Mena has high hopes for post-pandemic tourism

Visitors are returning to key tourism destinations around the Middle East and North Africa, but not everywhere is faring so well

The surge in passenger numbers at the Gulf’s biggest airports in the opening months of this year tells a clear story of recovery in the region’s travel and tourism sector.

Doha’s Hamad International handled more than seven million passengers in the first quarter, up 162 percent on the same period in 2021. 

Dubai International saw a 139 percent year-on-year increase, with 13.6 million people passing through the airport, prompting one May visitor to Dubai’s Arabian Travel Market conference to say “it felt as if the pandemic had never happened”. 

The event offers a window into the health of the region’s tourism industry and, while things might not be quite back to pre-coronavirus levels, they are getting close. 

Visitors return

Dubai welcomed 3.97 million visitors in the first three months of this year, significantly up on the 1.26 million for the same period in 2021 and close to the 4.75 million recorded in the opening quarter of 2019, before the pandemic brought cross-border travel to a virtual standstill. 

Elsewhere in the Gulf, Bahrain reported a 600 percent increase in international arrivals in the first four months of this year, at 2.47 million, compared with last year’s meagre 354,000.

In Turkey, another major tourism market in the wider region, it is a similar story. Visitor numbers published by the Culture and Tourism Ministry for the first four months of 2022 show a 173 percent year-on-year increase, with the biggest source market being Germany, followed by Bulgaria and Iran. Arrivals in April alone amounted to 2.6 million, not far off the 2.7 million that visited in the whole of the first four months of 2021.

Jordan, for its part, saw tourism revenues leap by 252 percent year-on-year to $1.2 billion in the first four months of 2022, as visitor numbers were over one million.

Some challenges still remain, however. The main missing piece of the puzzle for Dubai is Chinese visitors. They constituted the fourth biggest group among arrivals in early 2019, but do not feature among the top 20 so far this year, due to ongoing lockdown restrictions in China.

For others, Russia’s invasion of Ukraine has set back hopes for a stronger post-pandemic tourism rebound. Egypt’s deputy tourism minister Ghada Shalaby has said her country is hoping to draw in more visitors from Western Europe, the Gulf and Asia to offset the loss of Russian and Ukrainian tourists, but even so, “expectations for Egyptian tourism in 2022 are not higher than last year”.

Occupancy rates 

According to industry research firm STR, occupancy rates remain below their pre-coronavirus levels, showing the market still has some way to recover. The UAE enjoyed the strongest average occupancy rates in the opening four months of the year at 74.2 percent, but this is well below the 80.9 percent recorded in the equivalent period of 2019. 

In Saudi Arabia, where religious tourism remains the dominant factor despite concerted efforts to develop a leisure market, occupancy this year has averaged 58.6 percent, slightly below the 60.4 percent seen three years ago. 

Some other key tourism destinations are faring far worse. Morocco’s average occupancy rate in January-April was just 31.5 percent, compared with 61.5 percent in 2019. 

However, average daily rates (ADRs) have been higher this year in several key markets including the UAE and Egypt and in the Saudi cities of Mecca and Medina, with the last of these performing particularly strongly.

STR managing director Robin Rossmann says the Middle East has been outperforming the US, Europe and Asian markets on this measure. Dubai has led the way, helped by the draw of Expo 2020, but Saudi Arabia, Kuwait, Bahrain and Qatar have all seen ADRs rise above 2019 levels. 

When it comes to revenue per available room (RevPAR) the picture is more mixed. Many of the strongest markets, including Lebanon and Saudi Arabia, have seen RevPAR significantly ahead of 2019 levels – in Lebanon’s case, it has been running 135 percent higher. But the weaker markets, particularly those in North Africa such as Morocco and Tunisia, are dealing with RevPAR rates some 40-50 percent below their pre-pandemic levels.

Event boost

What is clear is the importance of major events for the hospitality industry. Dubai’s Expo 2020 attracted around 24 million visits – not far off the 25 million target the authorities had set prior to the pandemic – and while it is not yet known how much of the total was accounted for by repeat visits and by local residents rather than incoming tourists, the chronic lack of taxi availability during the final three months reflected a general sense that the city was far busier than normal.

The football World Cup in November is expected to draw some 1.5 million visitors to Qatar, with a likely positive spillover effect on some neighbouring countries. Qatar Airways has partnered with Flydubai, Kuwait Airways, Oman Air and Saudia for shuttle services to and from Doha on match days, with up to 168 flights a day between those destinations. 

Planning for the future

Each tourism market around the region faces unique challenges. Bahrain, for example, is concerned about the opening up of Saudi Arabia and what that might mean for the number of visitors coming across the King Fahd causeway. “Bahrainis are really worried about what’s going on in Saudi Arabia in terms of their tourism industry,” said one regional economist. “They worry that they’ve lost the family leisure market. The next few months will be key to see if Bahrain can sustain its position.” 

In November 2021, the Bahrain government unveiled an ambitious tourism strategy that aims to increase the sector’s GDP contribution to 11.4 percent, up from seven percent today, attracting 14.6 million visitors by 2026. The plan includes promoting and marketing the country in partnership with national airline Gulf Air and developing several new hospitality projects.

Others are seeking to open up new market segments, most notably gambling in the UAE emirate of Ras Al-Khaimah. In January, the US’ Wynn Resorts announced it had signed a deal with the local authorities to develop a 1,000-room property with a gaming licence. The precise nature of what will be allowed has yet to be revealed, but it marks a bold step which others are likely to follow if it proves successful. 

Underpinning the prospects for all these markets is the health of the aviation sector. Many airlines returned to profit in 2021 or expect to do so this year, which should give confidence to the wider travel industry, although high air fares may deter some travellers.

“There is buoyancy in traffic,” said John Strickland, director of aviation consultancy JLS Consulting. “Emirates, Etihad and Qatar Airways are all reporting strong premium traffic. High oil prices are bad for airlines, but they know they are good for their customers in the Gulf.”