TOURISM IN GCC – A COMPARATIVE ANALYSIS 1

Tourismin GCC – A Comparative Analysis

    1. Background to the Study

The growth model ofthe Gulf Cooperation Council (GCC) countries has delivered strongsocial and economic outcomes over a number of decades. The economy ofthese countries relies heavily on oil as the main source of fiscaland export revenues. GCC governments have helped to raise the livingstandards of regions through increased public sector spending andemployment. However, the economic growth model of the region hasvarious weaknesses making economic diversification important.Economic diversification in the GCC countries would lower exposure touncertainties and volatility in the global oil market, increaseproductivity, create more jobs and establish a non-oil economy, whichwill be necessary for the future (when revenue from oil start toreduce). For that reason, the study carries out a comparativeanalysis of the tourism development across GCC countries, as one wayof attaining economic diversification in the region.

ConceptualFrameworks

Even though political instability brought about by the emergence ofterrorist organizations (such as ISIL) and Arab Spring have led touncertainty in the region, GCC countries have continued to developtheir tourism sector as one of the futuristic economic pillars. Thehospitality industry in the region is set to reach $ 35.9 billion bythe year 2018, which represent 9.5% annual growth from 2013 (in 2013the hospitality industry in GCC region was valued at $22.8 billion).The growth of tourism industry is fueled by a rise is in the level ofleisure travel, increased international tourists arrivals (especiallyfrom Asia). MICE tourism (Meetings, Incentives, Conferences andExhibition tourism) is the leading segment of tourism in the region(Fasano&amp Iqbal, 2015).

Governments in the region have made various efforts to develop thetourism industry, for example Dubai undertook Dh117.5 Al MaktoumInternational Airport development and Saudi Arabia funding of 11 newsports stadia. Other countries have undertaken various projects aimedat attracting more tourists. It seems to bear fruits with countriessuch as Saudi Arabia getting 7.4 million visitors in the first halfof 2015 (which was 25% increase from 2014). Kuwait and Bahrainregistered 66% of the total number of visitors in GCC, followed byQatar and then UAE (Hertog, 2015). The statistics shows that despitevarious political and social challenges that have affected thestability of the regional tourism industry, efforts made to developthe industry in the entire GCC economic and political union has bornsome fruits, but much need to be done if the region is to achieve itseconomic diversification objectives.

    1. Relevance of Research

The finding of the study reveals competitive and efficient strategiesfor promoting tourism in the GCC region. The information is vital tothe regional policy makers. Ensuring economic stability andimprovement of living standards are the key goals of GCC governments.Given the uncertainty in the oil industry and likely drying up of oilreserves, adopting alternative economic development policies iscritical for the future of the region’s prosperity. The researchprovides recommendations on the projects, strategies, and plans thatcan be implemented to nurture tourism industry and ensure it helps tocushion the region from economic uncertainty. On addition, findingsfrom the study provides illustration and analysis of the tourismdevelopment over the years and projected future development, whichhelps to identify challenges facing the industry and how differentgovernments are dealing with them

    1. Statement of the Problem

The fall in oil prices has dealt a big blow to oil dependentcountries with GCC countries bearing much brunt. Given increasing oilprice volatility, and fear of oil reserve drying up in the future,GCC countries are faced with a task of ensuring that they secureeconomic stability for future generations. As a result, tourism hasemerged as one of the most promising industries that can anchor theeconomy of these countries during oil price volatility periods.According to Ernst and Young (2016), tourism development is thepromising strategy for hedging GCC economy. GCC countries haveinvested massive wealth in expanding infrastructure, improvingtourist sites and creating new attraction sites, as a way of givingthe region a competitive position in the global tourism industry.Given the critical economic period that GCC countries experienced,the study seeks to answer the question, which strategies are used topromote tourism in the GCC region and how can the strategies beimproved to ensure that the region has attained its economicdiversification objectives?

