Bahrain is implementing a long-term strategy to transform its tourism sector into a major engine of growth under Bahrain Economic Vision 2030, the kingdom’s blueprint for economic diversification. The country is seeking to leverage its location at a continental crossroads and its unique position as the region’s sole island nation to bolster the sector. The kingdom identified tourism development as key element of the Economic Recovery Plan launched in 2021 to guide its recovery from the economic slowdown brought on by the Covid-19 pandemic.
With a causeway providing easy access to Saudi Arabia, Bahrain has long been a short-term travel destination for visitors from its closest neighbour. In order to boost the number of tourists, as well as increase daily spending and overall time spent in the country, Bahrain is making targeted efforts to diversify and promote its tourism offerings – both to better serve visitors from the Gulf, and to attract and engage tourists from further afield.
Structure & Oversight
Tourism is governed by various government entities, including the Ministry of Tourism (MoT), which was established as a specialised ministerial body in June 2022. The Bahrain Tourism and Exhibitions Authority (BTEA), for its part, was established in 2015 under the Ministry of Industry and Commerce, then known as the Ministry of Industry, Commerce and Tourism.
The MoT plays a strategic role in promoting and showcasing tourism attractions. Its primary responsibilities include promoting and supervising the Tourism Strategy 2022-26, facilitating consultation with private sector stakeholders, coordinating representation of the kingdom’s tourism sector at international forums and events, providing investment opportunities to potential investors, engaging in the negotiation and execution of bilateral and joint memoranda, and establishing ties with countries and tourism organisations across the world.
The BTEA is also responsible for a wide range of portfolios linked to tourism. This includes contributing to pertinent legislative work, spearheading waterfront development initiatives, constructing and maintaining conference and exhibition facilities, organising conventions and trade shows, as well as attracting and licensing local and international events to be hosted in the country. Within the Bahraini tourism market, the Association of Bahrain Tour and Travel Agents functions as a civil institution, representing the owners of private tourist establishments in the country. Additionally, the government-owned national carrier, Gulf Air, serves as a major partner in the industry.
To streamline and enhance sector administration, King Hamad bin Isa Al Khalifa issued Royal Decree No. 45 of 2022 in August 2022. The decree assigned responsibility for implementing the provisions of the primary legislation regulating tourism in Bahrain, Royal Decree No. 15 of 1986, to the MoT. Recognising the need for reform, a committee comprising members of the Bahrain Economic Development Board (Bahrain EDB), the BTEA, and the Bahrain Chamber of Commerce and Industry was formed in October 2022. The committee’s primary objective is to develop a growth-oriented framework for updated and progressive legislation, catering to the evolving needs of the tourism sector.
Growth & Development
Bahrain made substantial progress upgrading its tourism industry prior to and during the pandemic through beachfront and luxury hotel developments, the revitalisation of historical sites and cultural heritage, the expansion of conference-hosting capacity – notably through the newly operational Exhibition World Bahrain, the largest space of its kind in the region – and its hosting of regular large-scale events, such as the Formula 1 Gulf Air Bahrain Grand Prix. As several major tourism projects come on-line, the country is implementing a revamped tourism strategy for 2022-26, aimed at generating and maintaining growth momentum in the post-pandemic era, with the MoT responsible for the implementation of this plan.
The gradual easing of international travel restrictions in 2022 sparked an upward trend in inbound tourism flows. Demonstrating strong resilience, inbound tourism that year reached 90% of pre-pandemic levels observed in 2019.
Policy Orientation
The Tourism Strategy 2022-26 is structured around four related objectives: positioning the country as an international tourism centre, boosting the contribution of tourism to GDP, increasing and diversifying the number of target markets, and expanding the kingdom’s tourism offerings. These objectives will be achieved by facilitating the entry of travellers, diversifying and developing tourist attractions, enhancing and improving accommodations, and elevating the global promotion of Bahrain’s offerings in collaboration with the private sector and Gulf Air.
