Qatar’s hosting of the FIFA World Cup and the AFC Asian Cup in 2023 will build the momentum towards travel and tourism recovery in the GCC region, the Economist Intelligence Unit (EIU) has said in a report.
In its latest ‘Middle East outlook 2023’, EIU noted business activity, revenue and profitability in the travel, tourism and hospitality industries in the Middle East have taken a major hit in recent years stemming from the Covid-19 pandemic and then the Russian invasion of Ukraine.
However, a corner appears to have been turned and momentum is building with international arrivals on the upswing in 2022 and a full recovery to pre-Covid levels of arrivals expected in late 2023 (or early 2024).
“The recovery will be aided by major sports and cultural events — Qatar is hosting the FIFA World Cup in November and December 2022 and the AFC Asian Cup in 2023, while Saudi Arabia will increase the numbers of foreign visitors allowed to attend the annual Haj pilgrimage.
“These and other locations, including major tourism hubs in the UAE and Oman, are redoubling their efforts to promote their tourism offer in major export markets in Europe and Asia, as well as reassuring visitors through high-level health and security measures,” EIU said.
Domestic tourism, it said has supported a depressed market in recent years and this will continue to be an important outlet for the tourism sector, along with regional arrivals.
International arrivals to the GCC were back on an upswing and accelerated quickly in late 2021 and in 2022, and looking ahead they will be aided by vaccine rollout and safety measures, lighter travel restrictions, a further promotional drive and the release of pent-up demand for travel and tourism.
In the longer term, travel, tourism and hospitality are identified as key ingredients of strategic growth plans and consequently are subject to pro-business and pro-investment reforms as well as receiving substantial investment from the public and private sectors, EIU noted.
In the report, EIU said business conditions across the Middle East will differ greatly by country in 2023. Business conditions in the GCC states will be the most favourable in the region, supported by buoyant energy sectors, the recycling of oil funds into the wider economy and ongoing business and economic reform programmes.
Strong purchasing managers’ indices (PMIs), which record business activity in the non-oil private sector with a 50 threshold that separates expansion from contraction — for most GCC states are suggestive of relative health and momentum of non-energy private business sectors in the short term.
Competition between Saudi Arabia and the UAE to establish leading business hubs will intensify, although this will also create space for co-operation and joint ventures given the scope for mutual benefit and the pragmatic nature of intra-GCC business investment.
“GCC states will continue to push for openings in new sectors and to attract foreign private investment, which will be supported by well-capitalised, profitable and strong financial sectors and already enacted pro-business reforms,” EIU said.
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