Middle East tourism sector remains resilient despite investment issues: Industry leaders

Middle East tourism sector remains resilient despite investment issues: Industry leaders
Industry data suggests that about 200,000 rooms are under development across the Gulf region. Shutterstock.
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Updated 26 September 2023
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Middle East tourism sector remains resilient despite investment issues: Industry leaders

Middle East tourism sector remains resilient despite investment issues: Industry leaders

ABU DHABI: The Middle East’s tourism and hospitality sector remains upbeat despite a slew of issues affecting investments, particularly rising construction costs, funding delays and higher interest rates for development projects. 

Speaking at the Future Hospitality Summit in Abu Dhabi, industry leaders shared their observations on the challenging environment for new hotels in Saudi Arabia, the UAE and elsewhere in the region, and how this affects tourism targets. 

“The Middle East region, namely Saudi Arabia and UAE, is showing resilience in the face of rising construction costs for a combination of reasons, including investor profiles in the region, a robust economy and governmental policies and the rise of oil prices,” said Camil Yazbeck, global chief development officer for premium, midscale and economy segments at French multinational hospitality company Accor. 

“Governments, especially in Saudi Arabia, have a target to achieve based on the country’s vision. We are seeing determination in meeting this target, with close collaboration between the public and private sectors to ensure project delivery on schedule. In addition, international consultants are being appointed to accomplish multiple projects across either one or numerous markets,” he said. 

A study by hospitality consulting firm HVS, “Navigating the Investment Terrain: Trends in GCC Hotel Development Costs,” notes that Saudi Arabia has become the focus for investors as the Kingdom strives to turn itself into a travel destination to increase the tourism sector’s contribution to the local economy to over 10 percent. 

The paper also said that hotel rooms in the pipeline in Saudi Arabia are primarily upscale, accounting for 36 percent of the total projects, with the concentration of the number of rooms operated by the top three operators for the existing supply decreasing as the positioning moves from luxury to midscale hotels.  

Change in mindset 

The Kingdom is also the leading country of hotels in the pipeline, focusing on luxury and upper-upscale hotels. 

Industry data suggests that about 200,000 rooms are under development across the Gulf region. 

Hala Matar Choufany, HVS’s president for Middle East, Africa and South Asia, said that Saudi Arabia and the UAE “have particularly demonstrated a strong commitment to tourism as a driver of economic growth, which may provide the incentive needed to overcome cost challenges.”  

She added: “When considering the government role in hotel and destination development, many projects in the pipeline are less dependent on debt financing and arguably have lower return expectations when compared to the private sector and investment funds.”

But considering the historical development trend in the UAE and despite significant growth observed in the last 15 years, only 60 to 70 percent of planned projects materialize, with a typical delay of 18 to 24 months, Choufany commented. 

Such delays, however, have a more significant impact on supply and demand dynamics in critical cities with strong seasonality, such as Riyadh and Makkah, she said, and it was also not uncommon for smaller and midscale hotels with limited investment budgets to be less impacted when compared to large and luxury assets, which typically experience longer financing and completion timeline.  

The HVS executive nonetheless had a positive outlook: “The UAE has about 208,000 hotel rooms operating at an occupancy of around 70 percent. It is estimated that an additional 45,000 hotel rooms are planned to open, which at a similar occupancy rate suggests an increase of 10 million accommodated room nights. 

“Factoring in project delays, limited financing as well as increasing travel costs, we are of the view that arrivals will continue to grow albeit at a slower pace when compared to 2022 and 2023, and the current inventory will absorb demand increases,” Choufany said. 

As for Saudi Arabia, Choufany noted that considering the country’s considerable investment in tourism, strong growth was observed during the previous two years — although coming from a lower base. 

“Undoubtedly, the Saudi Arabia hotel development pipeline, projected at around 275 hotels  – 80,000 rooms – is likely to be more impacted by rising construction costs and increased lending rates, which may result in years of delays. Consequently, the number of visitors may be adjusted to 35 million by 2030, which remains a significant growth compared to 2022,” she added. 

In Accor’s case, Yazbeck said the group is seeing greater demand for conversion opportunities in regions where they are experiencing funding challenges. He added that this strategy accounted for around half of Accor’s openings last year. 