The MoT is strategically prioritising key areas to bolster the tourism sector. These areas include architectural and seaside aesthetics, business tourism, sport tourism, leisure tourism, medical tourism and cultural tourism, with a particular emphasis on archaeology, history and media.
In order to establish itself as a prominent international tourism centre and expand its source markets, the country is pursuing partnerships with travel operators in eight target markets, including the US, Israel, India, China and various European countries. A key aspect of the source market diversification strategy involves creating synergies with tourism developments in neighbouring Saudi Arabia and the wider GCC. Bahrain intends to position itself as a featured destination in travel packages, fostering cooperation with neighbouring countries and entities to strengthen tourism coordination as well as integration. The country is keen on reinforcing ties with neighbouring countries and entities, including the Arab Tourism Organisation.
Bahrain has met several of the targets set under the Tourism Strategy 2022-26. These include elevating the average daily expenditure of visitors to BD75 ($199) and extending the average duration of their stay to 3.5 days. Going forwards, the kingdom aims to raise the annual number of tourists to 14.1m, achieve inbound tourism expenditure of BD2bn ($5.3bn) per year and increase the contribution of tourism to GDP to 11.4% by 2026. Such objectives demonstrate Bahrain’s commitment to advancing its tourism industry and generating substantial economic growth in the process.
Recovery
Despite the challenging effects of the pandemic, the tourism industry made a significant recovery by the end of 2021, displaying a faster rate of growth than the economy as a whole. Despite the restrictions on international travel, such as the closure of the King Fahd Causeway connecting Bahrain to Saudi Arabia until May 2021, the sector was able to approach pre-pandemic levels.
In 2019 travel and tourism accounted for 13.4% of Bahrain’s economy, contributing $4.9bn. However, in 2020 the tourism sector saw a decline, with its contribution dropping to $2.3bn, equivalent to 6.6% of GDP. According to the World Travel & Tourism Council’s 2022 report, there was a recovery in 2021, with the figures reaching $2.9bn, or 8.2% of GDP. By way of comparison, Bahrain’s overall economy experienced a growth rate of approximately 2.7% in 2021, according to the IMF.
In 2021 the sector experienced a rebound in employment and overall growth. It was responsible for 82,000 jobs, representing 13.3% of total employment, indicating a 6.2% increase from 2020. In comparison, in 2019 the industry created 95,400 jobs, equivalent to 15.1% of overall employment.
The results of a BTEA and Information and eGovernment Authority survey put tourism revenue from the third quarter of 2022 at BD456m ($1.2bn), a 74% year-on-year (y-o-y) increase. Furthermore, in February 2023 the MoT announced that tourism revenue for 2022 was more than BD1.5bn ($4bn), which is 50% higher than the agency’s targeted BD1bn ($2.7bn) for the year.
Arrivals & Spending
The arrival statistics for 2022 indicate a sustained recovery across key segments. Inbound annual tourism flows reached 9.9m that year, representing a 175% increase compared to the 3.6m tourists recorded in 2020. The visitor count in 2022 almost reached the pre-pandemic level of 11m visitors, surpassing the estimated global pandemic recovery rate of 65% projected by the UN World Tourism Organisation. In 2022, as the total number of annual visitors approached prepandemic levels, the average length of stay per tourist also exhibited growth, standing at 3.5 nights, a 3% increase from the figures recorded in 2019. This aligns with the target set by the MoT for 2026.
In 2022 the total number of overnight stays by tourists demonstrated resilience, reaching a level on a par with 2019, with 13m stays. The average daily expenditure per visitor surpassed pre-pandemic levels, exceeding the target set for 2026 by the MoT, which was BD75 ($199). Average daily expenditure rose from BD75 ($199) in 2021 to BD76 ($202) in 2022, compared to BD71 ($188) in 2019. Total inbound tourism expenditure experienced significant growth in 2022, more than doubling from BD700m ($1.9m) to BD1.5bn ($4bn) and surpassing the overall tourism spending observed in 2019.
