With the goal of attracting half a million visitors by 2030, Djibouti’s tourism sector has set some ambitious goals in place. The industry is slated to play a key role in the government’s economic development strategy, Vision 2035, which looks to leverage the role of tourism as a job creator and foreign exchange earner in line with broader economic diversification efforts. There is plenty room for growth in the small country. Djibouti benefits from a number of niche attractions, including sandy beaches along the Red Sea, salt lakes, volcanic fields and popular underwater diving sites. The fact that its beaches are within easy access of landlocked Ethiopia and it hosts several foreign military bases also play in its favour. Yet, according to the World Bank’s “Country Partnership Strategy for the Republic of Djibouti” report published in March 2014, only 10% of the country’s tourism potential is exploited. The underdevelopment of the sector is largely due to three factors: high-priced tickets from large tourism source markets, which is a result of limited international connectivity; regional instability; and a lack of facilities.
Showing Resilience
However, in spite of these challenges, there has been steady growth in the number of tourists – even if the absolute figures remain comparatively modest. A decade ago, the number of visitors was insignificant, at less than 2000 annually, but over the intervening years this has shot up 35 times to almost 73,000 international visitors in 2014, according to figures from both the World Bank and the National Tourism Office of Djibouti (Office National du Tourisme de Djibouti, ONTD). From 58,425 visitors in 2009, the number of tourists went down to 51,410 in 2010, but then recovered to 56,550 in 2011, according to the ONTD. In 2012 the country saw more growth and the number of visitors went up to 60,230.
The government aims to attract 500,000 visitors per year following a new growth model. According to estimates from London-based market intelligence firm Euromonitor Intelligence, the sector is expected to play a key economic role by increasing its contribution to Djibouti’s GDP from the current 2% to more than 10% in 2035, while the government suggests it will be able to generate around 30,000 direct jobs, compared to 4500 at the present – all of which will have positive knock-on effects in other sectors such as construction, consumer goods and agriculture.
Business First
The leisure segment in Djibouti is largely insignificant, with the bulk of foreign visitors coming on work trips. Under the government’s new plans, business tourism’s contribution should decrease from its currently dominant position of 98% of total visitors to 12% by 2030, according to figures from the ONTD. The high temperatures in the country also limit leisure tourism to the months of November and December, when temperatures fall to 23-29°C and the majority of leisure travellers arrive. However, even during those two months, the segment only represents around 10% of the total number of visitors, and only 2% overall for the entire year. According to Ehtasham Asghar, front office manager at the Acacias Hotel in Djibouti, the average length of stay for business travellers was four days. Asghar also pointed out that expenditures for this segment averaged between €150 and €200 per day. It is hoped that leisure visitors will both stay longer and spend more money per day throughout their visit.
According to ONTD figures, almost half of all visitors, or 48%, came from France, with 21% arriving from other European countries. The third-largest group came from Gulf Cooperation Council countries. Visitors from Africa represented just 6%, with the majority of them coming from Ethiopia. Finally, visitors from Asia and North America represented minor percentages at 5% and 3%, respectively.
Occupancy Rates
Hotel capacity in the 873,000-person country is fairly limited, which has contributed to fairly stable rates and high levels of occupancy. According to ONTD figures, in 2015 there was a total of 1015 hotel rooms in the country of which 320 were at five-star hotels, 245 in four-star hotels, 344 at three-stars hotels and 106 in two-stars hotels. However, the hospitality sector experienced sustained demand throughout the first 10 months of 2015, with a peak occupancy rate of 92% in February 2015. According to the ONTD, occupancy rates averaged 82.6% for the year, a significant increase compared with 78.6% in 2014. A large contributor to the higher-than-normal rates was an influx of refugees and transit passengers who were looking to avoid the civil war in nearby Yemen.
Investments
The high demand for hotel rooms has made Djibouti an increasingly attractive proposition for potential investors and two new high-end facilities are currently in the works, alongside retail and commercial infrastructure that should improve the country’s touristic offerings. Traditionally, the high-end tourism segment in Djibouti has been extremely limited and dates back only 10 years. In 2006 UAE property developer Nakheel Hotels & Resorts developed a five-star hotel in partnership with Kempinski in Djibouti City. With 320 rooms, it is one of the largest resorts in East Africa. The Sheraton Djibouti completes the luxury accommodation offerings in the country with 185 rooms.
However, high occupancy rates have attracted more investors, with a new five-star hotel planned. The new hotel should help alleviate pressure on existing facilities. Nael & Bin Harmal Investment, a Dubai-based investment group, is building a new five-star Ayla Hotel Djibouti, which is expected to open by the end of 2016. The investment company is also behind the Bawadi Mall in Djibouti, which is the first shopping centre in the country and will also open in December 2016. A second shopping centre is under construction in Djibouti City with investment from the local HALT Group, in partnership with Shanghai-based Touchroad International Holdings Group, while a third mall, owned by the Ministry of Islamic affairs and operated by the Moroccan company Kamaj, is drawing near completion. Finally, in March 2015 Ilyas Moussa Dawaleh, the country’s minister of economy and finance, told online news portal Arabian investors and helping travel and leisure companies like SIYYAN set up shop. SIYYAN operates the first Djibouti-owned live-aboard boat for small-scale cruises and diving holidays. The boat is now being referenced by tour operators marketing to international tourists and, in the meantime, is catering to local tourists.