2.0. LiteratureReview

Literaturereview focuses on looking into detail what other researchers havedone in investigating the oil prices and tourism in the GulfCooperation Council (GCC). Among the member states of GCC are Kuwait,Saudi Arabia, Qatar, Bahrain, Oman, and the United Arab Emirates(Fasano, &amp Iqbal, 2003).The section has explored the GCC oilprice in GCC economy it has also provided an overview of globaltourism and GCC Tourism strategies.

2.1. GCC Economyand oil prices

GCC economyhas been facing pleasure to look for an alternative source of incomedue to volatility in oil prices. There has been a sharp decline inoil price because of political risk. Political wrangle among the GCCmembers has contributed to lower growth rate. It has also caused thefinancials such as IMF, and U.S withdraw their support, whichconsequently makes the economy shrink. Studies show that between 2014and 2015 the oil prices in GCC economy declined by 50%. The barrel ofoil in 2015 was costing $58. The GCC countries have tried to put inplace measures to minimize the impact of the sharp decline in oilprices by hedging oil prices in derivatives. The study further showsthat the growth of oil in GCC countries was anticipated to be 3.4%however, due to a sharp decline in oil prices the growth decreased by1 percent (Nusair, 2016).

Research showsthat the rate of Growth among the GCC countries is anticipated todecline due to sharp fall in oil prices. For example, in 2015 theUnited Arab Emirates project an economic growth of 3.4% while SaudiArabia projected growth was 3%. However, in 2016, the projectedeconomic growth for UAE and Saudi Arabia declined by 3.2% and 1.5%respectively (Basher, &ampAlkhater, 2014). The InternationalMonetary Fund projected that the GCC countries would continueexperiencing a sharp decline oil prices because of an oversupply ofoil from other economies. The IMF further suggested that the GCCeconomies would be having problems in maintaining a significantmarket share of oil in the future due to increase in global oilsupply from other countries. IMF projected that United States wouldapply strict monetary measures when availing funding to GCC economiesbecause they are perceived as high-risk borrowers. The GCC countrieshave identified tourism as an alternative investment opportunityother than oil. They have realized that overreliance on oilproduction may adversely affect the economy due to volatility in oilprice (Arouri, Jouini, &amp Nguyen, 2013).

2.2. GlobalTourism Overview

The global tourismdata by Nation World Tourism Organization (UNWTO) shows thatinternational tourism grew by 4.4 percent in 2015 which amounted to atotal of 1184 million tourists. The study further shows that in 2016,the international tourism arrival will increase by 4%. The rate oftourism growth in 2016 is slightly lower as compared to the previousperiods. The UNWTO shows that tourism growth regarding region willvary. For example, in the Middle East, the projected tourism growthwill be between 2 to 5 percent while in Europe it will be 4.5% whilein Asia and America tourism growth will be between 4% and 5% (UNWTO,2016).

The UNWTO showsthat the growth of tourism across the world has grown faster thanother sectors of the economy. The number of tourist destinationacross the world has been increasing over the years. On the contrary,the total volume of oil export across the world tends to be surpassedby the volume of tourist activities. Research further shows thattourism is a leading economic player in the international business.It is a source of revenue in most developing countries. The globalcontribution of tourism from 2006 to 2015 reached $7.17 trillion.Besides, the number of world tourist arrival amounted to 1087 millionpeople between 1995 and 2015. Such statistic indicates that investingin tourism by GCC economy is not in vain more revenues will beobtained which will consequently help to improve the state of the GCCeconomy (UNWTO, 2016).

2.3. GCC tourismstrategies

GCC havebeen put forth strategies to promote the growth of tourism among theGCC countries. According to a meeting chaired by the Doha tourism,minister Selman Bin Sultan the strategies to improve growth oftourism were discussed. Some of the strategies that discussed includeintegration of tourism among the GCC member’s states, provision ofprograms that attract tourist, and promotion of bilateral agreementsamong member’s states. The integration strategy focused on ensuringthat there is proper coordination among the GCC countries such thattourist can be able to tour any of the GCC countries freely withoutrestriction. Integration strategy is also aimed at ensuring thatmember’s states work together in developing tourist destination(Pirani, &amp Arafat, 2016).