“Converting a hotel to one of our brands can be as simple as selecting ready-to-go design concepts or pursuing a completely bespoke design path … we have been on the owning side of the table, too, so we understand the mindset of an owner and are able to creatively find the solutions that work best for their specific property and investment objectives,” Yazbeck commented. 

Constructive creativity 

Looking forward, Filippo Sona, co-chairman of furniture suppliers Wood Couture, said companies can achieve their targets if they tackle hotel construction more creatively and strategically. 

“By entertaining more lean processes and targets to shorten the overall time frame, there will be savings on bank finance charges. Also, projects need to compass smaller development phases as opposed to having huge construction sites on the first phase in order to spread the risk over time,” Sona said. 

Michael McGovern, director of Dubai-based Compass Project Consulting, agreed: “In the face of rising construction costs, meeting tourism targets in the Middle East remains a practical aspiration, but it hinges on meticulous strategic planning, close collaboration among stakeholders, and the embrace of innovative construction techniques.” 

He added: “Developers must have robust financial contingency plans and diversified funding sources to buffer against delays. Collaborating with experienced project management consultancies, like us, can provide proactive risk mitigation strategies and effective communication with financial partners is crucial.” 

Meanwhile, industry leaders admit that while some costs may have to be passed on to customers, the overall approach has emphasized maintaining the service quality and guest experience. 

“In reality, the approach taken to recover the higher costs will depend on a combination of factors and the specific circumstances of the hotel project,” Choufany said. 

Sona added: “Engineering value, as opposed to value engineering, is the name of the game: anticipating versus curing. Rethinking and going back to the drawing board where possible is the solution. Where developments are advanced, there is the need to relook at costs or bring innovative solutions to recuperate equity invested.”


Saudi Arabia’s leadership in global clean energy advocacy stressed at COP28 

Saudi Arabia’s leadership in global clean energy advocacy stressed at COP28 
Updated 02 December 2023
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Saudi Arabia’s leadership in global clean energy advocacy stressed at COP28 

Saudi Arabia’s leadership in global clean energy advocacy stressed at COP28 

DUBAI: Saudi Arabia is poised to take a leadership role in global forums, leveraging its presence in the G20 and the Clean Energy Ministerial to spotlight regional knowledge and environmental concerns on the world stage, according to a senior executive.   

During the UN Climate Change Conference, COP28, in Dubai, Jean-François Gagne, head of the secretariat at the Clean Energy Ministerial, emphasized the significance of regional harmonization in advancing climate change ambitions.    

“Saudi Arabia has the advantage of being at the G20 table, allowing it to play a leadership role in bringing regional knowledge and environmental concerns to the international table. This is crucial because we need all regions of the world to move forward together,” Gagne told Arab News.     

He added: “When you have regional champions, it really helps making sure that there’s no one that gets left behind in terms of advancing our clean energy goals.”    

Gagne also explained two ways in which regional collaboration can help accelerate ambitions related to climate change. The first involves creating higher demands for common products and technologies.  

“We know there’s going to be a need for brand-new technologies to be able to be deployed more broadly. When you have industry and governments working together in terms of defining what these new technologies will be, you need to be able to show that there will be enough demand for the investment in terms of bringing these new technologies forward,” he said.  

The second involves reducing the costs associated with deploying these technologies.  

“Making sure that the markets between different countries don’t create hurdles to the deployment is going to be important. Regional harmonization plays a significant role in bringing down the cost of deploying those technologies. This, in turn, makes it much easier for policymakers to increase their climate ambition because they know that the technologies will be there at a cost that is reasonable,” he continued.  

Underscoring the importance of harmonization and collaboration, Gagne explained ways in which the private sector could engage more with the public sector.   

“First of all, they need to make sure that when they look at these questions, they don’t look only at their own individual companies benefits, but they look at this in terms of a sectoral approach to finding the right solutions,” he said.  

Gagne added: “The second, they can engage in dialogue with governments in terms of what are the real feasible opportunities for governments to drive the demand for these new technologies.”   

