October 2023 Al-Monitor PRO Trend Report 

3,391 words

Introduction

Empty hotels, canceled flights and travel advisories. The outbreak of fighting between Israel and Hamas in October 2023 has undercut a fledgling tourism rebound in the Holy Land after years of struggle. The fallout could spread further, with the prospect of a wider war looming over an even bigger tourism boom unfolding across the Middle East and North Africa (MENA).  

Global tourism isn’t expected to fully recover from COVID-19 until 2024, but Q1 2023 saw the Middle East become the world’s first region where tourism arrivals fully reached pre-pandemic levels, exceeding 2019 numbers by 15%, according to the United Nations World Tourism Organization (UNWTO). That came as global arrivals only reached 80% during Q1, while the Middle East has since reported the world’s best results between January-July 2023, with arrivals 20% above 2019. 

This rebound only underlines tourism’s importance in a region that has long beckoned travelers, but the Israel-Hamas war also proves that conflict and geopolitical instability remain as much a fixture of the landscape as the pyramids or Petra. Against that backdrop, tourism in the region is undergoing profound and rapid changes, according to Siamak Seyfi, an assistant professor in tourism geography at Finland’s University of Oulu. “These developments exert a significant influence on how travelers perceive the region and make travel decisions, especially in neighboring countries to Israel,” Seyfi tells Al-Monitor. 

Crucially, this rebound was providing a needed boost at a critical moment: The World Bank forecast on Oct. 5 that MENA’s GDP growth will fall sharply this year, from 6% in 2022 to only 1.9% in 2023, a hit especially pronounced among the GCC’s oil-exporting nations. That’s a big reason why MENA has a lot riding on tourism, which features prominently in future economic and political plans across the region — particularly for Gulf players seeking to diversify away from oil. 

Nowhere is that more evident than in Saudi Arabia, where Crown Prince Mohammed bin Salman is using tourism to help craft a new image for the kingdom. Riyadh has earmarked $1 trillion to develop its tourism sector, producing a diverse range of mega projects — from heritage tourism to winter sports. “It’s a rebranding campaign at a massive physical scale,” said Waleed Hazbun, a professor of Middle Eastern studies at the University of Alabama and author of "Beaches, Ruins, Resorts: The Politics of Tourism in the Arab World." Ultimately, this is a pivotal moment for the evolution of MENA’s travel and hospitality sector, one marked by big ambitions and big expectations — and many question marks.  

1. State of Play: Road to Recovery 

This new Gaza war has upended a fragile tourism recovery in Israel and Palestine. After reopening to foreign visitors in January 2022, Israel recorded around 2.7 million tourists last year. That was down about 40% from 2019, but still a welcome return for a sector accounting for 2.8% of Israel’s GDP.  Still, Israel was a laggard amid a wider tourism resurgence: 2022 saw the Middle East enjoy the world’s strongest relative increase in tourism arrivals, reaching 83% of pre-pandemic numbers, while the global rate was 63%, according to the UNWTO.  

This rebound is particularly evident in the Gulf, with Dubai and Doha once again ranking among the world’s busiest international airports in 2022. “Backed by a strong and growing aviation network in the region coupled by relaxation of visa rules in some countries, tourists are back and thriving in the Gulf,” said Nikhil Kilpady, a director focused on aerospace at consulting firm Frost & Sullivan. Travel and tourism are expected to contribute $185.9 billion to GDP in the GCC in 2023, up from $171.4 billion in 2022, according to the Emirates News Agency (WAM). 

Qatar is proving a big winner: Fresh off hosting its World Cup last year, the tiny Gulf state attracted over 2.56 million visitors through August 2023, surpassing its entire 2022 total, according to Qatar Tourism. That was well above its 2019 total of 2.1 million visitors (although that total came amid a diplomatic blockade imposed by Gulf neighbors). 

The UAE’s results are also strong: Dubai alone welcomed 14.4 million international visitors last year, compared to roughly 16.7 million in 2019. Travel and tourism contributed about $45.5 billion to the Emirati economy in 2022, or roughly 9% of GDP. As of October 2023, the UAE reports tourism currently contributes 14% to GDP. 

