Bahrain has targeted the tourism sector to be a main driver for growth and diversification as the economy recovers from the Covid-19 pandemic. Indeed, as the only island nation in the Middle East and home to large-scale events such as the Formula 1 Bahrain Grand Prix event, the country is well positioned to meet these goals. It has long been a top destination for travellers from Saudi Arabia — attracted to its entertainment, dining and shopping options — with the two countries connected via the King Fahd Causeway. Officials are looking to diversify both source markets and offerings, and have implemented a series of measures and projects aimed at meeting these objectives. These include targeted marketing campaigns, partnerships with entities such as Gulf Air, the development of luxury beach resorts and the creation of what will be the Middle East’s largest conference facility once complete.
These efforts have progressed despite the global economic slowdown, which saw tourism arrivals abruptly cease in markets around the world. However, widespread vaccination campaigns in many of the country’s primary source markets – as well as at home – coupled with the easing of travel restrictions have allowed many key tourism indicators to recover. This trend is expected to continue into 2022 and beyond, especially as some of the country’s larger-scale tourism projects come on-line.
Structure & Oversight
There are a number of government entities involved in tourism, namely the Ministry of Tourism, which oversees the sector. The ministry leads tourism development projects, and formulates policy and legislation to facilitate growth. The Bahrain Tourism and Exhibitions Authority (BTEA) was created in 2015 to support the ministry’s efforts to develop the sector. The BTEA is responsible for organising and attracting conventions and trade exhibitions; maintaining conference and exhibition centres directly, or though specialised companies established with BTEA involvement; marketing the country’s offerings; and developing tourism products and experiences.
In addition, the BTEA is tasked with fostering new source markets, managing tourism promotion, and developing the institutional and legislative framework to support the sector’s growth. In 2016 the authority created the slogan “Ours. Yours. Bahrain”, which aims to underscore the country’s authenticity, hospitality and modernity to visitors from the GCC and beyond. More recently, in October 2021 it launched a tourism strategy for 2022-26, which seeks to increase the sector’s contribution to GDP and diversify source markets (see analysis).
Performance
The tourism sector was among the most affected by the pandemic. In 2020 Bahrain’s tourism was valued at BD827.9m ($2.2bn), or 6.7% of GDP, according to the most recent report from the World Travel & Tourism Council (WTTC). This figure was down 54.4% from 2019, when the sector contributed BD1.8bn ($4.8bn) to GDP and accounted for 12.8% of the economy. By comparison, in 2020 overall GDP contracted by an estimated 5.4%, according to the IMF. This disparity underscores the outsized effect that the health crisis had on the sector.
The contraction in tourism activity also resulted in a loss of jobs. In 2019, 96,600 individuals were employed in the sector. However, in 2020 as borders closed and social-distancing measures were imposed, the number of jobs fell by 22.1% to 75,200, with the sector accounting for 11.8% of total jobs in Bahrain, down from 14.6% a year earlier.
Arrivals & Source Markets
Bahrain attracted an average of 1m visitors per month prior to the pandemic, with total inbound tourism expenditure increasing at a compound annual growth rate of 9.9% between 2015 and 2019, according to the Bahrain Economic Development Board (EDB). In 2018 Bahrain welcomed 12m tourists, a figure that fell to 11.1m in 2019. Closed borders caused international arrivals to drop by 83% to 1.9m in 2020. While total tourist nights fell from 12.8m in 2018 and 13.2m in 2019 to 2.9m in 2020, the average length of stay increased over the period, from 2.9 nights per tourist in 2018 to 3.6 nights per tourist in 2020, reflecting how the extra hurdles associated with international travel led to longer stays for those who ventured abroad. With the sharp drop in international arrivals came a proportional fall in inbound tourism expenditure. Total inbound tourism expenditure reached BD1.6bn ($4.2bn) in 2019, but this decreased to BD692.5m ($1.8bn) in 2020. In 2019 international tourist spending accounted for 87% of the total, with this decreasing to represent 82% in 2020.
In September 2020 the country reopened its borders to tourists and non-residents, which helped to boost arrivals to the kingdom. This was reflected in an improvement in tourist inflows, which grew by 89% to 3.6m in 2021 – albeit still around onethird of pre-pandemic levels. Total overnight stays improved in kind to 8.1m, while the average length of stay remained steady, at 3.7 nights per tourist.
In the first half of 2021 much of the growth seen in hotel stays was fuelled by so-called staycations, as well as the reopening of the King Fahd Causeway to vaccinated travellers and quarantine stays. Saudi Arabia was the top source market, with 2.7m Saudis visiting Bahrain, followed by India (210,000), Pakistan (81,200), Kuwait (74,700) and Egypt (73,500). These top-five source markets accounted for 86.9% of inbound visitors that year.
Investment
Officials used the brief pause in visitors caused by the pandemic to focus on developing tourism infrastructure. More than $10bn was pledged to such projects in January 2020, including the $1.1bn new passenger terminal at Bahrain International Airport and construction of a new causeway linking the country with Saudi Arabia.