During a session discussing the crucial role of regional coordination, Steve Kukoda, vice president and executive director at the International Copper Association, stated that collaboration is crucial to advancing ambition.   

“Regional harmonization really is critical to accelerating actual ambition, and we talked about the first cost barrier. This is a way to bring the cost down, but on multiple levels,” Kukoda said.   

He added: “If you manufacture an air conditioner, you now can sell the same product in 10 countries. You don’t have to have different types of the same air conditioner just to meet the standards of individual countries. So that increases the scale of production and brings down costs.”   

As part of Saudi Arabia’s Vision 2030’s prominent projects, Richard Bush, chief environment officer at NEOM, underlined the giga-project’s mission, as articulated by the chairman, Crown Prince Mohammed bin Salman. The mission is straightforward: to construct the world’s first sustainable and highly livable city.   

“Every city we’ve built has created an unreasonable impact on the environment and an unacceptable level of pollution. And what I’d like to say about this project is that it’s completely transformed,” Bush said.   

He added: “The way we think we’re going to design, live, and function into the future. There is nothing we do on a daily basis that resembles anything we’ve experienced before.”


Global leaders call for binding agreements, increased renewable energy investments at COP28 

Global leaders call for binding agreements, increased renewable energy investments at COP28 
Updated 02 December 2023
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Global leaders call for binding agreements, increased renewable energy investments at COP28 

Global leaders call for binding agreements, increased renewable energy investments at COP28 

DUBAI: The call for a significant increase in renewable energy investments resonated strongly on the third day of COP28, with various leaders advocating for a binding agreement at the Dubai event.     

In the High-Level Segment National Statements, German Chancellor Olaf Scholz outlined a tripartite proposal to reinforce the gathering’s recurring themes.     

“I propose three initiatives today. Firstly, making renewable energy expansion a top global energy policy priority. Here in Dubai, let’s set two binding goals, tripling renewable energy expansion and doubling energy efficiency by 2030,” Scholz stated.    

“My second point addresses international collaboration. We require platforms for developing collective solutions to transformation challenges.”      

He added: “Thirdly, I wish to discuss solidarity and responsibility. In 2022, Germany exceeded its goal of providing €6 billion ($6.5 billion) annually for international climate finance.”     

Norway’s Prime Minister Jonas Gahr Store also highlighted his country’s commitment to the event’s ambitious renewable energy targets.     

On the other hand, Iceland’s Prime Minister Katrin Jakobsdottir reaffirmed her nation’s dedication to advancing global energy transition.     

“We must drastically reduce emissions. Accelerating the green energy transition, scaling up green solutions, enhancing nature-based solutions, and ensuring polluters pay are essential. However, we also need to reduce our focus on maximizing production and consumption, shifting toward sustainability and well-being,” Jakobsdottir remarked.     

Other leaders underscored the critical need for financial support to assist developing countries in their transition efforts.     

“The world must honor its financial pledges. In 2022, the IMF (International Monetary Fund) reported $7 trillion spent on fossil fuel subsidies, yet the global commitment to the Paris Agreement’s $100 billion annual target remains challenging,” stated Mark Brown, prime minister of Cook Islands.     

Liberia’s President George Weah also emphasized the importance of improved global financing mechanisms, highlighting the country’s need for support to strengthen its climate action initiatives.     

Additionally, leaders from developing countries have called out other nations’ commitments to lack of action.  

“The Paris Agreement was a beacon of hope, a promise made by the world to safeguard our planet and its inhabitants. However, the reality falls shorter than the commitments made, and the burden of climate action continues to disproportionately fall on the shoulders of developing nations despite our minimal contribution to the crisis while the big polluters do their best to lecture us but not to stop themselves,” Edi Rama, prime minister of Albania, said.  

Eswatini’s Prime Minister Russell Mmiso Dlamini further stressed these points, stating “The commitments made remain just words. Fossil fuels remain high, much against the initial plans.”  

“In Eswatini, trucks are queuing in large numbers in borders carrying hundreds of tons of coal in transit to the developed world. While this continues, the use of nature-based mitigation is being promoted. With such practices, reaching net zero by 2050 will be impossible and developing countries should not be made to pay through the use of carbon markets,” he added.  

