Despite its unique natural and historical heritage, Algeria’s tourism sector has long struggled to transform into an important component of the country’s economy. The tourism industry was positively galvanised after independence in 1962, and the North African country experienced relative success in attracting visitors during the 1960s and 1970s.
However, much has changed in subsequent decades. Underdevelopment of tourism infrastructure, coupled with insufficient promotion of the country’s destinations and little political encouragement have left the sector as a residual contributor to Algeria’s GDP. Nonetheless, new government incentives, along with private initiatives to expand existing hotel capacity, are helping to modernise the sector, which has historically been sidelined by government focus on other economic activities.
Geographical Paradox
Algeria’s geographical position is a paradox: it is advantageously close to key source markets in southern and western Europe, but also close to well-developed tourism destinations in the Mediterranean basin. Authorities are aware of this, aiming to avoid the mass-market tourism that has negatively affected some other areas in the region. “Tourism consumers pay a lot of attention to quality, sometimes even making concessions on price in order to access quality,” Abdelkader Gouti, advisor at the Ministry of Tourism and Handicraft (Ministère du Tourisme et de L’Artisanat, MTA), told OBG. “However, they do not make concessions on quality. This will be our main focus.”
As international tourism trends move towards a multi-product perspective, in which a growing number of travellers choose to combine different tourism niches into a single trip, Algeria has the potential to develop a comprehensive offering to allow it to match its Mediterranean counterparts in the medium-term. But for this plan to be successful, public policy and government decision-making on the sector will need to move faster than it has done so far.
Slowly Gaining Importance
The role of the tourism sector in Algeria’s economy is expected to continue on an upward trend, although this evolution will most likely happen at a slow pace. In 2013 tourism directly contributed 4% to Algeria’s GDP, according to figures by the World Travel & Tourism Council (WTTC). This figure is expected to climb upwards to 4.2% of GDP in 2014. The number of foreign entries has been growing slowly over the years, reaching 2.73m visitors by the end of 2013, up from 1.5m visitors in 2005, according to figures by the MTA. Although the number of visitors climbed 3.7% compared to 2012, the fact remains that a large majority of these entries were accounted for by Algerians living abroad, which represented 1.76m of all entries in 2013. The low figures are a reflection of a lukewarm performance in the tourism sector.
However, the potential to grow is there. The WTTC predicts that by 2024, the amount of visitors arriving in Algeria will rise to 3.2m. For these projections to become reality more quickly, implementation of a comprehensive strategy that includes both the renovation of existing tourist infrastructure as well as regulatory changes to facilitate foreign and domestic investment into the sector is needed.
Much of this change has already started to happen with the 2008 introduction of the National Tourism Development Plan (Schéma Directeur d’Amé- nagement Touristique, SDAT). This strategy focuses on revitalising the country’s aged tourism infrastructure as well as increasing the quality of the sector’s human resources pool.
Business Travellers
Presently, Algeria’s yearly tourist entries remain heavily dependent on business travellers, which make up the bulk of foreign visitors. This is not so much a reflection of the tourism sector’s development, but more a result of growth in other industries, such as oil and gas exploration and infrastructure construction, which are attracting a host of foreign companies and human resources. However, for the tourist industry to progress in the country, Algeria will need to tap in to its natural strengths and develop more relevant tourist niches. “The contribution of business visitors to the tourism industry is somewhat of an illusion, because foreign exchange that comes in from business visitors often leaves the economy through other channels,” Saïd Boukhelifa, a former advisor at the MTA, told OBG. The potential to expand other segments is present in the country’s vast desert landscapes, varied Mediterranean coast and rich historical sites. But successive efforts to modernise the industry have fallen short due to the sometimes cumbersome regulation and lack of coordination between the central government and local authorities with regards to implementing a comprehensive tourism strategy.
