Following several years of steady growth, business in the tourism industry continues to show encouraging signs. Although the number of foreign visitors is progressing only slowly, the pace of investment, particularly in hotel construction, has quickened considerably over the past five years (see Construction chapter). This can be attributed to efforts under the National Tourism Development Plan (Schéma Directeur d’Amé- nagement Touristique, SDAT), introduced in 2008, to develop the sector and address current deficiencies, particularly infrastructure and human resources.
Tourism makes up 2% of GDP and employs 5% of the workforce. The SDAT aims to raise the sector’s contribution to 5% and attract 2.5m tourists by 2015. The initiative is being implemented in two phases: the first, which runs to 2015, is a start-up period to develop investment, train the workforce and promote Algeria’s main tourist assets; while the second, through 2025, will focus on boosting tourist numbers and ensuring that steps identified in phase one are implemented.
BY THE NUMBERS: According to statistics from the Ministry of Tourism and Handicrafts (Ministère du Tourisme et de L’Artisanat, MTA), the number of visitors travelling to Algeria in 2012 was 2.63m, a 10% annual increase over 2011. Non-resident Algerians accounted for the largest proportion of the total with 1.65m visitors, up by 10.64% year-on-year (y-o-y), while the number of foreigners reached 981,955 rising y-o-y by 8.91%. Tunisians made up the biggest proportion of foreigners with 531,596 visitors, followed by the French (119,518) and Spanish (33,049). The number of leisure tourists increased y-o-y by 11.48%, attracting 702,226 people or 71.51% of foreign visitors, while the number of foreigners travelling for business went up by 3.22% to 276,404, or 28.15% of foreign visitors.
IN THE WORKS: As of 2012, Algeria had 1136 hotels providing 96,000 beds. However, only 18% of beds currently meet international standards. Medium-term objectives under the SDAT aim to ensure 75,000 beds are in line with global standards by 2015. Extensive renovations to existing facilities have thus been in progress since 2008, alongside new hotel construction. As of end 2012, some 713 projects had been registered with the authorities, adding a potential 82,000 beds and generating 38,000 new jobs. Two-thirds of these consist of urban developments, 25% are coastal, 3% are Saharan, 3% are thermal and 2% are climatic. Works on 405 facilities, accounting for 50,000 beds and 23,000 jobs, were 60% complete at the time of writing.
Meanwhile, 120 projects (12,000 beds and 6000 jobs) are on hold due mostly to insufficient funds, though improved finances and greater expertise in carrying out the works may potentially help to bring the projects back on-line. The authorities are also looking into solutions to allow these projects to proceed by easing collaboration between investors and banks and bringing construction plans in line with the specific needs of the tourism sector. Finally, 130 projects (15,000 beds and 7000 jobs), the majority of which are located within the tourism investment zones (zone d’ expansion touristique, ZET) have not been launched due to land ownership issues. The national committee approving tourism projects, commission national pour l’ approbation des projets, saw its role reinforced in 2012 to investigate these pending projects, determine the obstacles hampering progress and find solutions for them to proceed smoothly. The most common issue facing most projects was found to be a lack of collaboration with administrative bodies carrying out projects on the same ground. Therefore the role of the committee has focused in the last year on synchronising the various departments to allow works to proceed.
GETTING IN THE ZONE: Some 205 ZETs, covering a surface area of more than 53,000 ha, have been identified for the development of tourism projects while another 39 are expected to be created. Although ZETs were mainly chosen in areas with natural and cultural qualities, and where projects can be developed in a sustainable manner, 85% of projects currently taking place in Algeria are being built outside of these zones, and 98% of the total ZET surface has not been utilised since 2003, according to the MTA. Cumbersome administrative procedures and high costs have pushed investor interest away from these areas. Since ZETs involve a significant surface area to be developed – with each zone averaging some 260 ha in size – a key requirement to obtaining local authority approval for exploitation of land is the tourism development plan, which many investors fail to deliver due to the lack of specialised consultancy firms in the country. Another obstacle is the financial cost of developing ZETs, estimated at roughly AD142bn (€1.31bn). “Considering the cost of developing a ZET, private investors could help carry out these projects and bring along their expertise and knowhow,” Djamel Challal, a former consultant responsible for communication at the MTA, told OBG. Challal said that poor planning of these zones could lead to classification problems once the project is finalised.
INCENTIVES: Access to land and credit are another two major challenges constraining sector development that the authorities have sought to overcome through a number of fiscal and financial measures in recent years.
Financial incentives introduced under the 2009 Complementary Finance Law include a 50% discount on government-owned land grants in the Hauts Plateaux region and 80% in the Sahara. State subsidies of 3% and 4.5% on bank loan interest rates for tourism projects in the wilaya (provinces) of the north and the south were also introduced in 2009. This measure also applies to loans obtained for tourism modernisation projects carried out in these regions under the Quality Tourism Plan Algeria (Plan Qualité Tourisme Algérie, PQTA). PQTA-related imports of equipment and furniture not produced locally according to hotel standards will be exempt from Customs duties until December 31, 2014.
