Emerging markets to look out for in 2017
The Gulf’s major tourism destinations have come a long way over the past two decades.
When their respective governments first made economic diversification a top priority and earmarked tourism as a key growth sector, they were yet to define what would make their destination offering different to that of their GCC neighbours. The remit was to grow the aviation and tourism sectors quickly and then refine the offering later.
But over the past five years, tourism development strategies have become highly focused, with each destination targeting specific markets.
Dubai has set out perhaps the most diverse blueprint for tourism growth, with family tourism and business events both identified as key growth sectors.
Elsewhere in the UAE, Abu Dhabi has emerged as a cultural and entertainment hub, with two islands – Saadiyat and Yas – established as trailblazers for both, while Sharjah is carving a niche in heritage- and eco-tourism. Ras Al Khaimah, meanwhile, is setting its sights on adventure tourists.
Oman’s niches span eco-, adventure- and cultural-tourism too, while Saudi Arabia’s infrastructure cannot grow quickly enough to cope with the boom in pilgrims visiting to perform Hajj and Umrah. Qatar is focused on MICE business and sports-related tourism, and Bahrain is back on track with its tourism development strategy, with several major infrastructure projects underway that will create brand new destinations. The kingdom is honing in on sporting events, conferences and cultural experiences to entice more visitors to its shores.
At the same time, some pan-regional tourism trends are emerging that in the not-too-distant future will be upgraded from niche to mainstream status if their current growth trajectory is anything to go by.
Top of this list is the halal tourism movement, which is fast emerging as one of the biggest growth opportunities for the Middle East, from both an inbound and outbound perspective. Other up-and-coming sectors the region is targeting include cruise, medical and shopping tourism, to name a few.
Each of these niches provide the Gulf’s hotel sector with new lucrative source markets and should be taken seriously given the competitiveness of the current marketplace where temporary over-supply, combined with softened demand from some major markets is dampening hotel performance.
Family tourism has become a key focus for the UAE, particularly with a raft of brand new theme parks opening their doors in 2016 and more planned over the next few years.
IMG Worlds of Adventure, Dubai Parks and Resorts, plus attractions on Yas Island in Abu Dhabi such as Ferrari World Abu Dhabi and Yas Waterworld, will take total theme park visitation in the UAE to an estimated 16 million in 2016 according to Nikola Kosutic, research manager UAE at Euromonitor International.
“The number of visitors to theme parks is expected to increase by 62% during 2017. As the government of UAE works to reach its target of 22 million visitors to the country by 2020, the development of key attractions and theme parks will support this.”
Kosutic says family tourism will be the fastest-growing sector for the UAE in 2017 and the
hotel industry is in “an ideal position to leverage its offering for family tourists by offering bundle packages for families in terms of rooms or accompanying packages for leisure activities”.
“Developing room infrastructure to better meet the needs of larger group travellers, such as increasing number of beds, complimentary meals for kids and enhancing in-room services to meet family needs is imperative,” he says.
“Partnering with destination management companies and tour operators can enable hotels to win greater percentage of guests.”
Dubai Tourism’s 2015 Annual Visitor Report reveals Dubai is well on track to reaching its target of becoming the world’s leading family destination, with families now representing more than half of all travellers visiting the city. Those visiting friends and families/or relatives (VFR) represented 13.9% of all visitors in 2015, underlining the importance of the residing population being advocates for the city and goodwill ambassadors for Dubai through word-of-mouth endorsement.
The average length of stay at 7.2 days was primarily led by families travelling on leisure visits and hotels and hotel apartments made up nearly three quarters of all accommodation choices for visitors in 2015, meaning Dubai “continues to ensure its supply pipeline delivers quality, capacity, diversity and value to appeal to an expanding visitor demographic while maintaining its premium destination offering across budgets”, according to Dubai Tourism.
Chris Nader, vice president – development, at Shaza Hotels, observes that the family market is “accounting for a large share of such intra-regional demand”.
“While historically this segment was particularly attracted by shopping, its needs are now shifting to include as well meaningful experiences and adventures with their children. We are seeing a great push from Dubai to position the emirate as a global leader in theme parks and family-friendly entertainment, and we can already see investors and hoteliers focusing on this market opportunity,” he notes.