Security
Tourism strategy implementation has also been affected by safety concerns. Although the country regularly receives European visitors that take multiple-day guided desert tours, that segment of the market has been badly affected by regional instability in North Africa, as well the January 2013 attack on the In Amenas gas facility in southern Algeria. Although the attack occurred far from tourist sites, it nonetheless had a negative impact on Algeria’s image as a safe destination. “In the mind of foreign visitors, it is difficult to disconnect In Amenas, from the Oasis of Timimoun, for example,” says Boukhelifa. Further pressure was added in September 2014 with the assassination of a French guide by Islamist militants in the mountains of the Kabylie region, west of Algiers. These events are rare and the large majority of visitors coming to the country are not under threat by terrorism acts. However, perception and public image are a determinant factor of tourism flows, and these events could pose a longterm threat to the sector’s development because of their high visibility in the international media. In the past, the government implemented a ban on foreign visits to the southern areas of the country. Even visits to areas around the southern city of Tamanrasset, for example, are only possible through tourism agencies that are subject to strict security checks.
Differentiation
Even with these challenges, Algeria’s tourism industry has proven to be competitive in certain niches. Chief among them is Saharan tourism, in which the country has specialised since independence; mixing the last frontier aspect of Algeria’s southern desert, with cultural heritage sites such as the ancient city of Ghardaïa or the oasis town of Timimoun. “Nowadays, the Saharan tourism product is the only one that is fully competitive, as the Algerian Sahara is something very unique. The desert is also very different between the specific regions of the south, while other countries offer the same desert product across their entire geography”, Gouti told OBG. Despite its initial promise as a tour destination in the 60s and 70s, Algeria has faced difficulties in making the flow of tourist groups coming through packaged trips relevant on an industry scale. Boukhelifa believes that the total number of visitors that have arrived in Algeria in this form since the country’s independence is below 500,000.
Much potential also remains unexplored in the country’s considerable Roman historical sites. Well preserved places like Timgad, Djemila or Tipaza attract a mostly domestic tourist crowd. However, several other sites, such as the ruins of Hipponne in Annaba, remain poorly kept. Boukhelifa believes that only five of the over 20 well-known historic sites are properly prepared to receive tourists, but with upkeep, these could become a staple of the country’s appeal. Most times, international travellers are unaware of Algeria’s vast Roman heritage. A good example to follow would be Tunisia’s promotion of historic Roman sites, which has enabled government money to be channelled into their maintenance and security, and has prompted the creation of several direct tours from the capital Tunis. These tours serve sites such as the Roman coliseum of El Jem or the ruins of Dougga, which are both several hours from Tunis by road.
Domestic Tourism
In the meantime, historical sites mostly serve as attraction points for domestic visitors. Although a relatively limited number of Algerians go abroad for their vacation periods, potential still remains to be explored in the domestic tourism segment. According to the MTA, 2.13m Algerian nationals travelled abroad in 2013. “These outgoing numbers hold potential, often as relevant as the foreign tourists coming in. Algerian tourists travel to places like Turkey or Tunisia,” Gouti told OBG. “In order to compete for these outgoing travellers, we need to offer them something that is at least as good as what they can currently find overseas.”
With a rising number of people owning cars and the development of better road and rail networks across the country, catering to domestic tourists has become a priority. On the government side, much of the push for domestic tourism is led by the National Tourism Office (Office National Algérien du Tourisme, ONAT), a state-owned tour operator under the MTA that puts an emphasis on both the demand and the supply sides of domestic tourism. By establishing cooperation deals with Gestour, which manages the network of state-owned hotels, and Air Algérie, as well as private accommodation and transport providers, ONAT is able to provide accessible vacation options for Algerians, focusing on high-school and university students, as well as private and public sector workers.
Expanding Infrastructure
To expand accessible infrastructure, ONAT has built 260 vacation bungalows in seaside areas such as Béjaïa, Jijel and Mostaganem, west of Algiers. The same strategy will be implemented to develop accommodation options in the southern areas of the country. ONAT is currently building two tourism villages in Timimoun and Taghit, two oasis towns that have been attracting national and foreign tourists for decades. The projects consist of building 50 bungalows in each place, but ONAT is preparing to increase capacity if the market responds positively. “It is good to invest in new infrastructure in the south, because it allows us to create winter options to complement the tourism offer already being established on the coast, and develop year-long demand,” Mohamed Cherif Selatnia, director-general at ONAT, told OBG.