Additionally, financial incentives introduced under the 2011 Complementary Finance Law include a 90% discount for investors on the cost of land titles ( concessions or government-owned land grants) during the construction phase of the project. This saving can be extended by one to three years and the investor can continue to benefit from a 50% discount on the cost of land titles. The National Federation of Algerian Hô teliers (Fédération Nationale des Hôteliers, FNH), set up in March 2012, is set to play a key role in raising awareness of such incentives. The FNH was created to help investors with project development and hotel management across the country, providing them with assistance on how to handle legal and administrative tasks as well as access to land and financing.
PRIVATE INVESTMENT: By the end of 2012, tourism had attracted AD220bn (€2.02bn) in private investment since the launch of the SDAT in 2008. “A number of governorates are witnessing a sustained pace of investment in tourism infrastructure,” Challal told OBG. “This is a positive sign for the sector and an encouraging factor considering the cost of investment and the lengthy return on investment,” he added.
At 75%, the majority of projects are carried out by Algerian investors. The remaining 25% are predominately funded by investors from Arab states. The trend has been to develop urban infrastructure in the hospitality sector which investors see as a more profitable year-round business. “Algeria is the third African destination for business tourists after Cameroon and Côte d’Ivoire,” Challal told OBG. Algiers in particular has witnessed sustained hotel growth in the past five years and brands such as Accor and the Hilton can be found in the city. One of the most recent to open is the five-star Hotel Oasis, an investment made by Algerian agro-industry operator Groupe Chérif, offering 324 beds and employing 486 people.
Ongoing projects in the city, notably the rehabilitation of the Sidi Fredj tourism resort in the west of Algiers comprising five hotels, are due to add some 2000 beds before the end of 2013. Hotel development, however, is not specific to Algiers, as other key cities are also welcoming more and more hotels. Oran for instance saw the opening of two new Best Western hotels in 2013. The chain’s first facility, Le Colombe, opened in January, and offers 23 rooms and three suites, while the second, Liberté Hotel, opened in March, and has 107 rooms and 19 suites. Best Western also plans to expand to Algiers and Constantine. Finally, work began on a new Marriott hotel in Constantine in early 2013, the chain’s second in the country after Tlemcen. The AD14bn (€128.8m) investment is expected to be delivered within the next 23 months, adding some 180 rooms to the city’s stock and creating 600 permanent jobs.
PUBLIC INFRASTRUCTURE: Algeria saw its first hotels built by the state in the 1970s. However, insufficient funding (as the country diverted its full attention to hydrocarbons exploration) resulted in poor quality infrastructure and services. Following la décennie noire (the black decade) in the 1990s, the authorities focused on restoring security, and investors as well as visitors started to return to the country. Public hotels continue to be upgraded and brought in line with international standards under the PQTA national modernisation programme launched in 2009 to boost the quality of tourism infrastructure and services. The government will spend between AD70bn (€644m) and AD90bn (€828m) under the PQTA to upgrade 65 state-owned hotels (equivalent to 18,000 beds) with the aim of bringing 20% of existing public capacity in line with global standards by 2015. The implementation of the PQTA in state-owned hotels is overseen by Gestour (Société de Gestion de Participation de l’Etat du Tourisme), which is responsible for the management of state-owned facilities. Some €56m has already been spent on upgrading the Aurassi Hotel, one of the main high-end hotels in Algiers and the first state-owned hotel to undergo renovations under the PQTA. The refurbished hotel opened its doors again in March 2012.
DOMESTIC TOURISM: Domestic tourism is still in its infancy, owing mostly to underdeveloped leisure activities, poor promotion of existing offerings, and a lack of affordable and adequate infrastructure.
“As peace and political stability return to the country, household revenues increase, and the socioeconomic climate improves, there is increasing demand for leisure activities within Algeria, especially among families and young people,” Challal told OBG. Nevertheless, hospitality infrastructure needs to be adapted to the needs of the Algerian people to allow domestic tourism to thrive. “There is a great need to create mid-range accommodation and any such development is welcome,” Tahar Sahri, general director of Touring Voyages Algérie (TVA), told OBG. TVA, a public tour operator, has acquired plots of land along the coast and plans to build bungalows and mid-range holiday resorts.
“Similar developments will put more affordably priced options on the market, boost competition and improve the quality of offerings,” Sahri told OBG. “Developing domestic tourism will prepare the ground to welcome international visitors.” Moreover, legislation to regulate the development of guesthouses is being drafted. “It is a solution to meet rising demand and bring people closer to the social reality of each region,” added Sahri.
Another state-owned tour operator, the National Tourism Agency (Office National Algérien du Tourisme, ONAT), has placed domestic tourism at the heart of its strategies since 2011, following instructions from the Council of State Participation to refocus its activities on the local market. In preparation for summer vacationers, ONAT has constructed 260 bungalows, villas and apartments in prime coastal towns, notably Jijel, Bejaia, Mostaganem and Oran.