Source Markets
In 2022 GCC countries were the dominant source markets of inbound visitors, accounting for 99% of visitors based on their country of residence. Notably, Saudi Arabia alone contributed 88% of visitors to the country. The top-five source markets by nationality were Saudi Arabia (7m), India (736,500), Kuwait (300,300), Pakistan (257,600) and Egypt (236,807), collectively accounting for 85.5% of total inbound visitors. While less significant contributors in nominal terms, the five countries with the highest increases in arrivals in Bahrain were Israel (3047%), Qatar (1019%), Russia (492%), Turkey (307%) and Kuwait (302%).
The King Fahd Causeway continued to serve as the predominant mode of transport for inbound visitors, constituting 90% of total arrivals in 2022. However, the rate of growth in arrivals by sea (348%) outpaced those by causeway (178%) and air (149%), albeit remaining marginal in absolute terms, at 32,617 by sea compared to 8.9m arrivals by causeway and 978,659 by air. The sharp increase in sea arrivals was consistent with the resumption of cruise ships in the fourth quarter of 2022, a key point of recovery from the pandemic. Cruise ships delivered 11,000 tourists in just three days in December 2022, indicating significant growth in this segment.
Investment
Bahrain secured foreign direct investment (FDI) in 11 tourism projects from 2017 to 2021, according to a 2022 report by fDi Intelligence, a division of the Financial Times. This placed the country among the top five in the Middle East and Africa in terms of tourism FDI. In 2020 Bahrain took the top spot in the region for tourism FDI in terms of value. The country attracted $492m, which represented around 30% of the total $1.6bn invested in the Middle East and Africa that year. Much of this financing came from large real estate firms such as Eagle Hills, an Abu Dhabi-based developer which has taken on projects on the reclaimed land of Diyar Al Muharraq, and Emaar Properties, a Dubai-based hotel and luxury residence firm.
The country also ranked first in the region for the number of jobs generated by the tourism sector in 2020. According to the Bahrain EDB, over the first three quarters of 2022 the sector attracted $291m in direct investment through eight companies. These investments together are expected to generate more than 1090 jobs within the span of three years.
Capacity Building
Bahrain capitalised on the pandemic-induced slowdown to enhance its tourism infrastructure, leveraging projects under the aegis of a $10bn Bahrain EDB initiative aimed at preparing for a post-Covid-19 upsurge in travel. As a result of these efforts, the country is witnessing the completion of various significant projects, including airport expansion, augmented event-hosting capacity and the development of beachfront hotels. Collectively, these initiatives are expected to invigorate the country’s tourism offerings.
A notable achievement in recent times is the commissioning of a new terminal at Bahrain International Airport (BIA) in June 2022. This was part of the $1.1bn airport modernisation project that was initiated in 2016 and inaugurated in 2021. With the introduction of the new terminal, the airport’s capacity has quadrupled, allowing for an annual passenger throughput of up to 14m. The additional facilities include 5500 parking spaces, 104 arrival counters, 24 self-check-in kiosks, 44 immigration counters, 22 e-gates and 24 departure gates. The new terminal features 3300 sq metres of duty-free space, 21 cafes and restaurants, and a new hotel and spa. Following the terminal’s opening, BIA was named the World’s Best New Airport at the Skytrax 2022 World Airport Awards held at the Passenger Terminal Expo in Paris, France.
Another substantive addition to the country’s tourism offering came with the fourth quarter 2022 completion of its $221m exposition and convention centre, Exhibition World Bahrain (see analysis). Owned by the BTEA and operated by the international venue management company ASM Global, Exhibition World Bahrain was inaugurated in November 2022, less than three years after work began in January 2020. The event space is located in Sakhir, in close proximity to the Bahrain International Circuit, home of the Formula 1 Gulf Air Bahrain Grand Prix and the Al Dana Amphitheatre, which has a seating capacity of 10,000. The new venue is designed to cater to a variety of events, including global music concerts, comedy shows, festivals and corporate events.
