Tourism of tomorrow
These global shifts are set to have a profound and disruptive effect on the Middle East travel and tourism industry. Martin Berlin, Middle East partner and global deals real estate leader at PWC, shares his insight
Demographic shifts
With the Middle East leading the emerging market population boom over the past decade, demographic and social change is a key issue that the industry will need to tackle. Given these dynamic parameters, the travel and tourism industry must update its offering to cater to this changing demand, deriving from a multiple clients’ base. This change from ‘Generation Z and the Millennial to the Silver tourist’ brings with it numerous opportunities and challenges. Embracing innovation in hotel branding through lifestyle branding and personalized experiences is key. The hotel industry’s business traveler is soon to be targeted by Airbnb. Hoteliers need to take strong, proactive actions to retain business travelers and attract customers across all ages and demographics. They must become more consumer-centric, while investing in creating strong identities for smaller lifestyle chains. The Gen Z and the Millennial tourists are most likely to make decisions based on social media influence, accentuating the extra attention that stakeholders should dedicate to social media platforms in their marketing strategies. Similarly, the impact of digitization extends to the travel and tourism industry. From automated bookings and e-itineraries to mobile check-ins and bring your own device (BYOD) entertainment platforms, the digital industry is set to have a profound impact on the travel and tourism industry.
Shifting global economic power
With the shift of global economic power, the Middle East stands at the center of many of the world’s fastest growing markets, most important of which are India and China. The region will have to take proactive steps to benefit from these shifts and its advantageous position. Emerging economies are expected to surpass advanced economies in terms of international tourist arrivals - with Asian and Pacific countries gaining most arrivals by 2030. While most of the countries are gearing up to attract and retain the Asian traveler (i.e. Indians and Chinese), destinations within the Middle East have already put the wheels in motion by introducing direct flights from India and China to the Middle East, easing visa procedures, introducing a variety of activities, especially in the family and cultural realms, providing a world-class retail offering, diversified hotel offering, leveraging celebrity endorsements and adopting other traditional marketing tools to promote a destination in the hosting country.
Accelerating urbanization
Currently, around half of the world’s population live in cities. The UN forecasts that by 2030, 4.9 billion people could become urban dwellers. The GCC is leading the urbanization game, with 85 percent of the population today living in cities. This percentage is expected to rise further by 2050. Although urbanization and tourism go hand in hand, since connectivity is increased between destinations, uncontrolled rapid urbanization presents acute challenges. These include constrained capacity and finance for infrastructure delivery, investment in service provision, proper planning and resource scarcity. It is therefore important for the Middle East to make wise choices when it comes to rapid urbanization in order to enhance and maintain the livability, sustainability and productivity of its cities. The downside of urban tourism is the negative effect it has on the environment, including, air pollution, noise pollution and over-utilization of resources. With water scarcity looking likely to become a concern in the future, it is vital that the region develops policies around sustainability within the tourism industry.
Climate change
Climate change and resource scarcity are pressing issues for the Middle East. GCC countries are among the world’s highest users of energy and water per capita. They are burning both oil and gas to produce power and desalinated water, giving them the worst carbon footprint. The impact of climate change on the tourism landscape is estimated to be highly negative, as it will compromise visitor numbers if the GCC summers become hotter. The region will need to implement critical control measures in the form of a sustainability roadmap with clear targets and mitigation strategies. It is important to think beyond profits and to preserve resources, building frameworks to enhance sustainability for the next generation. There also needs to be a strong contribution from key players across the tourism value chain, including government authorities, meteorological departments, developers, hotel operators and the tourists themselves. On a macro level, raising awareness on this issue is also crucial.
Technological breakthroughs
For many years, corporate technology was far more advanced than anything available to the consumer. But two key dates: 2007 and 2010, the respective launches of the iphone and ipad, shifted this balance decisively in favor of the consumer. Employees and consumers now have a very high benchmark for the experiences that they expect from their everyday use of digital apps and platforms. The smartphone penetration for the GCC markets is among the highest in the world, reaching 78 percent and 77 percent in the UAE and Saudi Arabia respectively. Accordingly, there is a great opportunity for the GCC to leverage on digitization. The travel and tourism industry has witnessed the infiltration of digitization across the entire value chain. From influencing the decision to travel to receiving post-travel feedback, every part of the process can be conducted on a digital platform.
The impact of climate change on the tourism landscape is estimated to be highly negative, as it will compromise visitor numbers if the GCC summers become hotter