Then there’s Saudi Arabia. It recorded 16.6 million international and 77.8 million domestic tourists in 2022, compared to 17.5 million and 47.8 million in 2019, respectively, according to its Tourism Ministry, while the sector’s GDP contribution was roughly 5.3% in 2022. Saudi Arabia’s tourist numbers increased 58% during the first seven months of 2023 compared to the same period in 2019, the Saudi Press Agency reported. The kingdom’s tourism minister told Bloomberg in September that international visitors will total between 25-30 million in 2023.  

Bahrain's government reported inbound tourism revenues nearly reached $4 billion in 2022 when it saw 9.9 million visitors. During H1, 2023 Bahrain received 5.9 million visitors, with inbound tourism revenues at about $2.5 billion. Oman welcomed about 2.9 million inbound visitors in 2022, with tourism revenues totaling roughly $4.9 billion, accounting for 2.4% of GDP, according to Oman’s news agency. In 2019 it recorded 3.5 million visitors. Statistics for Kuwait and Iraq are scarce (although the latter receives sizable numbers of religious tourists each year).

Outside the Gulf, Turkey's tourism revenues reached $46.3 billion in 2022, according to the government, up from about $35 billion in 2019, according to media reports. That came as Turkey tallied about 51 million tourists in 2022, roughly 45 million of whom were foreigners, in line with its 2019 totals. Turkey aims to receive 60 million tourists and $56 billion in revenue in 2023, its tourism minister has said, while the sector appears to have navigated the impact of the devastating February earthquakes. 

Meanwhile, traditional tourism powerhouse Egypt welcomed 11.7 million tourists in 2022 and sector revenues amounted to $12.2 billion, down from a record high of $13 billion in 2019, when some 13 million tourists visited Egypt. The country is targeting 15 million tourists in 2023 after recording over 7 million in H1, according to reports.  

Morocco reported 11 million tourists in 2022, a recovery rate of 84% compared to 2019, with tourism revenues in foreign currency reaching a record high of nearly $9.3 billion, up 19% over 2019. The country has since reported 5.1 million tourists visited between January and May of 2023, generating around $4 billion (although it’s also now grappling with the aftermath of a deadly August earthquake). 

Tunisia saw 6.4 million tourists in 2022, compared to 9.4 million in 2019, Reuters reported, while authorities expect about 8.5 million tourists in 2023. Tourism revenue through May 2023 reached about $550 million, up 57% from the same period last year. Elsewhere, statistics for neighbors Libya and Algeria are scarce (although Algeria at long last has been making moves to ease access for international tourists). 

Jordan welcomed 4.6 million tourists in 2022, close to the 4.8 million recorded in 2019, with sector revenues totaling $5.8 billion, according to the UNWTO. The kingdom, where tourism accounts for up to 20% of GDP, welcomed roughly 3 million tourists during H1 2023, according to media reports. Notably, Lebanon is experiencing a diaspora-powered visitor influx amid its crippling financial crisis: During the Arabian Travel Market in Dubai earlier this year, Lebanon's tourism minister told reporters the country expects 2.2 million tourists and about $9 billion in tourism revenue in 2023, equating to roughly 40% of its GDP.  

2. Tourism Targets 

Breezing between luxurious Gulf destinations could soon get much simpler: GCC countries are prepping to roll out a unified tourism visa within the next two years following a recent unanimous decision by the bloc, WAM reported on Oct. 23, 2023. 

Whether this visa scheme arrives on schedule is up for debate, but it won’t stop Gulf states from competing to become global travel destinations. After leading the world’s tourism recovery, MENA governments are outlining ambitious targets — particularly Gulf states, which see the sector as a conduit to achieving larger national goals. “Tourism development is almost always also nation branding and serves state goals,” said Hazbun. “But the question is, who is the branding for and do they buy it?” 

Saudi Arabia’s moves are clearly aimed at reaching a global audience, something the UAE has already achieved. That’s largely thanks to Dubai, which has successfully fashioned itself as a global brand thanks to a strategy relying on so-called “iconic architecture,” from the Burj Khalifa’s towering spire to manmade islands visible from space. Qatar’s World Cup is another ambitious nation-branding effort. 