Like Kosutic he stresses the need for more budget and mid-range family-friendly hotels, noting the hotel market in the GCC “can no longer rely solely on the upscale and luxury segment”.
Shaza has been monitoring this trend for the past three years and recently launched its new family-friendly four-star brand, Mysk by Shaza, to fill the gap in the market.
“We are opening our first Mysk hotel in Muscat next year and are already in negotiation for projects in Dubai, Jeddah, and Doha,” he reveals.
Honing in on halal
Shaza Hotels was created to primarily appeal to the needs of families who require a hotel experience that offers them respectful entertainment, culturally-connected experiences, and a children-friendly environment.
It’s one of a handful of hotel operators catering to the fast-growing halal tourism sector, which in 2015 was worth $145 billion, or 11% of total international tourism spend, according to Thomson Reuters.
More than one fifth of the world’s 7.4 billion citizens are Muslim and with many Islamic communities living in key growth regions such as the Middle East and Asia, it’s driving a growth in travel spend that is projected to hit $233 billion by 2020.
The biggest Muslim travel spenders are in the Middle East – the region accounts for 60% of all outbound Muslim tourism expenditure, worth some $60 billion annually, the Global Economic Impact of Muslim Tourism report by Salam Standard has revealed.
The study, released last month, also found the Middle East nations accrue the largest share of their tourism GDP from Muslim travellers (28%).
Salam Standard co-founder and CEO, Faeez Fadhlillah, will be one of the Muslim travel experts speaking at this year’s inaugural Global Halal Tourism Summit at Arabian Travel Market (April 24-27). The half-day event will take place on Wednesday 26 April and will discuss how the Middle East travel, tourism and hospitality industry can best leverage the sector’s huge growth potential.
ATM’s senior exhibition director Simon Press says 80% of the show’s panellists predict a “signification increase in the percentage of inbound halal business over the next five years”.
“Launching this summit therefore presents a timely opportunity for the industry to come together to discuss opportunities, share success stories and create awareness”, he says.
Getting your Muslim offering right
Some of the region’s leading industry analysts agree that hoteliers need to look at the halal tourism sector more closely to identify how they can adapt their products, services and marketing to appeal to this fast-growing sector.
Scott Booth, senior research director – head of travel, tourism and leisure research, YouGov ME, says “it is clear that halal tourism – although still poorly defined – is growing rapidly”.
Most hotels in the region offer the basics – Qibla in the room, prayer facilities, no pork (or clearly-labelled pork items), clearly delineated alcohol availability, if any – but could perhaps look to creating more experiences or packages to meet halal traveller needs, he says.
Ali Manzoor, associate partner at Knight Frank, says Sharia-compliant hospitality has gained traction over the past decade, but it does fall under a wide spectrum of definitions and needs to be better refined.
“At one end there are properties that are strictly sharia compliant, in that they give zakat, share profits, serve halal food, forbid alcohol, and segregate sexes. At the other end, properties which simply do not have alcohol or non-halal food are sometimes described as sharia compliant, which leads to an unclear value proposition for the end user,” he explains.
“One of most recognised entities bringing more clarity to the sector is CrecentRating, which has implemented a globally-recognised rating system that enables guests to ascertain how halal, or sharia-compliant a particular hotel is.
“In the UAE, only two properties have managed to achieve the highest attainable score of 7 – Al Jawhara Gardens, and Al Jawhara Hotel Apartments. It is interesting to note that both are marketed as Islamic accommodation specifically for Muslims, rather than accommodation that is suitable for all, but particularly geared towards Muslim travellers. “This distinction may seem trivial, but it does highlight an issue for properties that derive their entire identity from being ‘sharia compliant.’ While it does create a pull factor for potential Muslim guests, it also in some ways excludes those who may want to stay in a particular location but not fully understand what an Islamic hotel is.”
Online tools such as Salam Standard have set out to make finding a halal-friendly hotel or resort more simple by ranking properties Bronze, Silver and Gold according to the services they offer Muslim travellers.
