Special report: The power of the GCC as a source market for global tourism
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Special report: The power of the GCC as a source market for global tourism

Special report: The power of the GCC as a source market for global tourism

The size and monetary value of the outbound GCC tourism market were never in question – but what are its challenges, opportunities and key growth drivers in the foreseeable future?

Tourism airport

That the GCC market comprising Saudi Arabia, the UAE, Bahrain, Qatar, Kuwait and Oman, can prove to be an incredibly lucrative source market for global tourism is beyond doubt.

According to figures shared by the United Nations World Travel Organisation (UNWTO), international tourism expenditure from the GCC climbed from $40bn in 2010 to $60bn in 2017, with per capita expenditure of individuals from the GCC 6.5 times higher than other regions worldwide. Tourism boards across the world are only too aware of the fact.

“All over the world, [visitors from the GCC] are known as travellers with high solvency: their average spending on foreign trips is $1,700-$3,000,” says Anastasia Popova, head of International Division, Moscow City Tourism Committee.

While outbound tourism from the GCC means tens of billions spent in the destination countries, it also presents an opportunity for entities within the originating country. These could imply revenue streams for tour operators, airlines and travel insurance providers, among others, which stand to gain when the country’s residents book their foreign trip. According to data shared by Research and Markets, the Saudi revenue from its outbound travel and tourism market is projected to grow at a CAGR of 18.21 per cent from 2021-2028, reaching $27bn by 2028.

There are positive figures for almost all the other GCC markets. The UAE, which has the Arab world’s second-largest economy – and which has an approximately 90 per cent expat population – is expected to gather a revenue of $30.5bn by 2028 by way of outbound travel, Qatar will raise $13bn by then, and Kuwait will notch up $17bn in revenue from this avenue by 2028 (up from approximately $12bn in 2019.)

A pandemic-proof region 
The pandemic has undoubtedly pushed global tourism off a cliff. The UNWTO said that in 2020 international arrivals plummeted by more than 70 per cent, to levels not seen in over three decades. It estimated that the decline resulted in a loss of about 1 billion arrivals and $1.1 trillion by way of international tourism receipts.

Fleur Hassan-Nahoum, deputy mayor of Jerusalem

At the time, UNWTO projected a rebound in international tourism over the second half of 2021, though cautioned that a return to 2019 levels in terms of international arrivals could take between 2½-4 years. However, preliminary data released earlier this year by UNWTO showed that while there was a 4 per cent year-on-year increase in international tourists’ arrivals in 2021, overall, these figures were still 72 per cent below pre-pandemic levels of 2019, highlighting the need for a more sustained and uniform recovery.

There are tourism destinations that bucked the trend last year – especially when it comes to attracting visitors from the GCC. Switzerland is a prime example. According to figures shared by Switzerland Tourism as well as from the Swiss Department of Statistics, from July-November 2021, there was a 2,107 per cent growth in the number of arrivals from the UAE compared to the same period in 2020 – it isn’t unusual for tourism boards to report such large differences over 2020 when most of the world was under lockdown for several months and stringent travel restrictions remained in place.

However, Switzerland Tourism’s highlight is that the July-November 2021 arrivals of 201,670 people from the UAE was 19.5 per cent higher than the 168,701 individuals that travelled from the UAE over the same period in 2019 – which means that as far as visits from the UAE are concerned. Switzerland is beating its pre-pandemic figures. From the GCC alone, Swiss Tourism received 352,956 visitors, who in turn generated 15.7 million overnights in the Alpine country from July-November last year. Pre-pandemic figures shared by Switzerland suggested that Saudi and the UAE account for around 35 per cent of its arrivals from the GCC, while Kuwait and Qatar recorded 13 per cent, and Bahrain and Oman followed at between 2-3 per cent.

Another region that is bucking the trend is the UK.

“Flight bookings data from ForwardKeys has shown signs of recovery from the Middle East when it comes to arrivals into the UK in recent months. The most favourable week so far for the Middle East was in late November, when arrivals reached 78 per cent of pre-Covid levels, outperforming all other global regions,” says Jennifer Huntley, head of partnerships, APMEA region for VisitBritain.

“In our most recent year of full data, 2019, 1.2 million visitors came to the UK from the GCC, and those visitors spent GBP2.6bn during their stays. GCC visitors stayed on average 12 nights, and spent GBP2,151 per visit. On average, from 2017-2019, 45 per cent of visits from the GCC originated from the UAE, 19 per cent from Saudi Arabia, 16 per cent from Kuwait, 13 per cent from Qatar, 4 per cent from Oman, and 3 per cent from Bahrain,” explains Huntley.