In November 2021 the authorities released the $30bn Strategic Projects Plan, which outlined blueprints for the building of five offshore cities, transport networks and tourism developments, among other areas. As part of efforts to attract investors and market opportunities aligned with the programme, the following month the EDB launched a digital investment platform to link potential investors with opportunities in targeted sectors, including infrastructure, real estate and tourism.
One of these major projects is the Bilaj Al Jazayer tourist city, a $330m project led by the Bahrain Real Estate Investment Company (Edamah) that will include 1.2 km of public beaches and walkways, and recreational, residential and tourism facilities. Another Edamah-managed project is South City, which will be developed over five phases and include a five-star hotel, theme park and outlet mall.
Despite the impact of the pandemic on the sector, in 2020 Bahrain attracted some $492m in foreign direct investment (FDI) in tourism, according to the “fDi Intelligence Tourism Investment Report 2021” released by the Financial Times. This placed the kingdom first in the Middle East and Africa in terms of tourism investment, and accounted for roughly 30% of the total $1.6bn invested in the region that year. Much of this financing came from large regional real estate players, such as Eagle Hill and Emaar Properties. The country also ranked first in the region for the number of tourism jobs created in 2020, and second for the number of tourism projects financed by FDI.
The authorities have continued to ink deals with international players and brands. In September 2021 the EDB announced that the sector had attracted almost $40m worth of new investment in the first three quarters of the year, which would help create more than 260 jobs over the subsequent three years. This figure included a $6.5m investment from Turkish restaurant chain Gunaydin to open its first restaurant in the country in The Terminal, which was set to create 80 jobs; $8m from the chocolate brand Patchi to expand operations in the country; and a $1m commitment from ELSS Group to develop its regional base at the Bahrain Aquarium.
“Tourism, with its many restaurants, hotels and resorts, is among the industries we expect to bounce back to previous levels of activity as the country continues to gradually reopen and restrictions ease, allowing life to return to normal,” Ali Al Mudaifa, chief investment officer at the EDB, said to the press in November 2021, citing the new investments as key to the country’s broader economic diversification programmes and job creation.
Marketing
While “Ours. Yours. Bahrain” has been the country’s long-standing tourism slogan, the BTEA has implemented several promotion and marketing strategies in recent years to target specific audiences. One such campaign was the “Ihnee Fee Al Bahrain” (Here in Bahrain) and the # WeWillMeet campaigns, both launched in June 2020. The campaigns were designed to maintain engagement with tourists despite the closed borders, and increase the number of visitors once tourist activities were able to resume. It targeted not only the country’s traditional source markets in the Gulf, but also tech-savvy Millennial and Generation-Z travellers. The plan was divided into three phases, with the first being an inspiration phase that connected with potential visitors virtually through interactive posts and live online sessions. The second phase focused on encouragement through promotional activities, while the third phase coincided with the resumption of inbound tourism activities.
Hotels
As in other markets, the pandemic had a sharp effect on the hotels industry. This was reflected in key performance indicators: while the country’s four-star hotels had an occupancy rate of 45% in 2019, this figure fell to 21% in 2020. The number of nights sold in these hotels dropped from 1.3m to 515,000 over the same period, while total hotel revenue experienced a 66% decrease from BD74m ($196.2m) to approximately BD25m ($66.3m). This was reflected in a drop in the average daily rate from BD32.34 ($85.52) to BD29.41 ($78.01), and revenue per available room declined from BD14.56 ($38.62) to BD6.15 ($16.31).
For five-star hotels, the pandemic saw occupancy rates halved from 52% in 2019 to 28% in 2020, with the number of rooms sold experiencing a similar decline, from 909,000 to 449,000. Total revenue decreased by 57%, from BD126.7m ($336.1m) in 2019 to BD55m ($145.9m) in 2020. The segment saw the average daily rate fall by some 15% from BD71.31 ($189.15) to BD60.46 ($160.37), while revenue per available room more than halved, from BD36.93 ($97.96) to BD16.96 ($44.99).
The hospitality segment gradually recovered, with occupancy rising to 47% in 2021. This trend is expected to continue, with a January 2022 report from international real estate consultancy Colliers forecasting that the occupancy rate in Manama would rise slightly to 49% in 2022, with growth slowed by continued Covid-19 travel restrictions. Revenue per available room, meanwhile, is expected to increase through to 2024, but will likely remain below 2019 levels until then, according to hospitality research firm HVS Research.
Despite the challenges that were brought on by the pandemic, the BTEA and other government agencies such as the EDB have been successful in attracting investment from both international hotel brands and large property developers. For example, in May 2021 the Swiss-Belsuites Admiral Juffair hotel opened its doors. This hotel features 174 rooms and is located 11 km from Bahrain International Airport. In July of that year Hilton opened a 192-room hotel in Bahrain Bay. This was followed by Emaar Hospitality Group opening its Vida Beach Resort in December 2021, which marks the company’s first resort in Bahrain. The beachfront hotel offers some 157 rooms and 141 serviced residences.