New Developments
Bahrain’s hospitality industry experienced substantial growth in 2022, with multiple hotel openings and significant progress made on ongoing projects. In November 2022 Jumeirah Gulf of Bahrain Resort and Spa became the latest addition to the luxury hotel and residence brand based in Dubai. Covering 712,000 sq metres, the resort is located on the largely untapped south-western coast of Bahrain’s main island and offers 196 rooms and suites, along with an 11-bedroom summer house located on the beach.
Another milestone for the Bahrain luxury hotel segment was the opening in August 2022 of Hilton Bahrain, a five-star, 45-storey hotel which is Hilton’s second in the country, following the Hilton Garden Inn Bahrain Bay. The hotel is near the revamped airport and includes six restaurants and lounges, a wellness centre and recreational facilities.
Diyar Al Muharraq, the land-reclamation development located at the north-eastern tip of Bahrain, saw a series of new developments come on-line in 2022. Notably, Vida Beach Resort Marassi Al Bahrain opened its doors in January 2022 on the south-eastern coast, offering guests access to a private beach and proximity to Galleria Shopping Mall, a 200,000-sq-metre development by Eagle Hills Diyar slated to open in 2023. The Vida property, consisting of 157 rooms and 141 serviced residences, shares its neighbourhood with another hotel that opened in November 2022 – the Address Beach Resort Bahrain. This complex includes a 154-room luxury apartment building and a 117-room hotel. These properties are the first hotels to open in the Dubai-based company’s portfolio in the country.
With its strategic location and modern amenities, Diyar Al Muharraq is becoming a sought-after destination for both leisure and business travellers.
International Collaborations
The Bahrain Bay development, encompassing 600 metres of coastline, has achieved significant milestones in recent times. In June 2022 the BTEA announced the leasing of two plots at Bahrain Bay to luxury hotel brands Wyndham and Solymar. In addition to hotels, the development will feature tourist amenities, including a 200-metre public beach, restaurants, cafes, and recreational facilities such as green spaces, gardens and playgrounds.
Meanwhile, work on the Qalali Coast Waterfront Project, spanning 2 km on Muharraq Island, commenced in July 2021. An open tender for the project was launched in November of the same year. The Bahrain Real Estate Investment Company (Edamah), the real estate arm of the sovereign wealth fund, has taken on a significant role in developing tourist infrastructure, notably through the Bilaj Al Jazayer tourist city, a $330m project that is planned to include 1.2 km of public beaches and walkways, along with recreational, residential and tourism facilities, and South City, which will be developed over five phases and comprise a five-star hotel, theme park and outlet mall.
In a bid to build a local human resource base and cater to the expanding tourism sector, the BTEA has established a strategic partnership with Vatel, a hospitality management education company based in France. Through this collaboration, Vatel Bahrain was established to offer an internationally recognised four-year bachelor’s degree in hotel management. The school was inaugurated in October 2018, and the first batch of graduates completed their studies in February 2023. This initiative aims to develop a competent workforce that is equipped to serve the growing industry.
Hotels
Hotels and restaurants recorded the highest levels of growth among non-oil sectors during the first three quarters of 2022. The reopening of the King Fahd Causeway in May 2021 and the gradual resumption of air and sea travel facilitated expansion, resulting in an increase of 14.7% y-o-y in real terms, according to a quarterly report from the Ministry of Finance and National Economy.
Despite the expansion of hotel capacity through new developments, the recovery in tourist flows has allowed for a net rise in hotel room occupancy rates. According to the MoT, the number of available hotel rooms increased from 15,886 in 2020 to 16,375 in 2021, reflecting a growth rate of 3.1%. Additionally, the number of available beds rose by 3.9%, from 24,018 to 24,945. Nonetheless, the hotel occupancy rate surged from 23% to 37%, and the average length of stay increased from 2.3 nights to 2.9 nights over the same period.
The hotel occupancy rate increased by 6.6 percentage points in 2022. That same year the average daily rate, or revenue generated from rooms sold over the number of rooms sold, increased to $172.5, representing a 21.1% change from 2021 and a 7.5% rise from 2019. Hotel revenue per available room, which takes into account both the average revenue per room sold and the proportion of available rooms occupied, increased to $86.2 in 2022, reflecting a 39.6% change from 2021 but 13.7% short of the corresponding figure from 2019.