Expansion Efforts
Despite the fact that the country’s high-potential tourist destinations are located outside of the capital, only Djibouti City has the infrastructure required to accommodate and cater to tourists. The cost of electricity is one of the highest in the world, according to a 2013 World Bank assessment of the country’s energy infrastructure, which represents another obstacle when developing touristic sites in areas where demand is still low. The lack of affordable domestic transportation also restrains growth in leisure tourism. Transport fees to visit nearby pristine beaches from Djibouti City can be as high as $100. However, this could be about to change. Boston Partners, an Ethiopian investment firm, is constructing a new resort on Moucha island, just off the coast of Djibouti, according to the local press and has leased 500,000 sq metres of land for the purpose. Meanwhile, another HALT Group and Touchroad International project will see the construction of a another large-scale resort in Obock.
Government Moves
Much of the efforts to develop Djibouti’s tourism sector fall under the aegis of the ONTD’s Strategic Plan for the Development of Tourism, designed in collaboration with the World Tourism Organisation and funded by the UN Development Programme. In addition to offering tax incentives, the government has also established sector financing mechanisms, such as the state-owned Economic Development Fund of Djibouti (Fonds de Developpement Economique de Djibouti, FDED), which is encouraging investment in large hospitality projects and small and medium-sized enterprises. The ONTD has also organised workshops to assist local entrepreneurs in selling their locally made products.
Key Drivers
In order to achieve half a million visitors by 2030, the ONTD is seeking to leverage two key attractions. Firstly, the government is looking to take advantage of particularly high demand for Red Sea sun, sea and sand tourism, which has played a key role in the success of resort towns such as Egypt’s Sharm El Sheikh and Hurghada. Secondly, the country has a unique landscape and many ecological assets. In recent years the government has been working on submitting several locations to UNESCO for consideration as World Heritage Sites. In both cases, development is in its infancy. Accommodation is scarce, basic roads need improvements and there is no public transport to reach touristic sites. As a result, the number of leisure visitors beyond more adventurous travellers is limited. Ken Gradall, director of Djibouti-based Rushing Water Adventures, told OBG, “The difficulties of travelling and the lack of urbanisation attract an interesting segment of the market.”
However, the government is working to address this, in part by expanding awareness of key sites. Since ratifying the World Heritage Convention in 2007, local authorities have been working to meet the official requirements for approval of the 10 national landmarks on the tentative list sent to UNESCO’s World Heritage Committee. In 2015 Lake Assal was submitted, along with the Tumulus/Awellos ancient burial complex, the historical urban landscape of Djibouti City, the Abourma rock carvings, the Moucha and Maskali Islands, the landscapes of the Obock Region, Day Forest National Park, the saline Lake Abbeh and the Djalelo natural area.
Ecotourism
Understandably as a result of the country’s natural beauty, ecotourism is one of the primary focal points for growth. Traditionally, ecotourism has been developed through hut complexes near the beaches of the Gulf of Tadjoura. The ONTD, in partnership with local non-government organisation Discover and Aid Nature (Découvrir et Aider la Nature, DECAN), is overseeing the establishment of ecotourism centres around nationally protected areas in order to encourage more travellers to go inland. In September 2014 DECAN inaugurated its first ecotourism camp in the Djalelo Valley, 60 km south of Djibouti City. The camp grants access to 4000 sq metres of protected area. During its first year, it received 674 visitors, becoming the second-most-popular site in the country after the Sables Blancs beach camp. The Djalelo park, with an original capacity for 20 visitors, has been enlarged to host 33 guests.
The second DECAN ecotourism camp, built with the financial support of France’s ZooParc de Beuval, is located in Assamo, close to the Ethiopian border. It was inaugurated in January 2016 and can host up to 25 guests per night. The goal is to attract business travellers willing to stay some extra days to visit Djibouti and “disconnect” without going too far away from the capital. Bertrand Lafrance, founder and president of DECAN, told OBG, “The best way to attract investors will be the creation of public-private partnerships encouraging sustainable investments.” For instance, the FDED is already offering financial support for investors in eco-bungalows.
Promotional Campaigns
The ONTD has also increased their presence at tourism fairs and launched a campaign under the slogan “Djibeauty”, targeting international investors and sector experts. In December 2015 the government organised the Djibouti Whale Shark Festival to offer a forum for investors and stakeholders working in the area to share their experiences. In 2013 the ONTD also teamed up with Turkish Airlines, the Sheraton Djibouti and local industry stakeholders to invite French tour operators, press representatives and tour guide publisher Lonely Planet to visit the country. France is a key market, accounting for almost half of all visitors in 2015.