Tourismpromotion programs include campaigns to promote tourism andconstruction of an eco-system that fosters the growth of tourism. Thebilateral tourism agreements focus on ensuring that member’s stateshave a legal guideline that they may follow when carrying out touristactivities together. The agreements also concentrate on increasingthe cohesiveness of future tourism business relationship among theGCC countries. The GCC member’s states put forth policies thataimed at improving the tourism situation in the member countries(Alhowaish, 2016).

2.4. Summary ofthe literature review

It can beobserved that there has been a sharp decrease in the prices of oilamong the GCC members’ states. The decline is attributed to theglobal increase of oil suppliers. The number of countries thatproduces oil has been increasing significantly, which consequentlylowers down the prices of oil. In addition, the political instabilityamong the GCC member’s states has made it difficult for the GCCmember’s States to continue relying on oil. Research indicates thatthe production of oil in among the GCC member countries isanticipated to decline as their mining areas are becoming exhaustedmaking it difficult to mine large barrels of oil. Such decline inproduction of oil among the GCC members’ is a precautionary signthat GCC countries should look for an alternative source of income.Among the alternative source of revenues that the GCC countriesfocused on investing in is tourism (Alhowaish, 2016).

Research showsthat tourism has emerged as the leading sector of the economy thathas high potential growth than oil production. Investing in tourismis not in vain, because the economic benefits attributed to traveloutweighs the cost. Global Statistics on tourism shows that between1995 and 2015 tourist sector managed to bring an income ofapproximate 7.17 trillion dollars. Besides, more than 1087 milliontourists were received in various tourist destinations across theworld (Pirani, &amp Arafat, 2016).

3.0. Methodology

The sectionprovides information on the scientific techniques used to carry outthe research and how the data was collected and how analysis wasperformed. Some of the important parts under, methodology that wasdiscussed include research design, data collection, and analysis.

3.1. Researchdesign

The researchemployed a case study quantitative and qualitative design where GCCcountries were the scope of the study. Among the members, statesinvolved in the case study include Kuwait, Saudi Arabia, Qatar, UAEBahrain, Oman, United Arab Emirates, and Emirates. Case study designwas found to be appropriate because it helps to avoid generalizationand ensure that detail information is obtained from the targetpopulation. It also allows the researcher to do a comprehensive, andcomparative analysis of the information gathered (Taylor, Bogdan,&ampDeVault, 2015).

3.2. Datacollection

Secondarydata will be used because most of the information needed to carry outa comparative analysis of tourism in the GCC countries was availablevia e-resources. Some of the sources of data utilized include theUnited Nation World Tourism Organization. The quantitative data willalso be collected especially on the global performance of tourismabout GCC countries. The data on some tourists visiting the GCC andthe revenues obtain as well as projected growth were some of the datacollected for carrying out a comparative analysis of tourismperformance in GCC countries. Global data on tourism was selected itacted as a benchmark for comparing GCC tourism performance withglobal performance (Taylor, Bogdan, &ampDeVault, 2015).

3.3. DataAnalysis

Thequantitative data collected was analyzed quantitatively using thecomputer program SPPS. Spearman correlation was performed todetermine the correlation between the performances of GCC countriesand compare the results with global statistics. On the other hand,qualitative data was analyzed using qualitative techniques andnecessary finding recorded. Charts, graphs, and tables were used tocarry out a comparative analysis of tourism performance among the GCCcountries (Taylor, Bogdan, &ampDeVault, 2015).

4.0.Result and Discussion

4.0. TouristTrends in GCC

GCC attractstourists from different regions throughout the year for itsarcheological and cultural sites, beautiful beaches, and religiousand nature tourism. The arrival of international tourists registeredno change between 2012 and 2013 (compared to 4.7% global tourismgrowth between 2011 and 2012) but it grew by 4% in 2014. GCC regionattracts 4.5% of the total global tourists’ arrivals. Figure 1.0illustrates the international tours arrivals and the tourism receiptsin GCC region from 1995 to 2014.

