A diverse land of thermal springs, mountains, historic sites, vast desert and unspoilt Mediterranean coastline, Algeria offers a remarkable variety of activities for travellers. However, a decade-long civil war ending in 2002 and an antiquated transport infrastructure network has curtailed growth in the tourism sector, alongside negative perceptions abroad and a cumbersome visa regime.
These challenges are reflected in the World Economic Forum’s “Travel and Tourism Competitiveness Report 2017”, which ranked Algeria 118th out of 136 countries, lagging far behind its Maghreb neighbours Morocco and Tunisia, which placed 65th and 87th, respectively. The flip side of underdevelopment is that the sector has massive potential to grow with the right sort of political will in place.
As evidence of the latter, the government is currently implementing its long-term development blueprint for the sector. Known as the Tourism Development Masterplan (le Schéma Directeur d’Aménagement Touristique, SDAT) 2030, it seeks to increase the sector’s share of GDP to 10%.
Economic Contribution
According to the National Statistics Office (Office National des Statistiques, ONS), tourism accounted for 1.6% of non-oil GDP in 2017, up from 1.4% in 2016 and 1.3% in 2015. In terms of the sector’s direct contribution to the economy, the World Travel & Tourism Council (WTTC) put it at AD610.4bn (€4.43bn) in 2017 – the equivalent of 3.3% of GDP. This was down from AD599.7bn (€4.35bn), or 3.6% of total GDP, in 2016.
The WTTC forecasts the sector’s contribution to grow by 2.9% in 2018 to AD627.8bn (€4.56bn); however, it does not predict any substantial leaps in the next decade, with an average expansion rate of 2.4% per year estimated for the 2018-28 period. If achieved, this would bring the sector’s direct contribution to 3.4% of total GDP in 2028 – still some way behind the global average of 10.4%. When including indirect contributions, the figure rises to AD1.3trn (€9.4bn), or 6.8% of GDP, for 2017. Meanwhile, in terms of employment, tourism directly supported 320,000 jobs – equal to 2.8% of total employment – which grew to 678,500 jobs and 6% of the total when indirect contributions were taken into account.
International tourism currently plays a relatively minor role in the sector, with the WTTC reporting that in 2017 foreign visitor spending and international tourism receipts made up just 3.1% of visitor exports, while domestic spending accounted for the rest. In 2016 the World Bank put the value of international tourism receipts at $243m, the equivalent of 0.2% of total GDP that year.
This was significantly less than the $357m recorded in 2015, and lower than receipts of $7.9bn in Morocco (7.6% of GDP) and $1.7bn for Tunisia (4% of GDP). While receipts increased rapidly in the years following the end of the civil war – from $112m in 2003 to $477m just two years later – Algeria has not registered any major improvement since.
Although domestic tourism dominates the industry, tourism expenditure by Algerians holidaying abroad is much higher than in-country tourist spending. In 2016, for example, residents spent $475m abroad, while domestic tourism receipts stood at $209m, according to the ONS. The gap widened further in 2017, when outbound spending hit $580m and tourism receipts dropped to $140.5m.
Visitor Numbers
Despite lower revenue in 2017, there was a 20% increase in the number of international travellers, which almost hit 2.5m, according to figures from the Ministry of Tourism and Handicrafts (Ministère du Tourisme et de l’Artisanat, MTA). Foreign tourists comprised 1.7m of the total, while visits made by Algerians living abroad numbered 742,410 – up from 1.32m and 716,732, respectively in 2016.
Tunisian tourists accounted for 60.7% of all foreign arrivals at 1.04m – 27.5% more than in 2016. The second-largest source market was France with 198,856, followed by Morocco (73,104), Spain (47,075) and China (39,929). The latter overtook Turkey as the fifth-largest source market in 2017, with Chinese arrivals growing 33.3% that year. Indeed, growth of between 18% and 51% was recorded among all source markets, and the MTA will be hoping that the pattern is maintained as it seeks to attract 4.4m visitors per year by 2027.
Sector Plan
To help achieve this goal, and as part of wider efforts to diversify the economy away hydrocarbons, the MTA is following the framework set by the SDAT. The blueprint has five objectives: to make tourism one of the main engines of economic growth; to provide training; to reconcile the promotion of tourism and the environment; to enhance historical, cultural and religious heritage; and to improve international perceptions of Algeria. In the pursuit of these broad goals the MTA has established 225 so-called Touristic Expansion Zones (Zone d’Expansion Touristiques, ZET). The ZETs allow the ministry to focus efforts on bespoke developmental efforts at locations with a high potential for tourism spread across 56,472 ha and 34 wilayas (provinces). The first 174 ZETs were created in 1988 via executive decree, while two more were established in 2009, 31 in 2010 and 20 in late-2016. With two of the original ZETs decommissioned in 2004, the total now stands at 225, 116 of which are seaside resorts. A total of 36 ZETs are thermal spring areas in 12 wilayas of the highlands and the remaining 23 are in the Sahara, in eight southern wilayas. As of the end of 2017, there were 64 potential ZETs under consideration.