In April 2014 the ONTD also organised tours for the top 15 Ethiopian tour operators to showcase the country’s attractions. “The country holds great potential for regional markets, especially if transport infrastructure is improved. With better connectivity and more visibility, visitors from Ethiopia will be able to visit for a couple of days and enjoy the sea,” said Mohamed Abdillahi Waiss, ONTD director.
Neighbours Visiting
Attracting tourists from Ethiopia offers a significant potential market for Djibouti, given that it represents an easy and accessible destination for holidaymakers from the landlocked country. With this in mind, the ONTD has been closely working with authorities in Addis Ababa to market Djibouti as “Ethiopia’s beach”. The two governments signed a protocol agreement in April 2006 to facilitate development of their tourism sectors by offering reciprocal investment and property rights. Furthermore, since 2014 they have engaged in the promotion of Djibouti’s 372-km-long coastline by including it in Ethiopian tourism packages.
Ethiopian Airlines has also helped support the plan by offering deals to visit Djibouti. The carrier is already connected to Djibouti City via two direct flights: one from Addis Ababa and another from the city of Dire Dawa. An improved railway connection is also expected to be operational in 2016, with a capacity of 1000 passengers per train (see Transport chapter). The line should reduce road congestion and bring down transport time between Addis Ababa and Djibouti City. The ONTD also wants to co-brand Djibouti as a destination in connection with other countries in the region, such as Ethiopia or Kenya, to provide a larger and more diversified package for potential visitors from Europe, North America and Asia.
Improving Connectivity
However, the promotional efforts mark only one component of the country’s efforts to increase visitor figures. “We can spend millions on announcing our offer to the world, but the sector will not grow if we do not improve infrastructure first,” Asghar told OBG. Djibouti is also addressing the limited number of flights to the country with the construction of two major airports – one in the Obock Region and the other 25 km south of Djibouti City in Ali-Sabieh (see Transport chapter). Reuters reported in January 2015 that the two airports are being funded with investment from the China Civil Engineering Construction Corporation. The two airports are expected to cost a total of $599m. The first airport in Obock will initially have an annual capacity for 350,000 passengers when it opens by the end of 2016, rising to 767,000 by 2021. Another issue is domestic mobility. The current state of roads doubles the time normally required to reach tourist sites. An expansion of the national road network from 700 km to 1100 km has been under way since 2010. The RN14, a new 170-km highway, now connects the capital with Tadjoura. The RN14 section between the Gulf of Tadjoura and Obock Region is currently undergoing improvements. In less than 15 years, the ONTD aims to have as many as 66% of international visitors heading to Djibouti’s coast. Moreover, this could also unlock latent potential among the country’s own population. Houssein Mahamoud Robleh, director-general of the Kamaj Investment Company, told OBG, “There are opportunities for local tourism, meaning tourism by Djiboutians in their own country. What is needed is more infrastructure, roads and hotels, and creating a two-day weekend that will stimulate internal travel.”
The new airport at Obock forms a key part of this strategy, as the government looks to encourage the development of the north-east coast of the Gulf of Tadjoura. Special economic areas for tourism have been declared along this coast in order to boost the construction of new accommodation infrastructure that will include a luxury hotel complex. Using Egypt’s development model for Sharm El Sheikh and supported by the World Bank, local authorities are preparing a vast development programme to attract snorkelling and scuba diving tourists, taking advantage of the beauty of the coast and its location next to the Seven Brothers archipelago. There are already daily ferry services operating out of L’Escale ( Djibouti) to Tadjoura and Obock, facilitating access by ship. There are also plans for a cruise port in Obock to make the city into a welcome point for cruise lines on routes between Seychelles, Dubai and Mauritius.
Labour
The tiny size of the sector also impacts training in the workforce. Jean-Philippe Bittencourt, general manager of the Sheraton Djibouti, told OBG, “The country needs a labour force that can cater to the international community, speaks English and has the sufficient know-how to operate with global companies.” The lack of adequately trained hotel management staff in Djibouti, as well as relevant training at education institutions, increases room fees as costly foreign experts are required to start operations. The ONTD is addressing this shortage by offering more opportunities for training in tourism-related professions. In late 2013 Waiss told local daily La Nation that the University of Djibouti would offer a tourism diploma, and international hotel chains have begun to run internal training programmes.
Comparative Stability
One of Djibouti’s primary advantages as an investment destination is its relative stability, particularly in comparison to the turbulence experienced by many of its neighbours. While the country is not immune from the occasional incident, such as the May 2014 attack on a restaurant in Djibouti City that resulted in US government personnel being confined to their base, the country has managed to ensure a comparatively stable and secure environment for tourists.
Outlook
Tourism occupies a key role in Djibouti’s Vision 2035, as it is expected to be one of the drivers of change for the national economy. The ONTD aims to build the country as a regional leisure tourist destination following a model based on three pillars: a capital city with greater business tourism offerings; development of the Obock Region; and an eco-friendly segment in the interior. However, concerns over infrastructure shortfalls remain and further development of infrastructure is required, as limited connectivity is an impediment to tourism growth.
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