Heading Up
Other segments of Algeria’s tourism sector are also receiving more attention from state as well as private investors. The MTA recently announced that 15 thermal centres across the country were being renovated by private operators, after the authorities recently allocated the necessary licences to tap into Algeria’s thermal water resources. In addition to these, another eight thermal centres are in the midst of being renovated by the MTA at a total investment of AD12bn (€111.6m). Authorities plan to establish a network of privately and publicly managed thermal centres across the country in order to better maintain the sites and also to more easily promote them as tourist attractions.
Tourism Investment
Contrary to other countries in the region, Algeria has faced difficulty in attracting a considerable amount of private investment into its tourism sector. Much of this has been related to its focus on other economic activities, and MTA figures show that the sector brought in €367.6m in investment over 2013, a small amount compared to the hydrocarbons sector. Other reasons for lower investment are linked to historical and political reasons. The state-owned hotel network developed over the 60s and 70s did not see much upkeep in the following decades, and civil conflict in the 1990s during Algeria’s décennie noire (Black Decade) further dampened hopes of consistent investment.
Economic growth, coupled with increased overall security, is already providing a better environment for investment in the sector. According to the WTTC, investment in Algeria’s tourism sector reached AD153.3bn (€1.43bn) in 2013. This is expected to increase a mere 1% for 2014, but rise by 5.5% over the coming decades to reach AD263.4bn (€2.45bn) by 2024. An encouraging sign comes from the way that authorities are pushing for faster development of Tourism Investment Zones (Zone d’Expansion Touristique, ZET) across the country. Although these were initially created after the country’s independence, ZETs are only now becoming a credible and effective way to channel private investment into the sector. So far, Algeria has already established 205 ZETs, although only about 30 of these have development plans that are approved and ready to receive private tourism projects. In recent years, tourism authorities have inaugurated several of these areas, especially around several points of the country’s Mediterranean coast (see analysis).
Hotel Revamp
Hospitality infrastructure has seen a revival over the past decade, and a series of international hotelier brands have increased their participation in the Algerian market, mostly through the management of state-owned hotels under their own names, increasing the quantity of international quality hospitality on offer.
Most of these typically cater to domestic and international business clientele, and so tend to open in major cities such as Algiers, Oran or Constantine. Figures from the National Federation of Hotels, put Algeria’s existing capacity at 100,000 beds, compared to a mere 5000 beds at the time of the country’s independence. “However, only about 10% to 15% of those hotel beds are in accordance to international standards,” Gouti told OBG.
With demand far outstripping supply, high prices are the reality in certain segments of the market. “Without sufficient competition, hotels will make less of an effort to offer a better service, because they are full, and prices will be kept high. The increase in the number of hotels will change this,” Selatnia told OBG. For the current hotel demand to be fulfilled it is estimated that an additional 100,000 beds will need to be developed.
Competition
Algiers is currently the most competitive hotel market, with several international names catering to business clientele. With a large proportion of business visitors returning to their home countries over weekends, occupancy rates vary between 85% on weekdays and 40% on weekends. Brands such as Sofitel, Hilton, Sheraton and Ibis are already present. Accor is planning to open a new Novotel hotel in the Bab Ezzouar business district in Algiers, close to the airport. Other major cities are also seeing increased interest from international hotel management. A 201-room state-owned unit managed under the Sheraton brand is expected to start operations in 2015 in Annaba, in the country’s eastern half.
These will add to a network of state infrastructure. Hospitality received a strong governmental boost after the country’s independence, which saw the establishment of several new hotels in addition to those built during the French colonial period. The state-owned units were later organised under Gestour, a public entity under the MTA that oversees the management of 65 public hotels across the country. Since 2009 Gestour has been renovating its hotel network, which has translated into a revamped Hôtel El Aurassi in Algiers, as well as the expansion and renovation work taking place in other well-known hotels such as the Gourara Hotel in the oasis town of Timimoun or the Cirta Hotel in Constantine. The renovation of the whole state-owned hotel network will cost up to AD70bn (€651m) and is expected to be completed in 2016.