Some observers have called for greater engagement with international expertise in order to improve the outcome of these programmes.
State-Owned Hotels
As part of the SDAT, the state is also committed to finalising large-scale investment projects geared towards renovating Algeria’s public hotel sector. Affirming this focus in July 2018, Abdelkader Benmessaoud, minister of tourism and handicrafts, told press that plans for 60-70 state-owned hotels providing a combined total of 7000 beds were in the pipeline. This is on top of the ongoing modernisation of facilities operated by of public hotel company Groupe Hôtellerie, Tourisme et Thermalisme (Groupe HTT).
The company operates some 66 hotels across the country and is currently pursuing a AD70bn (€508.2m) project to renovate its assets and expand capacity from 30,000 beds to 32,500 by end-2018. While the rate of the rehabilitation programme’s progress has been slower than expected, Benmessaoud told media in July 2018 that the planned creation of a national commission to monitor the roll out of hotel developments would help prevent such inefficiencies in future.
Limited hotel capacity has been a significant and persistent constraint to development in the past, with Algeria estimated to have only 0.1 hotel rooms for every 100 people, according to the “Travel and Tourism Competitiveness Report 2017”. Nonetheless, the portfolio of accommodation is expanding notably, having risen from 1231 hotels and 107,420 beds in 2016 to 1289 hotels and 112,264 beds the following year. The authorities have set a target of having 300,000 beds by 2030.
Private Hotels
While private hotels currently account for 90% of these beds, for many years Algeria hosted only a handful of accommodation options operated by international chains. The last decade has seen an impressive wave of openings of international establishments, starting with French Accor’s Ibis-branded establishments, inaugurated in the 2005-17 period in various locations across the nation. US operator Marriott has also swiftly expanded its footprint, opening its seventh hotel, the 201-room Sheraton Annaba, in January 2017, followed by its eighth property, the 72-room Protea Hotel Constantine, in February 2018.
Meanwhile, UK-based hotel owner International Hotel Group cut the tape on its first foray into the Algerian market in early 2018. With 242 rooms, the Holiday Inn Algiers – Cheraga Tower is located in the west of the capital city and is now its tallest building.
With local investors seeking experienced foreign operators to manage their facilities, other opportunities have arisen for local players in the industry. For example, Société d’Investissement Hôtelière has partnered a number of projects, including the 326-room Hyatt Regency Algiers Airport Hotel, which is scheduled to open in the first quarter of 2019.
Some stakeholders, however, see the need for more involvement from foreign players in the management of Algeria’s accommodation options. “There is a serious lack of international management standards within the hotel industry. A higher number of hotels could be managed by international companies, following the model that has been implemented through the subsidiary EGT Centre for the Sofitel and Mercure hotels,” Lazhar Bounafaa, CEO of Groupe HTT, told OBG.
Distribution of Accomodation
Urban areas have the largest number of accommodation options, with 949 hotels providing a total of 69,861 beds, followed by coastal areas (239 hotels, 31,326 beds), then the Sahara (59 hotels, 4928 beds), thermal springs (23 hotels, 4266 beds) and other natural areas (19 hotels, 1883 beds).
The region with the largest number of beds is the north-central region with 45,585, followed by the north-east (13,343), the north-west (6852), the south-east (2092), the south-west (1605), the Hoggar Mountains (225) and Tassili n’Ajjer national park (150). Given the natural beauty of Tassili and Hoggar, as well as the popularity of Algerian desert tourism in 1970s and 1980s, these last two regions are particularly underdeveloped.
Transport Links
One reason for this could be a dearth of quality transport infrastructure in those areas. Algeria scored 39.3 out of 100 for transport infrastructure in the World Economic Forum’s “Global Competitiveness Report 2018”, putting it 88th out of the 140 economies assessed in this category. Nevertheless, the country has been making improvements – most notably in terms of the quality and capacity of its air transport infrastructure.
Spearheading this is the expansion of Houari Boumediene International Airport (HBIA) at the cost of around $1bn. The project has been in development since 2014, with China State Construction Engineering Corporation responsible for much of the building work, including a new terminal.
The project will also include a new apron, runway and parking area, as well as a Hyatt Regency hotel, and it is scheduled to come on-stream in early 2019, with phased development to continue through to 2032. Through the work the airport will raise its passenger capacity by an extra 10m per year, up from an estimated 8m, according to market intelligence firm CAPA Centre for Aviation.
With the Algerian population standing at around 42.2m and HBIA’s passenger traffic at roughly 8m in 2017, the airport is relatively under utilised when compared with footfall at Tunis Carthage International Airport in Tunisia and Casablanca Mohammed V International Airport. These airports recorded passenger footfall of 5.9m and 9.4m in 2017, respectively, despite serving smaller national populations of 11.3m and 35.8m. Therefore, while the expansion work in Algiers will boost capacity, ancillary efforts to attract tourists will be key to seeing this utilised.
