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Reeling them in

GCC countries need to become more attractive to tourists

by George Atalla

In recent years, tourist arrivals to Gulf Cooperation Council (GCC) countries have increased from 23.5 million in 2006 to 29.7 million in 2011, representing a an average annual growth rate of around 5 percent. The Gulf region, as well as the Middle East overall, are clearly part of a global trend that has made tourism as important to the world economy as the automotive sector. But governments in the GCC have to do much more if their countries are to participate extensively in the global growth of hospitality and benefit from the 70 percent increase in global tourist arrivals over the next 20 years that is predicted by the sector’s main international organizations, the UN World Tourism Organization (UNWTO)  and the World Travel and Tourism Council (WTTC). If accurate, that will mean a whopping 1.8 billion global tourists a year.

While the six GCC states have considerable tourism potential, none has made tourism a national priority. As a result, the direct contributions of tourism to gross domestic product in Kuwait, Qatar, Oman and Saudi Arabia range from 4.5 to 7 percent, while countries such as Spain and Hong Kong achieve 15.2 and 18.5 percent contributions according to WTTC and Euromonitor. Until they invest in tourism strategies and better plan their hospitality offerings, GCC countries cannot fully benefit from a sector that accounts for 9.3 percent of world output.

Enhancing the experience

Three factors currently prevent the GCC tourism sector from reaching its full potential: a subpar mix of tourism products, insufficiently developed sector enablers and systems that discourage tourism.

First, most GCC states have a below-average assortment of tourism products because of limited variety, undifferentiated product quality and sporadic marketing. Examples of the narrow range of offerings include Saudi Arabia’s focus on religious tourism, Bahrain and Qatar’s stress on business offerings and Oman’s concentration on beaches. 

In terms of quality, the GCC could obtain globally recognized quality certifications. Only the United Arab Emirates has beaches with “Blue Flag” certifications, a mark of water safety and good environmental practices. Similarly, there are too few attractions designated as UNESCO World Heritage sites despite the region’s considerable historical endowment. GCC countries also tend to market and promote their tourism products unsystematically. They participate infrequently in international tourism fairs and do not take advantage of digital promotion channels.

Second, most GCC countries have not fully developed the enablers that support and boost the sector. For example, they lack a long-term strategic plan for tourism and do not consistently develop human capital for the sector. The governments do not invest substantial amounts into tourism and there is not enough done to encourage private sector investment.

Third, there are systems that discourage tourism. These include stringent visa requirements and environmental sustainability standards that are lower than they should be. An area where change is happening in this regard is public transportation. Although it is underdeveloped, the region is undertaking significant investments in rail and metro systems worth around $70 billion.

This analysis applies primarily to the GCC states with nascent tourism sectors but not fully to the UAE and specifically Dubai, which embarked on planning, building and marketing its tourism sector years ago and consequently is one step ahead when compared to other GCC states or fellow Emirates. 

The GCC’s tourism sector also has six competitive advantages. First, GCC countries are in generally strong economic health, allowing them to invest in tourism products. Second, the region has ample airport capacity to handle large volumes of visitors, with convenient connections to countries that are major generators of tourists. Third, GCC states have great appeal as business tourism destinations given their infrastructure for meetings and conventions. Fourth, the region’s cultural amenities are improving, with ancient sites being restored and important new museums in Kuwait and Qatar promoting the contemporary arts. Fifth, the GCC has good weather for a significant part of the year when top tourism markets for beach leisure activities are in low demand. This  allows the GCC  to be a “sun and beach” destination when competing markets are off-season. Sixth, the GCC’s reputation for safety and stability can attract security conscious travelers.

To build on these advantages, GCC states have to treat tourism as a multilayered ecosystem. Understanding the sector in this way allows them to address shortcomings in the ecosystem through three sequential steps that yield a national tourism sector strategy.

The first step is to define the ecosystem. Its major components are tourism products and services, attractions such as beaches and culture; sector enablers that build up the sector, such as marketing and promotion; and system enablers, such as infrastructure, safety and security which influence tourists’ perceptions of a country.

Building their tourism ecosystem requires GCC countries to understand what tourism products and services they offer at present and then concentrate on a few core product areas. That requires them to define and take inventory of all offerings including those related to culture, sun and beach, nature, sports, lodging and food. GCC countries also have to examine sector enablers. 

These typically fall into five categories: planning, promotion, marketing, human capital development, and research and statistics. Generally, a central tourism planning entity (CTPE) oversees these activities with a mandate to  diversify tourism offerings and increase tourism-related investments. 

Finally, countries must examine their system enablers — such as infrastructure, health and safety — to see where more attention is needed.

The second step is to choose a strategic position and value proposition. This involves selecting the main sources of tourists, which are preferably large and close. Countries then need to narrow the potential sources of tourists by segment, such as business or budget travelers, families or retirees, which has implications for the average spend of these tourists and the anticipated growth in their numbers. This allows GCC countries to decide which products to prioritize, bearing in mind whether the product is inherently in demand, is ready to be offered, and can compete.

GCC countries will benefit from focusing initially on a clear and well-articulated value proposition that differentiates them from competing destinations. For instance, GCC countries may offer their tourism products to the broader Arab market; they may become business and conference hubs, or adventure holiday destinations. Lacking the maturity of established tourist destinations, we recommend that countries refrain from hasty pursuit of multiple value propositions. 

Offering one product, such as beaches for anybody to sit on, is different than having a value proposition. An example for a focused value proposition would be culture holidays for high net-worth visitors from Europe, where a CTPE has identified an activity, a geographic source of tourists and a segment of that source market, and where supporting parts of the ecosystem are put in place. 

As opposed to multiple propositions that would scatter efforts and prevent GCC countries from developing a well-defined brand, we see the best practice in focusing on a clear value proposition formulated around few products but with a variety of quality offerings. 

The third step is to set up an appropriate institutional framework. This allows the CTPE, which is at the heart of the framework, to obtain the maximum impact from tourism initiatives and integrate tourism into the national development program. The CTPE is typically responsible for setting policy and drafting and enforcing regulations. In some countries, the CTPE develops and executes projects.

By developing a tourism strategy, GCC countries can help in diversifying their economies, increase the skills of their workforce and create jobs in complementary sectors such as retail and construction.

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George Atalla

George Atalla is a seasoned government strategist, retired EY senior partner, and global advisor. He led EY’s Government & Public Sector practice from 2014-2023, growing revenue from $1.0B to $4.5B. With a 25-year consulting career, he has worked in over 60 countries, specializing in technology-enabled transformation, public-private partnerships, and policy reform.

Antoine Nasr

Antoine Nasr is the Global Head of the Government and Economic Development Practice at Kearney. He has twenty years of management consulting experience advising governments across MENA and SEA on a broad range of public policy and national agenda topics.

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