Bahrain: Road to recovery

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The number of international arrivals to Bahrain surged in mid-August, as visitors headed to the Gulf country to celebrate the post-Ramadan Eid holidays. The tourism sector appears to be more generally looking up after a challenging 2011, with its direct contribution to GDP projected to grow by 3.7% per year until 2022, according to the World Travel & Tourism Council. Recent investor activity is largely in line with these expectations, with a number of new hotels set to open in the coming years.

The Ministry of Interior reported in late August that some 230,000 tourists entered the country during the week of August 16-22. The majority of visitors – about 190,000 – arrived via the King Fahd Causeway, the bridge that connects Bahrain to Saudi Arabia, to enjoy Bahrain’s relaxed environment. The remaining 40,000 visitors either landed at the international airport in Manama, the capital, or came through the seaport.

The Eid holiday is traditionally a time of travel throughout the Gulf region. According to the Tourism Directorate at the Ministry of Culture, the government entity responsible for tourism marketing, licensing and product development, the majority of tourists come from other GCC countries, with visitors from Saudi Arabia, Kuwait and Qatar enjoying easy access thanks to the causeway.

Tourism is an important element in the government’s plan to diversify the economy, as outlined in Bahrain Vision 2030, the Kingdom’s long-term economic development plan. In 2011 the direct contribution of tourism to GDP was BD513.2m ($1.35bn), equivalent to 5.6% of GDP, according to the World Travel and Tourism Council (WTTC). The total direct contribution figure is expected to rise by 4.2% in 2012, followed by an average of 3.7% growth per year between 2012 and 2022, reaching BD769.4m ($2.03bn) in the final year of the projection period.

The WTTC also predicts that employment in the sector will rise from around 27,500 jobs in 2011 to 36,000 jobs in 2022. Similarly, the number of annual visitors is expected to grow from 5m in 2011 to more than 8m in 2022, and investment in the sector is predicted to hit BD326.1m ($859.61m), compared to BHD205.5m ($541.7m) in 2011.

Some of these additional funds will likely be directed towards the building of new hotels, with a number of projects in the works from global and regional hotel chains, such as the Four Seasons, Marriott and Rotana. A Four Seasons is currently being constructed at Bahrain Bay, a mixed-use development in Manama, with a target completion date set for April 2014. Also planned for Bahrain Bay is a JW Marriott, which will have 274 rooms, as well as 102 residences, and is scheduled to open in 2016.

In the more immediate future, Dubai-based Ramee Group of Hotels & Resorts is expected to open its first property in Bahrain in September 2012. According to a company statement, the 28-storey hotel will be the Kingdom’s tallest, standing at approximately 115 metres. The five-star hotel will also feature seven food and beverage outlets, a fitness centre and 800 sq metres of ballroom and meetings space.

The opening of the Ramee property will follow on the heels of the August launch of Bahrain’s first Holiday Inn Express. The 274-room hotel is located on Exhibition Road, close to Bahrain International Airport, as well as the King Fahd Causeway, the Bahrain Financial Harbour and a number of key shopping facilities. The primary investor in the project is Dubai International Capital, the private equity division of Dubai Holding, which invested $40m in the hotel through its majority-owned Ishraq Gulf Real Estate Holding. Ishraq has already developed four Holiday Inn Express hotels, which cater to budget business and leisure travellers, in the GCC.

According to Maissan Jalal Al Maskati, the chairman of Ishraq, Bahrain is an “attractive” tourism market. “In fact, our decision to make such a substantial investment was driven by our long-term confidence in the market’s historically healthy occupancy levels and hotel rates, coupled by a sophisticated consumer base that demands a high-quality limited service product,” he told local media.

The fact that investors continue to approve hotel projects in Bahrain signals that the long-term growth expectations for the Kingdom’s tourism sector are healthy. Indeed, after a difficult 2011, the sector appears to be growing in confidence.

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