Accor's Christophe Landais observes issues in finding enough personnel for Bahrain's growing hospitality sector.
Lee Jamieson discovers that it takes more than an economic downturn to dent Bahrain’s spirits
Bahrain is undergoing the largest transformation in its history. This tiny, historic country has become one of the most vibrant business centres in the Middle East and is home to some of the Gulf’s largest financial institutions. With internationally competitive fiscal policies, Bahrain is attracting large sums of foreign direct investment.
The result is the creation of a thriving and transparent open market ranked 16th in the world by the Index of Economic Freedom.
More importantly, Bahrain’s success is built upon strategic and measured investment creating a stable, well diversified economy — a policy that has created a safe haven for hospitality investors and developers.
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Safe Haven
Bahrain’s greatest asset for foreign hospitality investors is its comparative stability in the present economic climate. Although Bahrain’s success was built on oil before its independence in 1971, its business interests have since diversified into other areas. Therefore, the country has remained stable in the face of fluctuating oil prices, while other oil-reliant economies have been dealing with turbulence.
This stability is the result of a long-term government strategy and in 2008, the travel and tourism sector (along with five others) was identified as a vehicle for foreign direct investment to further diversify the national income.
This has created the “perfect storm” for hospitality investors and developers. “Bahrain is attractive because its economy is more diversified than its GCC neighbours,” explains Accor Hospitality Middle East managing director Christophe Landais. “By diversifying away from oil, Bahrain has managed to resist the global economic downturn and the impact of dramatically decreasing oil prices.
“The IMF is predicting a 3% growth in GDP for 2009, which is impressive when compared to -0.2% in the UAE and -0.9% in the Kingdom of Saudi Arabia.”
In this respect, Bahrain is currently one of the safest places for hospitality investors to direct their capital. And there’s more good news.
The stable, transparent commercial practices of Bahrain have created year-round business activity — which has a positive return on investment impact for hoteliers.
“Bahrain’s thriving business community is doing business all year round, reducing seasonality for operators,” says Marriott Hotels International area director of sales and marketing in the Middle East, Jeff Strachan.
“The result is fewer peaks and troughs. It’s great for our business to have stable, year-round occupancy.”
When Bahrain’s economic and operational stability is coupled with its beneficial fiscal policy, it becomes highly attractive to foreign hotel developers, owners and operators.
For example, Bahrain imposes no restriction on foreign ownership and no corporation tax. “Some people are talking about the potential introduction of VAT at GCC levels, but this is currently not the case,” said Landais, “and should not be for at least three to four years.”
A New Chapter
Bahrain’s thirst for new developments and foreign investment is set to open a new chapter for the country’s hospitality industry.
The Bahrain of today will be unrecognisable by 2013 when many of the flagship development programmes are due to complete.
However, the speed of Bahrain’s growth could also become a stumbling block for its fast-growing hospitality industry.
Developers, owners and operators should be mindful that the sharp growth in the service industries will be primarily supported by the local population which is little more than one million. “It will be a challenge to encourage Bahraini nationals to join the hospitality workforce,” says Landais.
“The tourism and education officials need to make a continuous effort to attract young graduates to the industry.
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