Looking to the future, tourism authorities are expecting a strong rebound in the short to medium term, with around 9300 additional rooms set to come on-line by the end of 2022 to meet this increase in demand. This includes the Al Areen Palace & Spa rebranded by Raffles, which is set to open in the second half of 2022; and the Hilton Bahrain hotel, which will have 348 rooms, six restaurants and nine meeting rooms on Al Fateh Highway in Awali, and is on schedule to open in July 2022. In August 2021 Bangkok-based Minor Hotels announced that it would open its first hotels in Bahrain — the Avani Bilaj Al Jazayer Bahrain Resort and the Tivoli Bilaj Al Jazayer Bahrain Resort — in 2024.
Business Travel
The pandemic had a sharp impact on the segment, with business tourism spending falling by 64.5% from $1bn in 2019 to $362m in 2020, according to the WTTC. Leisure spending, by comparison, decreased by 52.9% from $4bn to $1.9bn over the same period. Despite this, the segment remains central to the development of the wider tourism sector’s offerings. The meetings, incentives, conferences and exhibitions (MICE) segment in particular has the potential to draw high levels of revenue. Bahrain is developing largescale facilities that are tailored for the business segment. The most notable of these is the new Bahrain International Exhibition and Convention Centre (BIECC) in Sakhir. Set to open its doors in late 2022, the 309,000-sq-metre venue will offer 95 meeting rooms, 10 halls and a 4000-seat auditorium, among other events facilities.
Work on the $221.4m project began in January 2020, implemented in line with Bahrain’s Economic Vision 2030, the country’s long-term development framework. The authorities hope it will enhance Bahrain’s position as a leading business tourism destination. The facility will employ as many as 300 individuals, and many exhibitions will shift from the current exhibition centre in Sanabis to the new, larger venue. Developers of the centre are working to build supporting infrastructure in the surrounding area in order to meet the anticipated rise in demand, with Debbie Stanford-Kristiansen, general manager of the BIECC, telling local media in February 2022 that the company aims to increase the number of hotel rooms in a 5-km radius from 340 to 18,000. Its proximity to the Bahrain International Circuit (BIC) is a key draw, giving business visitors to the kingdom the opportunity to also experience motorsports at the official Formula 1 track. Once it is complete, the BTEA-led development is expected to be the largest venue of its kind in the Middle East.
Sport
The authorities have identified sport tourism as another important growth segment, building on the success of offerings such as BIC. The circuit, which opened in 2004, spans more than 5.4 km and hosts international races such as the Formula 1 Bahrain Grand Prix and the Porsche Mobil 1 Supercup, as well as local events, including drag racing. From its inauguration to early 2022, the venue had hosted 16 Formula 1 Bahrain Grand Prix events, the most recent of which was held in March 2022. The event’s organisers prioritised environmental sustainability, with all energy used in the race coming from sustainable sources. In February 2022 Formula 1 signed an agreement to extend its contract with BIC until at least 2036, citing the authorities’ work on developing the segment and commitment to partnering with the private sector.
BIC is looking beyond the Formula 1 Bahrain Grand Prix to help facilitate growth throughout the tourism sector, by developing a diversified series of events that will attract visitors who are not only interested in racing, but in other sport and activities.
“BIC is playing a key role in developing the local tourism sector,” Sheikh Salman bin Isa Al Khalifa, CEO of BIC, told OBG. “We are working to develop a calendar of major events to take place throughout the year to attract more visitors, even beyond the Formula 1 Bahrain Grand Prix. Consistent engagement with tourism institutions and partners such as Gulf Air will be crucial to achieving this objective.”
New Projects
There are several large-scale projects under way to further develop tourism offerings. These include the 170,000-sq-metre Bahrain Bay, which will feature residential, commercial and tourism facilities, in addition to public spaces, including beaches and public parking. The space will be divided into five parcels, the first of which will be a 200-metre public beach comprising 28% of the total area. The remaining four plots will be developed by the private sector, with Wyndham Hotel, Gulf Hotel, Tawfiq Al Alawai and Sons Holding, and Solimar Real Estate involved in the project.
The government, meanwhile, plans to build five new cities on reclaimed islands. Once complete, these will increase Bahrain’s land area by some 60%. The islands will house new cities across a total of 387 sq km, with dedicated residential, industrial, recreational and tourist areas. One of the islands, Al Jarm, will have a new airport and feature mainly residential and tourist facilities with canals and an integrated, sustainable transport network. The country is also set to construct a sport city to attract athletes and spectators. It will be the largest integrated stadium in the kingdom, with a multipurpose hall, football fields, athletics tracks, a shopping mall and hotels.
Outlook
From sport and beach to business tourism, Bahrain has implemented a series of development projects that are aimed at attracting a wider variety of tourists. Slated to be the largest convention centre in the Middle East upon completion, the BIECC is expected to be an asset to the wider region, drawing global interest, stimulating growth across segments and creating jobs. Indeed, the BTEA’s plans for the future go beyond individual projects, with the goal of establishing a multibillion-dollar framework that will significantly contribute to Bahrain becoming a must-see destination for visitors to the region.
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