Huntley’s assessment of the lion’s share of visits from the region coming from the UAE, is supported by data released by the World Travel & Tourism Council in 2019 which found that while Saudi Arabia was the leading international market for outbound departures from the UAE with a share of 30 per cent, it was followed next by the UK at 17 per cent. The collective tourism potential of the GCC is further underscored by other destinations including Moscow. “The growing interest in Moscow is confirmed by statistics such as in the first nine months of 2021, there were 107,000 visitors from the Middle East, including almost 19,000 visitors from the UAE, 9,840 visitors from Qatar, and 3,815 visitors from Saudi Arabia,” observes Moscow tourism committee’s Popova.

Jennifer Huntley, head of partnerships, APMEA region for VisitBritain

A burgeoning GCC source market is true for the Far East as well, is also reflected in statistics by the Japan National Tourism Organization (JNTO). “In 2019, Japan saw a record high number of visitors from the GCC countries with 28,222 visitors making the journey, a 28.4 per cent increase on the previous year and the figure doubling in the past five years,” says Tomoko Kikuchi, executive director of JNTO’s Dubai office. Apart from the often-visited European, Asian and American haunts for GCC travellers, there are new markets that are only just opening to them – namely Israel.

“Following the signing of the Abraham Accords in 2020, the Israeli Ministry of Tourism held the first virtual joint tourism forum of the Emirates and Israel in December 2020. One of the main purposes of the forum was to create connections between Israel and UAE’s tourism industries and to initiate collaboration between the two markets in the tourism field,” says Ksenia Kobiakov, director of New Markets Development Department, at the Israel Ministry of Tourism.

“The UAE is a brand-new market for our ministry, specifically for our New Markets Development Department. We see great potential in incoming tourism from that destination. Therefore, we have put in action – and are already actively implementing – a detailed plan to promote tourism from UAE and Bahrain,” adds Kobiakov.

Local connections
Realising the need to tailor their messaging for the region, global tourism boards are going the distance. JNTO, for example, opened its first Middle East office in Dubai last November.

By 2030, Japan intends to attract 60 million visitors with a projected annual consumption of JPY 15 trillion – and to get there, it’s going to need to make a big splash in the Middle East.

“According to a survey conducted by the JNTO in six GCC countries from May to June 2021, approximately 30 per cent of respondents answered that they would like to go to Japan in the future. Conversely, almost 40 per cent of the respondents answered: ‘I don’t know much about Japan’, presenting an opportunity for the JNTO Dubai office to broaden awareness and increase the number of visitors from the GCC,” says JNTO’s Dubai-based Kikuchi on the reason why it decided to open a representative office in Dubai in the midst of a pandemic.

Also last year, the UNWTO opened its first Middle East office in Riyadh in order to coordinate its initiatives and policies across 13 member states within the region.At times, attempts are being made at direct exchanges with local tourism boards from the region to learn best practices as well as to facilitate an exchange of knowledge.

“I am in touch with Dubai Tourism to develop collaborations,” says Fleur Hassan-Nahoum, deputy mayor of Jerusalem and co-founder of the UAE-Israel Business Council. “Our tourism ministries are in contact and working on [ways] to bring value to each other. We are getting requests about trips to Israel from a cross-section of the public in the Gulf.”

Expo 2020 Dubai particularly has been a focal point in the efforts of countries to drive tourism from the region to their destinations. As Kobiakov from Israel’s ministry of tourism points out, Israel had its pavilion at Expo Dubai 2020 opened by Israel Tourism Minister Yoel Razvozov.

VisitBritain, VisitScotland and Tourism Ireland meanwhile turned to the Expo to launch 10 new itineraries across the UK at the mega event. Some studies have also correlated a direct measurement of the impact that the Expo will have on driving out-bound tourism.

“Middle East tourism accounts for 1.3 per cent of the arrivals to Italy. It’s estimated that a 5 per cent increase of tourist flows to Italy following Expo Dubai would generate an economic value of EUR25.5m a year, accord-ing to the School of Management of Milan’s Politecnico,” says Paolo Glisenti, commissioner-general of Italy at Expo 2020 Dubai.The Expo has allowed international tourism boards operating in the UAE one more platform other than the traditional annual Arabian Travel Market held in Dubai every year.

