Tunisia: Tourism on the Rise |
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In spite of the slowdown in its European markets, tourism, one of Tunisia's key economic sectors and the country's second largest employer after agriculture, has shown steady growth over the first nine months of 2008, with record revenues expected by the end of the year.
Official figures released last month showed that Tunisia's tourism revenues rose by 9% year-on-year to approximately $1.8bn for the first nine months of 2008. Minister of Tourism Khalil Lajimi, speaking to local press last week, said that by the end of the year, taking into account seasonal changes in demand, he expects the sector's revenues to increase by a total of 8% to a record $2.4bn, compared to nearly $2.2bn in 2007.
The revenue growth has outpaced the modest increase in visitor numbers, which - in line with previous annual figures - has grown around 3% in 2008 to nearly 5.6m so far. Lajimi said he was optimistic that figure could reach 7m tourists by the end of 2008.
By comparison, 2007 saw a total of 6.7m visitors, a 3.2% increase over 2006. The vast majority of the visitors come from neighbouring Libya and Algeria. The two countries sent around 2m tourists across the border in 2007.
The tourism sector, which also serves as Tunisia's largest foreign currency earner, employs nearly 16.6% of Tunisia's total labour force, with more than 500,000 jobs in 2008. Thanks to the steady flow of visitors and the stable economic environment, the industry is also one of the chief attractions for foreign direct investment (FDI) into the country. Together with the real estate sector, FDI in tourism over the first nine months of 2008 jumped to an impressive TD183.6m ($133.87m), compared to TD8.2m the year before, with the dramatic rise due in part to the launch of several large-scale projects as well as the expansion of various hotels.
Tourism directly contributes to nearly 7% of the country's Gross Domestic Product (GDP). However, according to the World Travel and Tourism Council (WTTC), when the total impact of the sector on economic growth is taken into account, tourism and tourism-related revenues jump to 17.7% of Tunisia's GDP, or TD8.65bn.
While Tunisia's economy is relatively sheltered from the worst excesses of the current financial crisis, tourism is expected to be one of the more vulnerable sectors. While Maghreb visitors make up the largest portion of Tunisia's incoming tourist traffic, European markets also remain a steady client, particularly from France (1.3m visitors in 2007), Germany (514,000 visitors), Italy (440,000) and the UK (312,000) - all of which have seen cutbacks in consumer spending in recent months. Given that European visitor numbers were already dropping prior to the crisis - German visitor numbers, for example, fell by 6% in 2007, while Italian arrivals dropped by 4.3% - the crisis obviously has some in the country's tourism sector concerned about future growth.
According to Lajimi, the full impact of the economic slowdown has yet to be felt in Tunisia, but the government is already working to come up with measures to counter the expected drop in demand. Their efforts include promotional efforts to help improve the visibility of the sector, along with a series of modernisation programmes that have already been implemented for the country's 800 hotels. Indeed, earlier this year, 19 hotels and two tourist restaurants were closed due to a failure to meet basic standards, while several others saw their official classification downgraded.
According to estimates from the WTTC, should the programmes be implemented successfully, tourism and tourism-related contributions to the GDP will rise by over TD9bn to TD17.94bn in 2018, while the number of jobs in the sector will rise to over 620,000.
Of course, Tunisia is by no means the only tourism market to be affected by the financial crisis. Following a strong start to the year, global tourism figures fell from 5.7% year-on-year growth during the first four months of 2008 to less than 2% over the summer.
Tunisia is seeking to change the structure of its tourism sector to better cope with the rigours of the global slowdown as well as with increased regional competition from places like Morocco and Turkey. Since the 1970s, Tunisia has been a leading market for mass tourism, with a market that relies heavily on tour operators and wholesale package groups. While this launched the country into its role as a leading tourist destination, it had a negative impact on its sustainability and growth prospects. Given that package tours rarely spend outside of their prescribed itineraries, tourism-related revenues are limited and demand is often constrained by seasonality. Income per head in Tunisia is around $333, whereas Morocco - which is seen as a more upmarket destination - receives around $1040 per head. Similarly, Egypt receives around $850 per head.
In a bid to move beyond the mass tourism model, Tunisia has begun to build up its niche markets, particularly in medical tourism. The country already boasts a highly qualified health services sector, welcoming 150,000 foreigners to its thalassotherapy facilities in 2006 and an additional 75,000 to its various medical clinics in 2007. While the majority of the patients come from neighbouring Maghreb countries, an increasing number come from Europe, seeking to take advantage of cheaper prices and comparable treatment for a variety of operations ranging from cardiovascular surgery to cosmetic procedures. With the global medical tourism market currently worth $60bn, according to a recent report by US-based consulting firm Deloitte, Tunisia is looking to increase its share of the pie by investing heavily in new medical tourism projects, providing generous tax breaks and reducing import duties for private investors.
© Oxford Business Group 2008
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