Despite some nations being short of their commitments, the US has continued to demonstrate action with the announcement of a new pledge to the global climate fund.  

“Today, I’m proud to announce a new $3 billion pledge to the green climate fund, which helps developing countries invest in resilience, clean energy, and nature-based solutions,” said Kamala Harris, US vice president.  

She added: “Today, we are demonstrating in action how the world can and must meet this crisis. This is a pivotal moment, our action collectively, or worse our inaction, will impact millions of people for decades to come.”   

Moreover, global leaders have also laid out their accomplishments as well as future strategies for combating climate change.     

“We have cut our coal use by over 80 percent. We are growing our economy at a much faster pace than the eurozone average while reducing emissions. In total, our emissions are down by 43 percent from 2005 as we turn to renewable energy, the best performance among European countries,” Kyriakos Mitsotakis, prime minister of Greece, said.     

“Burundi has committed via the Nationally Determined Contributions to protect the environment, to strengthen resilience toward climate change, and to boost food security. This is infused in our national policies and our vision for Burundi. An emerging country by 2040, and a developed country by 2060,” Evariste Ndayishimiye, president of Burundi, said. 


US should participate in carbon pricing rather than oppose it: IMF director

US should participate in carbon pricing rather than oppose it: IMF director
Updated 02 December 2023
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US should participate in carbon pricing rather than oppose it: IMF director

US should participate in carbon pricing rather than oppose it: IMF director

DUBAI: The US should participate, rather than being a “loud opponent,” in carbon pricing, urged the director of the International Monetary Fund.
Addressing the Business and Philanthropy Climate Forum alongside the UN Climate Conference, Kristalina Georgieva affirmed that the US must not hinder the world from “moving in the right direction.” Instead, the country should explore the standards and regulatory fees it needs to implement carbon pricing into its economic model. 

The director deemed carbon pricing a “wonderful instrument” due to its dual role in revenue generation and addressing inequality. The principle is straightforward: the more emissions one creates, the more one consumes, resulting in a proportional payment.
According to Georgieva, revenues generated from carbon pricing can be strategically directed to compensate the most vulnerable parts of the global population. Assessments by the IMF indicate that allocating 20 percent of these revenues significantly support the 30 percent most vulnerable areas, providing them with the “much-needed” backing. 

The IMF chief emphasized that “carbon price is a very strong incentive, much stronger than anything else we can invent.”  

Addressing concerns about the political feasibility of carbon prices in various places, she expressed disagreement, asserting that carbon pricing can be implemented in diverse ways.
She added: “It can be a tax, and when it is a tax, it is the most efficient and impactful way.”  

Georgieva pointed out that in countries where carbon tax was gradually introduced, emissions saw a significant reduction of 30 to 40 percent. Furthermore, she highlighted European trading mechanisms that have successfully generated $190 billion in revenue.
Despite the current average carbon price standing at $20 per ton in areas covered by carbon pricing, when amalgamating this figure with 75 percent of the world without carbon pricing, the average carbon price would fall to $5, she noted. 
According to the IMF, a package of measures, including carbon pricing, the elimination of harmful subsidies, and policy support, would significantly accelerate decarbonization. The director instilled the idea that adopting such measures could empower the global population to “make this decade one that we take pride in.” 

Fossil fuel direct subsidies soared to a record $1.3 trillion in the last year, driven by support measures in response to the cost-of-living crisis, as stated by Georgieva. When factoring in indirect subsidies, such as those arising from the absence of carbon pricing addressing environmental and health damage, the total surges to $7.1 trillion. 

“We need to go from $900 million where we are now to $5 trillion to make decarbonization a reality. The question is, is $5 trillion, a lot of money? Well, it’s obviously not a little but put $5 trillion next to $7.1 trillion in direct and indirect subsidies, or next to the size of the world economy, which is over $100 trillion,” the director outlined. 

She added: “I think we should be brave and say yes, it can be done, except it will be only done if we get the private sector to move faster and especially move faster in the developing world where emissions are growing. I’m an optimist; I have seen gradually moving on blended finance in a meaningful way.”

