rates.”

Commenting on Saudi Arabia, Mackenzie added: “We’re expecting the domestic market to be further bolstered by new inbound demand from upcoming destinations.

“Certainly, from the giga projects, but we have seen increased interest in new developments, ranging from coastal destinations in Half Moon Bay and Obhur Creek, to destinations around Taif and the Soudah Mountains.”

In Qatar, Doha experienced a slight decrease in occupancy over the first half of 2022 compared to the previous year, but the FIFA World Cup is expected to result in “super-normal levels of demand” later this year.

“Reviewing the last forecasted figures shared by the Qatar Tourism Authority, there is an expectation of more than a million visitors over November and December… the additional demand is going to place significant pressure on the supply,” said Mackenzie. 

“A combination of alternative lodging options and new hotels will help with this influx of demand. We are still expecting more than 5,000 keys of internationally branded supply to open in preparation for the World Cup.”

Predicted GCC tourism growth rates to 2026

• Growth in the hospitality sector revenue of individual GCC countries is expected to range from a compounded annual growth rate (CAGR) of 2.9-8 percent between 2022 and 2026, according to Alpen Capital. 
• Saudi Arabia and UAE, the largest markets in the GCC, are expected to witness CAGRs of eight percent and 5.5 percent, respectively. 
• Kuwait, Oman and Bahrain are expected to grow at 7.1 percent, 6.3 percent and 2.9 percent, respectively. 
• Growth in Qatar is expected to normalise after the completion of the FIFA World Cup 2022, with a CAGR of 4.3 percent between 2023 and 2026.