One potentially limiting factor is a lack of penetration in either the international or domestic flight market by low-cost carriers (LCCs). Although international low cost seats have risen from 0.02% of the total in 2011 to 7% in the first eight months of 2018, according to CAPA, in Algeria there are no domestic LCCs. By comparison, international LCCs account for 8.6% of seats in Tunisia and 43.4% in Morocco. “Airlines and tour operators have a large role to play in developing both domestic and international tourism,” Bounafaa told OBG. “Tassili Airlines recently launched its first charter flights from Algiers to the south of the country as part of an all-inclusive package of six nights for €300, and this model could be used by other domestic carriers.”
Challenges
With most foreign visitors needing to apply for visas ahead of arrival, and foreign travel warnings and restrictions on the movement of overseas travellers still in effect across large parts of Algeria, it is perhaps unsurprising that domestic tourism dominates the industry to the extent it does.
To address the visa issue, in July 2016 the authorities announced that moves to reduce the burden imposed by the country’s visa process on visitors were being considered. However, there have been several Cabinet reshuffles since then, meaning the status of the initiative is currently unclear.
In terms of travel advisories, the MTA called on France to reassess its travel warning for Algeria in September 2017. The French Foreign Office appeared to respond by downgrading the classification “not recommended unless for imperative reasons” it designated to much of the central and northern areas of the country in August 2018 to “reinforced vigilance”. The rest of the country continues to be flagged as “inadvisable” for travel purposes or “not recommended” under the French rating scheme due to the threat of terrorist activity.
Meanwhile, the UK advises against travelling within 30 km of the borders with Libya, Mauritania, Mali and Niger, and warns travellers to all regions to be vigilant. The US also recommends exercising increased caution when travelling in Algeria, advising against travel to border areas.
Unfortunately, these types of warnings play to the negative perceptions of Algeria as a dangerous country. Tunisia is both a popular tourism destination and the one of the world’s largest exporters of foreign fighters to per capita. While Algeria does not even place among the list of countries with high levels of foreign fighters, travel warning about the country make the country’s reputation as a dangerous location even more emblematic of the need to transform its image to secure growth.
Marketing Strategy
Indeed, the state has acknowledged that promoting Algeria as an international tourism destination par excellence is key to galvanising the sector, and there is evidence to show some progress is being made in this regard.
As part of this, a new web portal was set up on the MTA website to provide information on the top destinations, travel agencies, hotels, restaurants and transport services, as well as culinary arts and crafts. The portal is available in three languages – English, Arabic and French – with Benmessaoud announcing shortly after its launch in mid-2018 that the interface would also be made available in the Amazigh language of the Berber people.
A digital guide to Algiers in the form of a mobile app was also launched in 2018, with the aim of promoting tourism in the capital and providing information on services such as hotels, restaurants and museums. The MTA has also been working to improve the reputation of travel and tourism agencies, conducting 295 inspections of Algiers-based agencies in 2017, which resulted in 152 formal actions against companies engaged in some form of malpractice. There were 2378 travel agencies and 44 local tourism offices were in operation in 2017, up from 2041 agencies and 35 offices in 2016.
Events
and events have the potential to raise Algeria’s profile on the international tourism stage as well. One such event is the annual Salon International du Tourisme et des Voyages (SITEV) held in Algiers. The 19th edition of the SITEV took place between October 17 and 20, 2018 and was attended by 300 national and foreign operators – a 50% increase on the previous year. Speaking at the exhibition, minister Benmessaoud encouraged the signing of bilateral and collective agreements between conference participants under the slogan “Algeria, a land of peace and hospitality”.
In addition, the port city of Oran has been chosen as host of the 2021 Mediterranean Games, which is held once every four years. The city is expected to benefit from the creation of more than 9600 jobs as it makes preparations for the event (see analysis).
Outlook
The Finance and Budget Committee has moved to support the MTA’s efforts to grow the industry, announcing that the sector’s budget for 2019 will be AD5.62bn (€40.8m), representing a 1.4% increase on the previous year. Of the total, AD2.42bn (€17.6m) will be made available for capital spending, while the remainder will be used to finance ongoing projects related to tourism.
Four new hotels are to be opened in the wilaya of Algiers in 2017, bringing the total there to 182, and growth in room numbers has been recorded across the country. In short, Algeria seems to be making the right moves to ensure that the capacity is there to support rising guest numbers.
However, securing this increase over the medium to long term, particularly among foreign visitors, will likely require a multi-pronged approach. Part of this means will involve overcoming the negative perception of the security situation, especially when a challenging visa regime persists as an obstacle to travellers with an interest in visiting North Africa.
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