JEDDAH – In recent years, the countries of the GCC have collectively played host to millions of tourists, with arrival numbers increasing in most destinations. However, there is still a widening gap between the opportunity that these nations have in their tourism sectors, and what they have actually achieved. Only two GCC states - the United Arab Emirates (UAE) and Qatar - rank in the top third on the World Economic Forum's Travel and Tourism Competitiveness Index. In effect, GCC countries today have a considerable amount of work to do if they want to increase their share of tourism receipts - and realize the considerable socioeconomic benefits that come with that. Against this backdrop, management consulting firm Booz & Company has formulated a framework to develop and execute a successful tourism sector strategy in the GCC - where it “represents a particularly rich opportunity.” Over the next 20 years, the number of global tourist arrivals is set to rise by as much as 70 percent, to 1.8 billion every year, according to the World Travel and Tourism Council. If there was any question about the industry's economic vitality, this statistic answers it: tourism already accounts for 9 percent of the world's economic output. Simply put, tourism dollars bring many benefits to destination countries. "A heavily visited country - one that takes in hundreds of millions, or billions, in tourism dollars - has a natural way of preserving its historic sites, generating support for small businesses, and burnishing its image," said George Atalla, a Partner with Booz & Company. "Tourism income can also be a mechanism for fulfilling parts of a country's economic agenda - including human capital development and economic diversification," he added. Tourism was a $2.68 trillion economic activity in 2012 in terms of its direct contribution to global output. However, Booz & Company's benchmarking study of almost two-dozen countries reveals that tourism brings many additional benefits to national economies. "For instance, tourism has a multiplier effect: when tourism spending goes up, other sectors of the economy, such as retail and construction, may rise along with it," said Antoine Nasr, a Principal with Booz & Company. "Tourism also has an impact on employment. The opening of a new theme park, for instance, can mean hundreds or even thousands of new jobs for the local population. There are also indirect effects, with jobs created in supporting businesses, such as food, lodging, and transportation companies," he added. The best way to understand how countries compete for tourists is to think of tourism as an ecosystem comprising three parts: products and services, sector enablers, and system enablers. • Tourism products and services attract travelers to a country. • Tourism sector enablers support a country's indigenous physical attractions. • System enablers are the quality of a country's infrastructure, security, health and safety, and environmental-sustainability practices. The GCC tourism market, which consists of domestic, regional, and international travelers, has witnessed significant recent growth. To develop the sector systematically, policymakers will need to bear in mind the tourism sector's six key competitive advantages as well as its three major disadvantages. The GCC countries have the ability to invest in capital-intensive tourism products; their large airport capacities with easy connections to major tourism markets; their strong appeal as business tourism destinations; the region's emerging cultural amenities; the long 'weather window' for sun-seeking tourists; and, the GCC nations' stability and reputation for safety. However, for the most part, GCC governments have not devoted much attention to their tourism sectors. This has resulted in three major disadvantages: 1. Subpar assortment of tourism products. GCC tourism products have three deficiencies. The first is their limited variety - that is, the tendency to focus on a single product. The second deficiency involves product quality; for example, despite the amount of shoreline that all of the countries have, the UAE's beaches are the only ones in the GCC with Blue Flag certifications. Finally, GCC nations have not sufficiently marketed or promoted their existing products. 2. Insufficiently developed sector enablers. By and large, GCC countries are not focusing on the activities that other countries use to bolster their tourism sectors. Most GCC states do not have a long-term strategic plan for their tourism divisions. Moreover, they do not invest heavily in the sector. 3. Systems that inhibit tourism instead of encouraging it. GCC countries have relatively restrictive visa requirements and significant challenges in the area of environmental sustainability, reflected in low scores for air quality and waste-management practices. In reality, there is no single ‘right' institutional framework. And, while it is useful to understand how countries with thriving tourism sectors use their CTPEs, this perspective alone does not yield definitive answers. GCC tourism officials need to apply this intelligence to their own institutional frameworks if they are to refocus their CTPEs on the correct priorities for maximum impact. Tourism represents a colossal economic opportunity for the countries of the GCC, as they have many existing assets that they can use to attract global travelers - from modern airports to pleasant beaches, and cultural and archeological sites. To date, however, most of these nations have not made tourism a priority, nor have they realigned their institutions to adequately tap into related opportunities. Now is the right time to take advantage of substantial national investments in infrastructure and human capital to begin the transformation of the GCC's tourism sector.— SG