Additionally, the agency has created packages for a number of activities such as coastal, cultural, thermal and Saharan holidays, which include flights, accommodation and ground transport. ONAT is expanding its offices across the country with the latest opened in the port of Algiers in June 2013, just in time to welcome the large community of non-resident Algerians returning to their homeland for summer holidays. Plans are also under way to open new agencies in the south of the country in Tamanrasset, Adrar and Bechar.
OFFERINGS: According to Sahri, “The future of Algerian tourism will be determined by the development of new offerings away from business tourism.” Indeed Algeria is slowly developing other niches, yet remains challenged by the lack of hospitality infrastructure and a specialised workforce. “Camping, for instance, is an activity many Algerians enjoy, but camping sites are generally not developed,” he told OBG.
Thermal tourism is an area with considerable potential for growth that the country is prioritising as it looks to develop wellness offerings. In 2012 thermal water springs attracted some 4m visitors, predominately locals. With abundant mineral springs and considerable demand for this activity, there is room to create more thermal facilities as existing infrastructure and equipment do not satisfy demand. The government set aside AD12bn (€110.4m) under the PQTA to renovate nine of the most reputable thermal sites.
Saharan tourism, particularly popular in the 1970s and 1980s, is another niche that Algeria is looking to re-establish. A lack of accommodation in the desert, however, is one of the main obstacles to the development of this activity, along with rising security concerns in the wake of a terrorist attack on a gas plant in the eastern town of In Amenas in January 2013.
PROMOTION: Over the past decade, Algeria has focused on restoring stability and its reputation. Today, while the country prepares the grounds to receive more international tourists, its primary immediate priority in terms of marketing is to stimulate domestic tourism. For this purpose, the country’s main tour operators and agencies, including ONAT and TVA, among others, placed domestic tourism at the heart of their promotional campaigns at the 14th International Exhibition of Tourism and Travel, held in May 2013 in Algiers under the slogan “domestic tourism, a national priority”.
Meanwhile, Algeria continues to strengthen its reputation internationally. Since the beginning of 2013 the potential of Algerian tourism has been showcased at numerous trade fairs, including Madrid’s Futur in January, Milan’s BIT in February and Berlin’s ITB in March.
SECURITY: The In Amenas attack in mid-January 2013, however, has raised the security issue again. Notwithstanding greater stability in recent years, Algeria is still subject to a number of internal challenges. The country is therefore stepping up precautions.
A tourism security-training programme was launched in May 2013 at the National Institute of Criminal Police in Algiers, providing some 60 police commissioners, coming from across the country, with specialist training. The five-day course was aimed at developing knowledge and programmes to ensure optimal security for tourist groups and delegations visiting the country. The training session was carried out by the general directorate for national security in collaboration with the MTA.
TRAINING: Plans to expand the number of beds on the market by 2015 will create 30,000 jobs, 5% of which will be in management, 10% in reception, 25% in accommodation, 45% in catering and 15% as guides. Some 5000 staff are due to receive training under the PQTA, yet the current system offers only limited capacity and will not suffice to meet the sector’s needs alone.
There are three training institutes overseen by the MTA that provide training to around 880 people annually. These are divided between Algiers (200), Tizi-Ouzou and its annex in Tlemcen (380), and Boussaada (300). A further 1600 places will be added in new schools planned for Tipaza (1200) and Ain Temouchent (400).
The MTA is looking to enhance training in collaboration with existing institutes of vocational education which already offer diplomas in certain specialties, such as catering and hotel administration. A new course for training local tourist guides will be made available as of October 2013 at the National Institute of Vocational Training in Bechar in the south-west of the country.
Higher-education providers have also started to manifest their interest in developing tourism-related degrees, particularly as the licence-master-doctorate system has made it easier to introduce new specialities. In May 2013, a private Algerian business school, Management Development International Institute (MDI), unveiled the first results of a study conducted in collaboration with the La Rochelle Business School of Tourism ( LRBST) in France evaluating the state of Algerian tourism. MDI set out its ideas on how the private school would like to contribute towards the development of the sector workforce. MDI suggested continuing education and training programmes on the job in basic professions, as well as middle and strategic management.
In collaboration with LRBST, MDI has also recommended setting up a Master of Business Administration in tourism management as well as contributing to the creation of a Mediterranean school specialising in tourism planned by the MTA. As well as plans to train new staff, Algeria looks set to benefit from foreign expertise in the training of existing personnel in the sector thanks to several management contracts signed with global brands that will pursue their own professional training programmes (see analysis).
OUTLOOK: The objectives Algeria has set itself under the SDAT are expected to create diversified and sustainable tourism. The focus on improving services and facilities should stimulate competition and innovation, and overcome challenges such as the high cost of accommodation and air travel. The arrival of new hospitality infrastructure will need to progress with the aid of specialised consultants, equipment and management. In the medium term, meeting domestic tourism demand will stimulate development in other sectors, notably in construction and transport, and prepare the ground to eventually receive more international visitors.
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