Emphasizing the significance of climate finance, the IMF chief affirmed that when considering all nationally determined contributions for this decade, they would result in only an 11 percent reduction in emissions. 

To uphold the commitment to limiting the temperature increase to 1.5 degrees Celsius, it would instead require contributions ranging between 25 and 50 percent, as highlighted by Georgieva.
Meanwhile, private funds currently contribute 40 percent to climate finance. To meet emission targets, this figure must escalate to 80 or 90 percent.
Despite climate risks being “macro-critical” and impacting economies, communities, and households, ultimately leading to financial instability, the director highlighted that transitioning to the new climate economy presents  “unique opportunities” for green growth and job creation. 

While the world economy has demonstrated resilience during challenges such as the pandemic and global conflicts, Georgieva, however, acknowledged that the IMF recognizes the current growth rate as “slow.” 

The organization is forecasting a modest 3 percent year-on-year growth rate for the next five years, nearly a full percentage point below the average of 3.8 percent observed in the preceding decade. 

The director expressed concerns that geopolitical tensions might exacerbate economic fragmentation amid a global climate crisis. This situation has left the entity “very concerned” about the growing inequality both within and across countries.

There exists a striking contrast between economies with a robust capacity to cope and low-income countries, where many have become “way more vulnerable” to climate devastation while grappling with adaptation challenges.  

In response to this disparity, the director emphasized the urgent need for cooperation. She called on companies and global bodies to emulate the proactive approach of the IMF, recognizing the importance of collective efforts in addressing the vulnerabilities and challenges posed by climate change. 

The director said, “There is nothing we can do each one of us alone, but we can make a difference working together.”  

She highlighted the IMF’s transformative shift in its approach over the last few years, integrating climate considerations into policy engagement. The focus involves mitigation strategies for countries facing high water levels, adaptation support for vulnerable nations, and transition plans for those heavily reliant on hydrocarbon sectors. 

“As a financial institution, the IMF has to put our money where our mouth is,” asserted Georgieva. This commitment materialized in the establishment of the $40 billion Resilience and Sustainability Trust.

Concluding her statement, the director expressed gratitude to the UAE for its recent contribution, with 11 countries having already accessed the fund. The UAE, as the newest contributor, provided 200 million dirhams ($54.46 million) as of Dec. 1.


African nations seek fair climate financing at COP28

African nations seek fair climate financing at COP28
Updated 02 December 2023
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African nations seek fair climate financing at COP28

African nations seek fair climate financing at COP28

RIYADH: Developing countries in Africa have urged developed nations to ensure equitable climate change financing for the implementation of adaptation and mitigation projects to address the global crisis, as highlighted by various officials participating in the UN Climate Change Conference in Dubai.   

On the second day of the COP28 summit, President of the Central African Republic Faustin-Archange Touadéra emphasized that developed countries, being the primary polluters, should bear the cost of climate change. 

“When it comes to determining who should pay for the climate bill, the answer is, bearing in mind the gap between developed countries, which are the primary polluters, and poor countries, it would be logical for the former to finance the mitigation process,” stressed Touadéra.   

Also speaking on the second day, President of Equatorial Guinea Obiang Nguema Mbasogo echoed this sentiment. 

He emphasized that “it is not enough, in our view, for developed countries to simply wring their hands and make empty promises.”    

“Rather, they need to fulfill their commitments and obligations under the Paris Agreement, which we achieved at COP21, and ensure the rollout and implementation of tangible, concrete action to mitigate the adverse impact of climate change,” the president added.   

Building on this, Côte d'Ivoire Vice President Tiemoko Meyliet Koné urged partners to mobilize more resources for the adaptation of African countries to the effects of climate change and to ensure financing for the continent’s energy transition.   

“Notwithstanding this, there is a need to avoid a situation in which finance for energy transition increases the debt of countries,” Koné emphasized.    

This plea comes as Africa, one of the regions with the highest rates of carbon capture and oxygen release globally, experiences minimal benefits, as highlighted by Mbasogo. 

“Africa, which bears the least responsibility in terms of emissions, is responsible for just 4 percent of global emissions. Unfortunately, Africa is a primary victim of the direct impacts of climate change,” Touadéra underlined during his speech. 