There is evidence of continued momentum into late 2022. A survey by the BTEA and the Information and eGovernment Authority indicated a 38% increase in the number of tourism nights booked in the third quarter of 2022 compared to the corresponding period of the previous year.
In light of the number of new hotel openings in the five-star market segment, real estate services firm CBRE Research forecast that the sector is likely to see its progress on key performance indicators (KPIs) moderate in the near future as capacity outpaces occupancy. However, four-star hotels, particularly those in proximity to retail and leisure facilities, are predicted to outperform the market.
Marketing
Bahrain has identified enhancing its image as a unique destination as crucial for attracting visitors from untapped markets and is working to establish synergies with the GCC, particularly Saudi Arabia. Additionally, Bahrain is seeking to strengthen its ties with more distant areas. In March 2023, during ITB Berlin, the world’s largest travel and trade fair, tour operator Visit Bahrain signed deals with several European travel and tourism organisations. The goal is to bring 28,000 European tourists to Bahrain between September 2023 and March 2024, with direct support from the MoT. “These agreements are part of a broader strategy implemented by Visit Bahrain to attract tourists from around the world, specifically Europe,” Ali Amralla, CEO of Visit Bahrain, told regional media in March 2023.
Visit Bahrain launched a campaign in January 2023 to attract 4500 German visitors to Bahrain throughout the year; by the time ITB Berlin was held 1800 German visitors had already come to Bahrain in groups through the programme, according to Visit Bahrain. Furthermore, the BTEA is helping to expand Bahrain’s tourism reach. During World Tourism Day 2022, organised by the UN World Tourism Organisation in Indonesia, the MoT announced that the BTEA had forged partnerships with 76 regional and international tour operators.
Bahrain has identified meetings, incentives, conferences and exhibitions (MICE) tourism as a pivotal and integral component of its overall tourism development strategy. Recognising the substantial potential of MICE tourism, Bahrain is actively working to foster an environment that is conducive to hosting a wide array of successful and impactful business gatherings, conferences, exhibitions and incentive programmes. This is reflected in the country’s recent expansion of offerings, which included the opening of Exhibition World Bahrain. The new venue has an exhibition space of 95,000 sq metres spread over 10 halls, and features a grand hall with a seating capacity of 4000 and 94 meeting rooms, among other amenities. It also houses a wide selection of restaurants, cafes and retail spaces.
In its first month of operation, Exhibition World Bahrain hosted three major events concurrently: Cityscape Bahrain 2022, Jewellery Arabia 2022 and Scent Arabia 2022. The country has since hosted other high-profile events, such as the Arab International Cybersecurity Summit.
India is a particular target for Bahrain’s MICE ambitions and has long been recognised as one of the most important source markets for the kingdom. To help expand its footprint in the market and attract new visitors, in September 2022 the BTEA organised a multi-day, cross-country roadshow in the subcontinent, with stops in Mumbai, Chennai, Bangalore and New Delhi. MICE and weddings are among the most important segments for Indian travellers to the kingdom. The two countries are linked by direct flights operated by Indigo, as well as Gulf Air, which connects Bahrain to nine Indian cities.
Outlook
Overall, the tourism growth outlook in Bahrain is promising in the medium to long term. Despite the challenges posed by the Covid-19 pandemic, the country has shown a strong commitment to diversifying and promoting its tourism offerings. Bahrain has allocated substantial financial and administrative resources to these efforts to develop the sector. Ongoing investment in new developments and promotional activities is yielding results, as evidenced by the progress made in 2022.
While there may be a temporary lag in KPIs in the coming years as capacity building outpaces immediate demand, visitor numbers can be increased in the medium and long run by leveraging the country’s attractive features. By implementing new projects and initiatives, the kingdom can generate heightened interest among travellers and create positive spillover effects on the wider economy. This will contribute to the overall development of Bahrain.
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