Middle East tourism & hospitality sector plays key role in job creation

DUBAI — As the Middle East hospitality and tourism industry continues to shift and develop at remarkable pace, it must recognize the need to address change at a scale and with an urgency that is unprecedented.

What then should businesses and governments do today to navigate this ever-changing landscape successfully? PwC’s answer is to focus on the near-term manifestations of the issues and challenges confronting the industry, using a framework known as ADAPT.

Speaking at the Arabian Hotel Investment Conference (AHIC) on Wednesday, Dr. Martin Berlin, Partner and Global Deals Real Estate Leader, said the issues and challenges facing Middle East Hospitality and Tourism can be grouped into five categories, collectively known by their acronym ADAPT

• Asymmetry: Increasing wealth disparity and the erosion of the middle class.

• Disruption: Disruption of business models and blurring of industry boundaries.

• Age: Demographic pressure on business, social institutions and economies.

• Populism: Breakdown in global consensus and increasing nationalism.

• Trust: Declining trust in institutions and consequences of technology.

As the elements of ADAPT interact and reinforce each other, Dr. Berlin outlines four important implications for hospitality and tourism:

• Differentiation: Common regional approaches are becoming very difficult, if not impossible. Countries in the Middle East are becoming ever more differentiated – even within the GCC – with very different levels of maturity, different focus areas and different challenges

• Alignment: Lower oil prices mean that diversification is moving at a full speed ahead, opening up enormous opportunities in the hospitality and tourism industry – but the risks facing investors are significant and hard to calculate

• Digitization: The lag in companies’ implementation of digitization strategies in the region means that technological disruption is now starting to hit the sector hard

• Mindsets: The region’s geographic position and its success in positioning itself as a global hub for tourism and leisure mean that there is an ever wider diversity – in culture, age and expectations – in the kind of visitors it caters to

The report, launched at AHIC Wednesday, also sets out recommendations for businesses and government to address these challenges and mitigate risks and ends with a closer look at two country cases for the UAE and Saudi Arabia, to illustrate its methodology.

Dr. Martin Berlin noted: “The tourism and hospitality industry is on the cusp of massive growth in the Middle East and it can play a key role in responding to some of the big challenges we face around job creation and the evolution of the private sector. But if it is to play such a central role, the entire tourism value chain must work together to realize future opportunities – through digitization, differentiation, alignment and the development of a mindset that embraces tourism and customer service."