In addition to this initiative, a multitude of new private hotel projects are under development across the country. By the year 2020, there are plans for 870 new hotels, according to authorisations given by the MTA. “This will, however, only translate into an additional 90,000 beds, because most of these new hotels are small,” Mokrane Louanchi, secretary-general at Gestour, told OBG.
Human Resources
During hotel renovations, Gestour is taking advantage of the temporary closing of some units to move forth with an enhanced training programme, which will eventually cover its 8000 staff. Skills upgrading will target all positions, including hotel managers, which are set to receive 13 months of training.
Human resources’ improvement to increase quality of service has become a priority for authorities, and the efforts have gained importance as a host of new hotels join the fray. “In Algeria, the five-star hotels have yet to find enough suitably qualified staff to match the service that they aim to provide,” Boukhelifa told OBG. As the number of international visitors increases over the coming years, more pressure will be put on human resources development to meet international standards.
Aware of this shortcoming, the MTA is enhancing training opportunities. The availability of quality human resources has greatly improved as more hotel brands enter into hotel management deals with the government, and train staff to meet international standards. The rising presence of international hotel brands is encouraging competition for the tight supply of best-qualified workers.
Public Education
Efforts have been made on the public side as well. Under the MTA, three main tourism schools provide skills enhancement to 900 people every year, in Algiers, Tizi Ouzu and Boussaada, and capacity is set to increase. The National Higher School for Tourism, currently based at Hôtel El Aurassi, will be moved to Tipaza, allowing it to increase the number of student vacancies from 200 to 600. A new tourism school is also expected to open in Aïn Témouchent, which will also add to the total number of available training positions.
Although still not offering comprehensive tourism degrees, some vocational training institutes across the country are nonetheless teaching skills in areas related to the sector and providing diplomas in topics such as hotel administration or catering. International cooperation deals are also contributing to sector development. For example, Constantine-based Ecole de Formation en Hotellerie et Tourisme Hadj Hocine Boulefkhad, a private tourism school, recently signed an agreement with the French Academie de Nice to establish a student exchange programme between the institutions.
Cumbersome Procedures
But as infrastructure and service quality are upgraded, Algerian authorities will also need to focus on easing the visa procedures most tourists need to endure before coming to the country. This is especially relevant considering Algeria’s geographic location, between Morocco and Tunisia, two countries with a heavy reliance on tourism revenues that allow for most visitors to access without visas. “Our current visa system is alienating the same tourists that are actually interested in Algeria,” Boukhelifa told OBG.
In fact, visa procedures for tourists visiting in organised tours can take several weeks to process and involve a series of bureaucratic procedures. Initially, the foreign tour operator sends a list of travellers to an Algerian counterpart who is in charge of securing the necessary visa authorisations. In the event that the tour visits sensitive areas in the country’s southern deserts, such as Djanet or Tamanrasset, visa authorisation must be obtained from three different security institutions: the police, the gendarmerie and the Department of Intelligence and Security. The list then needs to be approved by the MTA as well as the Ministry of Foreign Affairs.
Outlook
Algeria’s economy has been expanding and attracting international investment despite the small size of its tourism sector. As efforts to diversify earnings shape up, the tourism industry is increasingly viewed by authorities as a largely untapped resource, with the potential to boost employment figures and develop the country. However, for this to be achieved more effort will need to go to the development of a solid, quality-oriented tourism infrastructure. As Algeria aims to attract more travellers from traditional markets such as France, Spain or Germany, it will be competing with more developed destinations such as Egypt, Tunisia and Turkey. On a more positive note, Algeria’s relative stability in the region that has seen successive political and social unrest in recent years bodes well for its positioning. The sector is well placed for consistent if modest growth in tourism numbers, and this can be accelerated with swifter tourist visa procedures and the upgrade of existing infrastructure to a level that would allow Algeria to compete with its neighbours.
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