Now it’s Saudi Arabia’s turn. The kingdom, which only began issuing tourist visas in 2019, is no longer just a destination for religious pilgrims. Riyadh is aggressively playing catch-up, and its goals keep on growing: Saudi Arabia’s tourism minister told Bloomberg in September 2023 that the country has set a new target of welcoming 70 million international tourists annually by 2030, up from its previous goal of 50 million. It now aspires to see 150 million tourists (including local ones) per year by decade’s end, up from 100 million originally. That comes alongside seeking to boost tourism’s GDP contribution from 3% to 10% by 2030.  

Much-hyped megaprojects underpin Saudi Arabia’s tourism targets, headlined by its futuristic mega-city NEOM alongside the Red Sea Project, which is developing a slew of swanky resorts on islands along the country’s largely untouched western coast. 2023 has produced new moves here too, headlined by the country’s sovereign wealth fund launching Riyadh Air, a new premium airline set to begin flying in 2025. This all has come alongside a massive PR push globally, like paying superstar Lionel Messi many millions to promote Saudi Arabia to his nearly half a billion Instagram followers. That gets to the core of Riyadh’s ambitious tourism targets, which are an integral part of a huge attempt to craft a new and modern image for a country that still suffers from negative stereotypes and image problems.  

Saudi Arabia’s targets now largely overshadow its regional neighbors, upping the competitive stakes as they also pursue tourism growth. The UAE aims to increase the tourism sector’s contribution to GDP to $123 billion and attract 40 million visitors annually by 2031. The UAE is making moves to boost competitiveness, which includes preparing to become the first Gulf state to legalize gambling after creating a regulator for “commercial gaming” in September 2023. Las Vegas casino giant Wynn is already betting on that, with a $3.9 billion resort planned for the UAE.  

Meanwhile, Qatar wants to bring in 6 million visitors annually by 2030 and see tourism account for 12% of GDP. Oman is investing $51 billion to reach a goal of attracting 11.7 million visitors alongside generating $22.5 billion a year from tourism by 2040, while boosting the sector’s contribution to GDP to 5% by 2030 and 10% by 2040. Bahrain’s aims to tally 14.1 million tourists by 2026 and increase the tourism sector’s contribution to GDP to 11.4%.  

Outside the Gulf, countries are also eyeing big tourism gains. Among others, Turkey is targeting 90 million foreign tourist arrivals by 2028 and $100 billion in revenues, according to local media reports. Egypt wants 30 million tourists per year by 2028, its tourism minister has said this year. Morocco plans to spend nearly $600 million to develop its tourism sector and attract 17.5 million tourists by 2026, the same year that Tunisia hopes to boost arrivals to 11.5 million. 

3. Outlook

• As the world played catch up, the Middle East was poised to deliver a full tourism recovery in 2023 and future forecasts looked bright: Last year, the London-based World Travel & Tourism Council (WTTC) projected that travel and tourism’s contribution to Middle Eastern GDP would grow at an average rate of 7.7% annually between 2022-2032 to reach nearly $540 billion, or 10.1% of the total economy. That came as Saudi Arabia was expected to feature the Middle East’s fastest-growing tourist sector over the next decade by expanding 11% on average annually. 
• That outlook is now in flux until the contours of this new conflict between Israel-Hamas fully come into focus. A disastrous descent into a wider regional war would obviously have dire consequences for travel and tourism, but even a conflict contained to Gaza projects to cause noticeable sector disruptions. That said, the Middle East’s tourism sector is no stranger to weathering war and strife.  
• Given the evolving situation and current developments, the University of Oulu’s Seyfi reports that it is imperative that the industry remains flexible, resilient and innovative to navigate the turbulent waters of the current war situation and the associated geopolitical complexities. “Rebuilding a positive image and reestablishing a thriving tourism industry can be challenging after a period of conflict,” said Seyfi. “Tourist perceptions of the region may linger, and it may take years to recover lost ground.” 