Figure 1.0.International tourism receipts and tourists arrivals from 1995through 2014 (UNWTO, 2014).

Table 1.0 belowshows the total receipts of GCC countries from 2008 to 2020. Asillustrated in the table the total tourism receipt is projected to$187.18 billion in 2020.

Table 1.0 GCC tourism receipts from 2008 to 2020 (UNWTO, 2014)

Countries

Years

2008

2010

2015

2020

Bahrain (US Billion)

3.06

3.31

4.23

5.23

Kuwait (US Billion)

7.46

7.85

11

15.02

Qatar (US Billion)

3.79

4.35

7.28

11.8

Saudi Arabia (US Billion)

26.71

29.11

49.69

72.88

Oman (US Billion)

5.07

4.21

6.18

8.55

United Arab Emirates (US Billion)

37.87

38.45

53.14

73.59

GCC (US Billion)

83.96

87.28

131.52

187.07

Tourism visa openness score is used to evaluate the extent to which agiven destination is facilitating tourism. The emerging and advancedeconomies have an average tourism visa openness score of 32 and 27respectively. On the other hand, GCC has a score of 18, whichindicates that the region lags behind in facilitating tourism. Theeffect is illustrated in figure 2.0 below

Figure2.0 GCC-visa requirements for the world tourists (UNWTO, 2014)

The figure showsthat on average GCC region has highest number of people in the worldthat can apply for eVisa. However, compared to other regions aroundthe world, GCC region has the lowest abolishment of any visa, whereonly 1% of the world population is not required to get any kind ofvisa.

According to World Tourism Organization (UNWTO), UAE has the highestvisa openness among the GCC countries. Between 2010 and 2013, UAErelaxed its visa requirements and procedures for about 20 countries.Citizens from 39 countries that include all GCC members can presentvisa-on-arrival in UAE. The country has also adopted efficientsystems like E-Visa processing for citizens who are member of these39 countries. To boost tourism, Bahrain launched a 3 or 7 days e-Visafor nationals with GCC Resident Permit, if they will travel via theBahrain Internal Airport. Table 2.0 below shows visa openness by GCCcountries (UNWTO, 2016).

Country

Tourism visa openness

Bahrain

24- 39

Kuwait

11 – 23

Oman

11 – 23

Qatar

0 – 10

Saudi Arabia

0 – 10

UAE

40-69

Table 2.0 tourismopenness (Visa Openness Report (UNWTO), 2014)

Table 2.0. Visa openness by country (UNWTO, 2015)

Estimates indicatethat tourism industry in GCC region accounted for 5.7% of the totalGDP in 2014. Figure 3.0 below shows changes in tourism contributionto GDP over the years among the GCC countries.

Figure 3.0historical contributions of tourism and Travel to GDP (USD Billions)(UNWTO, 2015)

The figure showsthat tourism has continued to improve its importance in the GCC GDP.

4.1. Tourismin Specific GCC Countries

Table 3.0 below indicates the competitiveness index rankings of theGCC countries. The table presents a comparative for the countriesboth in MENA region and in ranking of 140 economies. The GCC regionhas 3.92 average index score in the MENA region.

Table 3.0 GCCcountries tourism competitiveness ranking (World Economic Forum,2015).