“The Moscow City Tourism Committee will continue to forge links with travel influencers, major tour operators and MICE agencies in the region taking part in Arabian Travel Market and events dedicated to the business travel: Meetings Arabia and Luxury Travel Congress (MALT) and Qatar Business and Luxury Travel Congress (QBLT),” explains Popova.

Foreign tourism boards, as part of their local outreach initiatives, are also working closely with influencers from the region. Switzerland’s tourism board, for example, collaborated with Raha Moharrak, the youngest Arab and first Saudi woman to climb Mount Everest, as well as Sara Murad and Haya Yasmeen to participate in the Swiss “100% Women” initiative where 700 women from 20 countries scaled all of the 4,000-metre-plus peaks in Switzerland last year.

In another initiative, Swiss Tourism also partnered with the wildly popular Dubai-based Supercar Blondie who undertook a Grand Tour of Switzerland and produced content for her over seven million followers on YouTube and close to 10 million followers on Instagram.

Growth drivers
There are going to be a handful of key drivers in growing the outbound GCC tourism market. These include intra-GCC travel whereby residents of countries are encouraged to visit other GCC markets, the role of airlines and finally, governmental policies that encourage travel.

Ksenia Kobiakov, director of New Markets Development Department, Israel Ministry of Tourism

According to data shared by the GCC Statistical Centre in Muscat, in 2019, the percentage of intra-tourism among GCC countries reached approximately 28.7 per cent of the total number of foreign tourists arriving within the GCC states. Reportedly, in Bahrain, 95.6 per cent of all the international tourists it received were from other GCC countries. The numbers varied for countries such as the UAE where 15.4 per cent of all its international tourists were from GCC countries, whereas in Saudi that figure stood at 26.5 per cent – indicating the potential of each GCC country to either further encourage travel from within the GCC, or as in the case of Bahrain, encourage it to open up further to tourists from beyond the GCC.

Playing a crucial role in stimulating an appetite to travel beyond national borders are airlines. Within months of the signing of the Abraham Accords, several carriers including flydubai, Etihad, Emirates and Gulf Air announced direct flights would begin operating to Israel. Also, budget airlines have recently ramped up operations to aid those who are travelling on modest budgets.

Wizz Air Abu Dhabi, for example, an ultra-low-cost carrier and a joint venture established between ADQ and Wizz Air Holdings, began operations out of the UAE capital in January 2021. “Wizz Air Abu Dhabi has successfully operated more than 1,000 flights since its launch in January 2021, with over 500 flights taking place in the fourth quarter of last year. Q4 results were particularly impressive after the easing of travel restrictions in September, with load factors at nearly 85 per cent in December,” says Michael Berlouis, managing director of Wizz Air Abu Dhabi.

“Wizz Air Abu Dhabi offers 37 destinations from the UAE to 22 different countries. Further growth East will build on the success of the first year of operations and capitalise on pent-up demand for travel.”

Apart from the low-cost model, other airlines such as the full-service carrier Emirates, have entered into agreements directly with foreign tourism boards to encourage travel. Emirates recently signed an MoU with the Ministry of Foreign Affairs and Public Service of The Bahamas to roll out joint initiatives to promote tourism to the Caribbean country, including via its Emirates Holidays platform. Another avenue to grow outbound tourism will be governmental and administrative policies, including visa liberalisation measures.

A few months ago, a visa waiver agreement between Israel and the UAE for citizens of the two countries took effect, and the results are already being felt on the ground.

“Thanks to the elimination of the need for visas since October 10, and the re-opening of Israel borders, we are looking forward to seeing a major increase in the number of visitors from the GCC. According to our estimates, Israel expects to welcome around 100,000 visitors from the GCC annually as long as the tourism situation worldwide goes back to normal,” says Israel tourism ministry’s Kobiakov.

The sentiment is echoed by Moscow City tourism’s Popova who adds, “The introduction of electronic visas, suspended because of the pandemic, will be a great advantage and will contribute to increasing the number of tourists from GCC to Moscow.”

Healthy forecasts are shared by VistiBritain’s Huntley too, who notes, “The most recent forecasts from Oxford Economics/VisitBritain predict that visits from the GCC will more than double in 2022 compared to 2021, reaching 550,000 in total. Visits in 2023 are forecasted to be a further 50 per cent higher, reaching 828,000.”

The pandemic and its numerous curveballs notwithstanding, forecasts such as these show that the growth drivers are primed to support an exponential growth in GCC’s outbound tourism market.

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