• At a minimum, elevated regional tensions and security tensions will send a chill over MENA’s tourism sector just as the Gulf’s winter travel season arrives. More importantly, any tourism declines will be especially impactful for Lebanon, Jordan and Egypt — all fragile economies relying heavily on tourism, with the sector accounting for over 10% of GDP in each country.  
• Notably, this conflict complicates Saudi Arabia’s ambitious tourism plans: as long as war and strife dominate headlines, it will be difficult for Saudi Arabia to sell its tourism takeoff to the world, dealing a blow to the kingdom’s broader efforts to rebrand itself on the global stage at a pivotal moment. That will likely set these plans back, but Riyadh’s immense financial firepower gives it a margin for error — for now. 
• Saudi Arabia’s tourism arrivals are still positioned to significantly outpace Gulf neighbors going forward, but masses of Western travelers won’t drive sector growth anytime soon. Arab tourists are expected to drive Saudi tourism arrivals in the near future (although China could also become a key source market going forward). This comes as the kingdom’s tourism-related projects are mostly in their early stages and still face plenty of feasibility challenges. 

• Saudi Arabia was always going to be hard-pressed to replicate the UAE’s rise, although the kingdom’s status as a religious tourism destination was never in doubt thanks to Hajj and Umrah visitors. “Having studied the growth of Dubai in the 2000s, I just don’t see the dynamics to match that success,” said Hazbun, pointing to Saudi Arabia’s larger population and less dynamic private and public sectors.   
• Saudi tourism features notable gaps: Most focus is on high-end luxury resorts, while the country still lacks wider infrastructure needed to drive mass market tourism. “To achieve their ambitious tourism goals, they should consider diversifying their inbound travel segments to include low-budget and mid-segment travelers,” said Kilpady. 
• One key to developing Saudi Arabia’s tourism industry is boosting entrepreneurism. “It is important that the government provides startup aid here, especially at the beginning,” said Markus Pillmayer, a professor in the department of tourism at the Munich University of Applied Sciences, who also points to a need for the Saudi private sector to play a larger role. 
• Meanwhile, the UAE’s tourism sector has proven more than capable of weathering disruption previously. That saw Dubai become a haven for travelers during the COVID-19 pandemic after becoming one of the world’s first destinations to reopen for tourism. Going forward, expect the UAE’s tourism offering to continue evolving, headlined by its impending legalization of gambling.  
• Qatar is another player to watch in 2024. Following a strong tourism performance in the year since its World Cup, Doha must now navigate a moment of uncertainty that could jeopardize its major investments aimed at boosting tourism. That underlines the importance of the tiny Gulf state’s global connectivity: Qatar Airways announced plans earlier in 2023 to potentially expand its number of destinations from 170 to more than 255. “To sustain the tourism growth, the airline will have to consider tapping into large outbound travel markets, such as China and Southeast Asia,” noted Kilpady. 
• Recent moves by Middle East states also point to a troubling conclusion: As Hazbun points out, many tourism scholars suggested that a pandemic-induced pause in global travel created a moment to rethink the future path of tourism, from addressing climate change to rethinking the legacy of neoliberal globalization. Yet Middle East states appear to be charting a familiar course. “It seems clear that in Saudi Arabia and the Gulf, they’re very much following the old model and playing it while they can,” said Hazbun. 
• More broadly, MENA’s tourism sector also faces other challenges in addition to conflict. That centers on climate change: The water-scarce region is warming nearly twice as fast as the global average, which could see temperatures exceed critical thresholds for human adaptability in some countries by century’s end. Climate change topped the agenda during the 2023 edition of the Arabian Travel Market, where the theme was “Working Towards Net Zero,” and tourism sustainability should feature prominently during COP28.  

4. Case Study: The new Petra?  

The ancient Nabataean city of Petra, with its majestic monuments carved into rose pink sandstone cliffs, has long beckoned tourists around the world (alongside conjuring up images of Indiana Jones on the silver screen). The site is the crown jewel of Jordanian tourism and last year drew nearly 1 million visitors — few of whom have probably ever heard of Hegra.   

Hegra is another Nabataean city located a few hundred miles to the south of Petra, in Saudi Arabia’s AlUla region, which until recently was basically unknown to the outside world. Now, the picturesque region is becoming pivotal to the kingdom’s broader tourism goals. Located about 650 miles from Riyadh in the country’s northwest, AlUla features a green oasis valley surrounded by rugged desert vistas and no shortage of culture and history. At its core is Hegra, the country’s first UNESCO World Heritage Site, which features over 100 tombs carved into sandstone cliffs.  