More than 50,000 hotels worldwide are already indexed on Salam Standard, which displays their Muslim-friendly amenities and services and allows users to rate and review them. Major hospitality brands whose properties are Salam Standard indexed include AccorHotels, FRHI, and Mövenpick Hotels and Resorts. Salam Standard was conceived after 50,000 Muslim travellers from around the globe were surveyed to discover what services and amenities were most important to them when travelling.
The availability of halal food and prayer mats or places to worship were some of the top priorities, the study found.
“Muslim tourists come from all corners of the globe and have vastly different levels of faith-based requirements,” says Fadhlillah.
“But there are tangible steps that hotels can take to become more attractive to this market – providing halal food, family-friendly activities and prayer facilities are some.”
Salam Standard’s Global Economic Impact of Muslim Tourism report reveals the GDP impact of the world’s Muslim tourism sector exceeded $138 billion in 2015. The industry generated 4.3 million jobs and contributed more than $18 billion in tax revenue.
“To put this into perspective, a GDP impact of $138 billion is larger than the entire economy of Morocco or Kuwait,” says Fadhlillah, who will be revealing more Middle East-specific report findings at ATM.
“The power and potential of the Muslim travel sector should not be ignored.”
Over the past decade there has been a paradigm shift in traveller sentiment – a one-size-fits all approach no longer meets the more complex travel needs of the modern consumer.
Travellers demand experiences, adventure and authenticity – and they want to explore lesser-known destinations, especially those that are untouched or unique.
According to TripBarometer 2015, around 69% of global travellers of all age groups were planning to try a new travel experience in 2016. The trends report says 17% were planning to travel alone for the first time while 15% were seeking their first adventure travel experience.
The recent WTM Global Trends Report 2016 in association with Euromonitor International reveals how adventure seekers are looking to the Middle East for new experiences and time-honoured trails are high on their agenda.
The Nativity Path in Palestine, Abraham’s Path from Turkey to Egypt, the Jordan trail, and Lebanon’s mountain trail are all centuries old, but are witnessing a resurgence in popularity, as hikers set out to discover the region’s history, religions, culture and rural communities.
Tourism infrastructure is minimal in many places along these routes, which means that home stays are often the only lodging available. This perhaps presents opportunities for hotel groups looking for off-the-beaten track presence while supporting jobs in rural communities.
Euromonitor International’s head of travel, Caroline Bremner says the marketing of these trails is proving to be “a surprising success with wider implications beyond the tourism trade, as they help spread a message of peace and fostering cultural exchanges”.
One hotel brand that has successfully carved a niche in remote Middle East locations is Anantara, part of the Minor Hotels group.
“We have a number of iconic properties in the Middle East including Qasr Al Sarab Desert
Resort by Anantara in the Empty Quarter in Abu Dhabi and Anantara Al Jabal Al Akhdar
Resort in Oman, which has just opened,” says David Garner, the hotel brand’s vice president
of sales and marketing for the Middle East, Sri Lanka and the Seychelles.
“Anantara continues to satisfy guest desires to connect deeply and personally with their
travel destinations by infusing authentic cultural experiences and interactive journeys
guided by local experts – we were the pioneers in this field,” he adds.
A sense of adventure
YouGov’s Booth believes adventure travel has huge growth potential in the Middle East.
“This is actually another travel segment that is so broadly defined it is difficult to pin down, but it includes sports or outdoor pursuits (scuba, hiking, surfing, etc); all sorts of adrenaline-fuelled or back-to-nature experiences (hiking, safaris, etc); small-yacht cruising (i.e. yacht charter or boutique adventure cruises); historical/cultural tours out of the ‘norm’ (Machu Picchu, Everest Base Camp, etc), and so on,” he says.
“What I am seeing is the pursuit of more authentic, personal, and ‘real world’ experiences.
“We have seen an explosion of services offering authentic wining and dining tours, cultural experiences and ‘life’ experiences in destinations across the globe. This matches with the profusion of self-catering accommodation services like Airbnb that put more power in the traveller’s hands to determine what their experience will be like. This focus is notable particularly amongst millennial travellers who seem to be carrying backpacking-type habits into their core income-earning years – Milennials are now aged 16 to 34, so we are only beginning to see how the segment will behave as ‘adults’.