Country

Index Score

Rank in the MENA region

Overall rank among 140 countries

UAE

4.86

1

28

Qatar

4.49

2

41

Bahrain

4.3

4

55

Oman

4.29

5

57

Saudi Arabia

4.17

7

62

Kuwait

3.61

12

101

The table indicates that UAE leads MENA region, and it is position 28in overall. The country has compensated its deficit in naturalresources with cultural resources, which plays a critical role inattracting both business and leisure travelers. The country is themain hub for the international air travel, giving it an edge over theother. UAE has held various international exhibitions and fairs,implemented a marketing campaign, and have embarked regulations,rules and policy that help in the tourism sector development. It isprojected that tourism will make USD 56.1 billion contributions tothe country’s GDP by 2020. The country is expected to gain a lot ofrevenue through Exports in 2020, which will bring about 25 millionvisitors from all over the world and will have an opportunity ofdiscovering other parts of the country. On addition, the countryorganizes Dubai shopping festival, which is the biggestentertainment, and shopping extravaganza in the Middle East, which asa good technique for marketing the country. In last few years, thefestivals attracted about 4 million visitors, the figure that isexpected to increase annually by 5 to 10% (Mohanty et al., 2015).

Qatar is the second GCC country in the MENA region and 41Sstbased on tourism competitiveness index. The country benefits fromgood tourism and ICT infrastructure, secure and safe environment, anda good air transport infrastructure. The country acts as the airtransport hub. The expatriate’s rules in the country are simplegiving the country easiness of hiring the foreign labor, whichcoupled which good education facilitates the ability of the countryto find the competitive human resource. Tourism is placed as astrategic pillar in Qatar’s vision 2030. The country recognizesthat tourism is important in diversifying the economic base, boostingcountry’s image, and driving a more sustainable country. Thegovernment has ensured that it has adopted all the measures topromote sustainable tourism by investing in infrastructuraldevelopment and developing tourist attractions such as CulturalVillage and Museum of Islamic Art. The country won a bid to host 2022FIFA world Cup, which could boost the country’s image. Theauthority plans to use $ 20 billion in developing tourisminfrastructure as it expects the visitors to increase to about 3.7million by 2022.

Bahrain is 55thin overall and 4th in the region. Some ofthe strengths that help the country to get more tourists includeprice competitiveness and high-quality human resource. However, thecountry is facing low health and hygiene and weakening infrastructurethat supports tourism due to population growth (Arouri et al., 2015).On addition, poor environmental sustainability and limited resourcesweakens tourism in the country. In 2013, the country hosted UNWTOinternational conference that was aimed at exploring the new culturalhorizons for tourism. The conference identified various ways in whichthe country can improve cultural heritage assets, and both are livingand intangible heritages to attract more tourists.

Saudi Arabia has invested massively in tourism infrastructure. Someof the strategies used to the market country include Jeddar SummerFestivals that attracted more than 2 million visitors in 2015. Thecountry benefits from a high number of people who perform Hajj. Ithas increased religious tourism in the country. Oman is redevelopingits tourism strategies. For example, in 2013, the country started‘tourism Challenge’ a program that was aimed at enabling youngpeople to expand tourism sector through various projects andinnovation.

6.0. Conclusionand Recommendations

The volatility in the price of oil has wreaked havoc the GCCeconomy. This is because the economy of the region revolves aroundexploration, drilling, and exportation of oil. To ensure futureeconomic stability and competitiveness in the global arena, leadersin the region have embarked of economic diversification measures.Tourism is single out as one of the most promising industries thatcan anchor the future economic prosperity in the region. Thecomparative analysis of the regions tourism performance shows thatwhile countries like Saudi Arabia and Qatar are experiencing hightourism growth, countries like Bahrain are performing dismally.

Based on the analysis it is recommended for GCC countries to carryout marketing and host global events such as Olympics or world cup sothat they can promote tourism in their country. It is recommendedthat GCC countries amend their laws and policies so that they avoidbeing inclined more on Islamic based laws and ensure that theyaccommodate other members of the society. The amendment oflegislation will holistically include the needs of different touristacross the world and hence, making the GCC countries become a globalhub for tourist attraction. GCC member countries should foster a goodrelationship with other countries. This can be achieved through suchways as entering into bilateral trade agreements, and cooperatingwith other countries in dealing with major global threats such asterrorism. Countries such as Bahrain should improve their tourisminfrastructure. Most of the GCC countries do not have much naturaltourism resources endowment. They can compensate this by creatingmore new sites.

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