Saudi Arabia hopes AlUla can contribute about $32 billion to its economy by 2035, and the region features prominently in efforts to market the kingdom to the world. Alongside droves of influencers, it’s now common to spot A-list celebrities traipsing around AlUla, from Alicia Keys to Will Smith — not to mention a 2023 Andy Warhol exbibit. It’s also receiving accolades, such as Conde Nast Traveler naming it one of the Seven Wonders of the World for 2023. 

Crucially, AlUla is a unique asset in Riyadh’s wider tourism portfolio as it seeks to attract travelers and business. Centered on natural beauty, AlUla contrasts with Saudi Arabia’s glitzy megaprojects — most notably the nearby NEOM, the plans for which sound like a science fiction fever dream and remain a long way from reality. 

Meanwhile, AlUla is very much real and already offers a tangible opportunity for Saudi Arabia to woo tourists. AlUla reported 185,000 visitors in 2022 and is forecasting 250,000 for 2023, with hopes to attract 2 million tourists annually by 2035. Despite similarities to Petra, Saudi Arabia is attempting to differentiate AlUla’s appeal, with an eye on affluence.  

That's seeing a focus on bringing luxury hospitality brands and eco-resorts to the region, like Habitas and Banyan Tree. More are coming, such as a cliff-carved cave hotel designed by Pritzker Prize-winning French architect Jean Nouvel, scheduled to be finished in 2024. January 2023 saw Saudi Arabia’s Public Investment Fund launch the AlUla Development Company, with the aim of turning the region into a global tourism destination. That includes plans to add 7,500 hotel rooms. 

Still, getting global tourists to AlUla may be less straightforward than getting to Petra. AlUla’s airport, which was only opened in 2011, has undergone large-scale renovations to increase its annual capacity from 100,000 to 400,000 passengers, but flights there are few. You can fly there directly from Dubai and Cairo, alongside domestic connections via Riyadh, Jeddah and Dammam.  

Notably, AlUla is central to broader efforts to nurture Saudi Arabia’s nascent film industry, again taking cues from Jordan, which turned Petra and nearby Wadi Rum into the backdrop for Hollywood blockbusters. 2023 saw the global release of “Kandahar,” an action thriller starring Gerard Butler that was filmed in Alula.  

5. Key Takeaways: 

⮕ Ultimately, the Middle East serves as a microcosm of the broader trends shaping the future of global tourism, a sector approaching an inflection point as its broader recovery is marred by climate change, conflict and competition. 

⮕ After outpacing all other regions globally, the Middle East’s tourism rebound is in flux as the Israel-Hamas war raises the risks of a wider regional conflict that could bring tourism to a standstill — a devastating scenario for many MENA economies.  

⮕ However this plays out, it won’t diminish the long-term importance of regional tourism, as MENA governments are increasingly banking on tourism to boost their economies and political ambitions as they look to the future, with outsized expectations and billion-dollar implications.  

⮕ Even if a worst-case scenario is avoided, regional tourism strategies must continue evolving to deliver sustainable and inclusive growth. "Often rather than building dynamic economic systems that integrate tourism into other economic processes, the sector is sustained in an enclave form with limited economic benefits for the rest of society and the economy,” said Hazbun. 

⮕ That is especially true for Saudi Arabia’s nascent tourism push. Although its tourism sector is poised to grow regardless, the kingdom’s ambitious tourism push and megaprojects are unlikely to live up to lofty expectations for now, but Riyadh’s plans are about far more than courting casual travelers: It’s a play to rebrand the country on the world stage. 

⮕ Beneath the hype and big investments, there are legitimate questions as to whether Saudi Arabia has a coherent strategy to develop a leading global tourism sector. “I’m not sure if they can really see the future development of a sustainable tourism sector at that scale,” said Hazbun, who believes some projects will win over Saudi visitors and the Gulf’s middle class. “If their effort to expand aviation works, they might be able to attract a broader range of visitors, like Dubai has,” he adds. 

⮕ There are ways to shift that narrative. “We should think about how tourism can be made sustainable so that nature, society, entrepreneurs and tourists can benefit from a unique product,” said Pillmayer. Failure to adapt could see many countries fail to reach tourism goals in the coming decade.