Trends that will impact Middle East travel

The global megatrends are set to have a profound and disruptive effect on the Middle East travel and tourism industry, according to a new PwC report.

The report adds that the five global megatrends that are widely believed to be shaping the future of our world are: demographic shifts and social change, a shift in global economic power, accelerating urbanisation, climate change and resource scarcity, and the rise of technology.

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, and tackle fast, the report added.

With 40% of the region's population under the age of 25; and its population expected to rise by almost 50% over the next 25 years. The tourism industry is seeing a change from what the report calls “Generation Z and the Millennial to the Silver tourist”. From targeted rebrandings and proactive actions to attracting new types of travellers whilst retaining existing customers; overhauling traditional marketing concepts and embracing the power of social media; to embracing a digital era.

The shift in global economic power

This has placed the Middle East at the center of many of the world’s fastest growing markets- India and China. Dubai in particular has leveraged that position to turn itself into a global hub for aviation, tourism and logistics. Through Dubai International Airport, the city has also turned itself into a key link, connecting the economies of the East and the West and placing the UAE within a four-hour flight of 40% of the world’s population. Opening itself to mass markets such as China and India, the development of large-scale tourism projects, the trim down of corporate travel budgets during trying periods and the consumer behavior of the millennial traveler, it is important for Dubai and other major cities in the region to address the skew of its hotel supply towards the luxury hotel sector and open its door to welcome more budget-friendly mid-market, i.e. 3 and 4 star hotels, into the mix.

The report cites the steps which countries across the region will need to take to further take advantage of that enviable position and central location on the West-East corridor. It argues that emerging markets are indeed set to overtake developed mones as both tourism and hospitality destination but also as providers of key customers.

Accelerating urbanisation

With new cities under construction, urbansation continues to rise – making it a struggle to develop sufficient infrastructure to cope with this population explosion. However, the focus will have to shift today to making urban spaces, including hotels, function optimally. This, PwC says, reflects a $4 trillion opportunity of projects planned or under construction in the Middle East and North Africa. A majority of the countries within the GCC attract urban tourists; wherein the main city is the targeted destination for the traveler.

Dynamic development of urban tourism is strongly dependent on economic growth, technological growth and increased air connectivity; all of which are positive factors for the GCC region. Tourism offerings usually vary from retail, leisure and wellness, cultural, theme parks, sun and sand but are usually concentrated “in-the-city.”

Climate change and resource scarcity is a pressing issue for the Middle East.

Water is and will remain a significant issue for the region over the coming decade, with the GCC already relying on 70% of its water and water consumption being forecast to grow by one-third by 2020. In addition to water scarcity, the Middle East is of course vulnerable to warmer summers - the region will therefore need to implement some critical control measures in the form of a sustainability road map with clear targets and mitigation strategies, said the PwC report.

Technological breakthroughs

The travel and tourism industry will require new skills and a shift in strategies. The Middle East travel and tourism industry has many of the right ingredients to benefit from these technological breakthroughs, with young, tech savvy populations across the spectrum and smartphone penetration in the GCC amongst the highest in the world, reaching 78% in the UAE and 77% in Saudi Arabia. Digitisation will affect the entire value chain of the travel and tourism industry; from influencing traveling decisions, to collecting feedback and improving the delivery of their products and services. A business strategy, befit for the digital age, will have to be the order of the day for the industry.