Optimism over Gulf region tourism growth intact despite triple challenges

Optimism about growth in travel and tourism in the Middle East remains intact despite the challenges of inflation, high oil prices and war in Europe.

This week’s Arabian Travel Market being held in Dubai heard that the region’s recovery from Covid is expected to be driven by major events like the Fifa World Cup in Qatar and Expo 2020 in Dubai.

The World Travel and Tourism Council has predicted 43% growth in travel and tourism in 2022 and a return to 2019 levels of contribution to global GDP by 2023.

Scott Livermore, chief economist at Oxford Economics, told delegates at ATM that the sector is “in the middle of the recovery”.

He said this has been driven by domestic travel which has rebounded to post pandemic levels, accounting for 55% of the sector, down from 80% at the height of Covid when borders closed.

“While that’s likely to go back down again, we think it’s a permanent change. International travel has lagged behind, especially the long-haul market,” he said.

In the Middle East two third of visitors are classified as long-haul, in comparison to 45% for the world as a whole, added Livermore.

He said: “We do expect growth this year, we expect accelerated growth in the region, likely to be boosted by significant international events.”

This year’s World Cup is expected to see one million people travel to Qatar for the event, ensuring the country fully recovers to pre-pandemic levels.

The recovery in the United Arab Emirates was “kick-started” by the delayed six-month Expo2020 in Dubai and supported by a successful rollout of Covid vaccines and marketing campaigns.

“Significant international events are current, and not a thing of the past,” Livermore said. “They are something to build on top of for the longer term growth for the industry.”

Livermore warned that rising inflation, rising interest rates and suppressed projections for GDP growth will reducing spending power of consumers.

He said concerns have shifted from Covid to Ukraine. Visitors to the Middle East from Russia and Ukraine historically account for 2.5% of the total and Russia was one of Dubai’s top source markets.

While the price of oil has come down from the recent peak of $140 a barrel, Livermore said delegates should expect prices to remain above $100 for the remainder of 2022.

“That will be translated into higher air fares and dampen demand, but despite this there are reasons to be positive,” he said.

“There is a lot of pent-up demand. People want to travel again and certainly in the leisure market households have the means to travel again.

“During the Covid crisis people could not spend, but their incomes were protected by various social support. Excess savings will cushion the impact from higher oil prices.”

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