For her part, Italy’s President of the Council of Ministers Giorgia Meloni emphasized the importance of Africa having equal opportunities in the fight against climate change. 

“Italy intends to direct an extremely significant share of the Italian climate fund whose overall endowment is €4 billion ($4.36 billion) to the African continent,” she said.  
Meloni affirmed that this was not a charitable approach because “Africa did not need charity.”  

According to her, Africa needed to be placed in a condition to compete on an equal footing to grow and prosper, thanks to the multitude of resources that the continent possessed.  

Additionally, Prime Minister of Belgium Alexander De Croo reiterated the continent’s potential to become a green engine for the world.  

“Europe will obviously not win the climate race alone; partnerships are crucial, especially with Africa, which harnesses 40 percent of the global solar energy potential. As stated by the president of Kenya at the African Climate Summit, the continent has the potential to become the green engine of the world,” De Croo confirmed.  

On the second day of the UN climate summit, leaders of developing nations took the stage to urge wealthy industrial countries to share their expertise in combating global warming and to alleviate the financial burdens they face. 

Meanwhile, they highlighted their own natural resources, which absorb heat-trapping carbon from the air.  


Exhibition World Bahrain wins World’s Leading New Exhibition and Convention Centre 2023 award

Exhibition World Bahrain wins World’s Leading New Exhibition and Convention Centre 2023 award
Updated 02 December 2023
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Exhibition World Bahrain wins World’s Leading New Exhibition and Convention Centre 2023 award

Exhibition World Bahrain wins World’s Leading New Exhibition and Convention Centre 2023 award

DUBAI: Exhibition World Bahrain (EWB) secured the World’s Leading New Exhibition and Convention Centre 2023 award at the World Travel Awards 2023, according to an official statement.

The award was presented to Dr. Nasser Qaedi, CEO of the Bahrain Tourism and Exhibitions Authority (BTEA), during the World Travel Awards 2023 Grand Final Gala Ceremony, which took place at Burj A-Arab in Dubai on Friday. The award was handed out in the presence of Philip Joseph Pierre, the prime minister of Saint Lucia, tourism ministers, and travel elites across the globe.

EWB captured the highest number of votes, clinching the internationally recognized award from Bharat Mandapam, India, and Takina Wellington Convention and Exhibition Centre, New Zealand.

With this win, "Bahrain has further cemented its reputation as the leading global hub for the meetings industry (also known as the MICE industry) due to EWB’s versatility, with its ultramodern amenities and innovative services that cater to all types of events," the statement said. 

Winning the award coincides with EWB’s first anniversary and celebrates a remarkable set of milestones. The venue is a sought-after destination for prestigious events, having hosted large-scale exhibitions, conventions, conferences, grand weddings, live concerts, product launches, seminars and much more.

EWB is strategically nestled within Bahrain’s vibrant Sakhir area, the kingdom’s up-and-coming hub for events, sports, and entertainment. The modern Arabesque structure is adjacent to Bahrain International Circuit, the home of Formula One and motorsport in the Middle East; Al-Dana Amphitheatre, the newest live entertainment destination in the region; and the soon-to-be developed Bahrain International Sports City, with easy access to the new Bahrain International Airport, over 18,000 hotel rooms across the island, and a wide range of attractions and dining experiences.

“It has been a privilege to receive this coveted award at the WTA ceremony. This remarkable accomplishment reaffirms EWB’s exceptional performance and continuous strides in the MICE industry, which is aligned with Bahrain’s tourism strategy 2022-2026 objectives to position Bahrain as a key regional player in business tourism and host major international exhibitions and conventions, increasing the tourism contribution to GDP, (increasing) the number of target markets, and diversifying the tourism product,” said Nasser Qaedi, CEO of BTEA. 

“With the implementation of mega tourism projects, the kingdom of Bahrain is solidifying its position as one of the most sought-after destinations in the next five years, backed by well-developed infrastructure, unique attractions, and enticing promotional packages offering travel experiences and accommodations in the kingdom’s most prominent hotels,” Dr. Qaedi added. 

EWB will host the ninth World Forum on Gastronomy Tourism in 2024, the world’s largest gastronomy tourism event.