“What this means is that as trip budgets grow, instead of the excess being used on more opulent flight classes and accommodation, it is going towards more differentiated holiday choices.”
One Middle East destination tapping into demand for adventure travel experiences is Ras Al Khaimah, which has set ambitious targets to attract one million visitors by 2018.
The development of niche markets is key to achieving this goal says Haitham Mattar, CEO of Ras Al Khaimah Tourism Development Authority (RAKTDA).
“Ras Al Khaimah is known for having the tallest mountain in the UAE,” he says. “Standing at 6,266 feet, it is a core proposition for the emirate and we are currently in the process of developing products to complement existing attractions for adventure travellers.”
RAKTDA recently launched the region’s first commercial Via Ferrata. Located on Jebel Jais, it features three-courses spanning 1,542 feet, including three zip-lines of 165 feet, 195 feet and 985 feet in length.
“This has already proven a popular attraction and we are keen to further develop our products and promotion of such activities across Ras Al Khaimah,” adds Mattar.
Sun, sand and surgery?
Traditionally, Middle East residents have ventured to Asia and Europe for medical treatment, but in a bid to not only claw back this business, but attract international medical tourists, the Gulf countries in particular are investing heavily in world-class healthcare infrastructure.
In March 2015, the President, Prime Minister and Ruler of Dubai, His His Highness Sheikh Mohammed bin Rashid Al Maktoum, launched the AED5 billion ($1.36 billion) second phase of the Dubai Healthcare City (DHC) project, a development spanning 22 million square feet overlooking the historic Dubai Creek that includes a wellness concept designed to enhance holistic care for residents and visitors alike.
It’s all part of DHC’s drive to position Dubai as a health and wellness hub in a bid to attract at least half a million medical tourists by 2020.
In a bid to promote the city’s medical tourism services, Dubai Tourism recently launched the world’s first medical tourism portal.
The ‘Dubai Health Experience’ offers medical tourists health, travel, hospitality and visa services at the click of a button.
Some hotel groups have already jumped on the medical tourism bandwagon. Rove Healthcare City, part of Emaar Hospitality Group, has opened its doors, while the 277-room TIME Royal Hotel, located just a few minutes from DHC and Wafi Mall, will launch soon.
“Dubai plans to position the emirate as a global medical tourism destination by 2020 with the Dubai Health Authority (DHA) targeting 500,000 medical tourists with expected revenues of AED2.6 billion,” says TIME Hotels CEO Mohamed Awadalla.
“To support this ambitious strategy it is imperative that Oud Metha’s hospitality capacity is enhanced as the area is currently underserved in terms of hotel rooms.”
The DHA is targeting a broad spectrum of treatment-seeking visitors including GCC nationals and South Asian medical tourists, which according to Awadalla, is a fit with TIME Hotels’ own sales and marketing strategy.
“We will also add more value to the market with two rooms per floor at our new Wafi property specifically designed to be handicap-accessible, which is a first for the city and a unique selling point for the promotion of Dubai as a leading destination for medical tourism,” he explains.
The hotel will also be wheelchair friendly with ramps sited throughout its major public areas and with adapted elevator access.
Euromonitor’s Kosutic says medical tourism is a key growth market for the Middle East, worth an estimated $3billion in 2016, up 15% on 2015.
A close cousin, the wellness sector, is also tipped for greatness, with spa revenues of $537 million anticipated for 2016 and a predicted CAGR growth rate of 48% between 2015 and 2020 to reach $729 million.
The UAE commands a 14% share of the spa market and hotels and resorts dominate the sector, Kosutic stresses.
His advice to hoteliers is to look to emulate the spa offering in more mature markets.
“There’s strong demand for two- to seven-night health and wellness programmes and life coaching focused on mindfulness, breathing, meditation and cosmetic treatments, similar to those available in the Asian market,” he says.
“Health-focused tourists usually spend 130% more than regular travellers as they seek such experiences as part of leisure activities.”