Why the Middle East’s tourism industry is about to undergo a radical transformation
Since the turn of the millennium the Middle East has become one of the most popular holiday destinations for travellers who enjoy luxury and leisurely breaks in the sun.
But a new report from PwC is arguing that five global megatrends which are believed to be shaping the future of the entire world – namely, demographic shifts and social change, a shift in global economic power, accelerating urbanisation, climate change and resource scarcity, and the rise of technology – are set to have a “profound and disruptive effect on the Middle East travel and tourism industry”.
The Middle East has led the emerging market population boom over the past decade with 40% of its people now under the age of 25. The population is expected to rise by almost 50% over the next quarter of a century so the way these demographic and social changes have affected travel and tourism in the region cannot be underestimated. Whilst historically, it was designed to cater to middle-aged business and leisure tourists from advanced economies, it will now be required transform itself to cater to a wider variety of visitors, age groups and backgrounds. Companies in the industry will therefore be required to overhaul traditional marketing concepts by embracing the power of social media and the digital era.
Dr. Martin Berlin, Middle East Partner and Global Deals Real Estate Leader at PwC, said: “Over the past decade, the Middle East has developed into a global hub for tourism and leisure, attracting visitors from all over the world, but new winds of change will require further transformation within the region’s travel and tourism industry.”
The shift in global economic power has placed the Middle East at the centre of many of the world’s fastest growing markets. As this shift from advanced to emerging economies continues, the region will have to take proactive steps to ensure they benefit. Dubai has already done so most impressively, having transformed itself into a global hub for aviation, tourism and logistics. Through Dubai International Airport, the city has also turned itself into a key link, connecting the economies of the East and the West and placing the UAE within a four-hour flight of 40% of the world’s population. More places in the Middle East will now be forced to follow its example. The report argues that emerging markets are not just set to overtake developed ones as both a tourism and hospitality destination, but also as providers of key customers.
One of the key challenges in the Middle East has been trying to develop sufficient infrastructure to cope with the exponential population growth which has seen it become the most highly-urbanised region on the planet. This trend, however, is slowing, so focus will now have to move to getting the most out of key urban development spaces. The report calculates that there could be $4 trillion worth of opportunity from projects planned or under construction in the Middle East and North Africa. Dynamic development of urban tourism is strongly dependent on economic growth, technological growth and increased air connectivity with offerings usually varying from retail, leisure and wellness, and cultural to theme parks, sun and sand but all are usually concentrated in or around the major cities.
The report says: “Businesses in the region will need to prepare for the challenges ahead: constrained capacity and finance for infrastructure delivery, investments in service provisions, proper planning and resource scarcity, among others.”
And resource scarcity, as well as climate change, is one of the most pressing issues for the Middle East. Water is and will remain a significant issue for the region over the coming decade, with the Gulf Cooperation Council already relying on 70% of its water and water consumption being forecast to grow by one-third by 2020. In addition to water scarcity, the Middle East is of course vulnerable to warmer summers - the region will therefore need to implement some stringent control measures with clear targets and mitigation strategies.
One of the key means of combatting the various issues which are detailed in the report could be the continual advancement of technology and subsequent breakthroughs, but digitisation is also affecting in the travel and tourism industry which will mean that new skills and a shift in strategies is required. The region’s populations are young and tech savvy and smartphone penetration in the area is among the highest in the world, reaching 78% in the UAE and 77% in Saudi Arabia. That should mean that the Middle East will be able to cope and adapt but digitisation will affect the entire value chain of the travel and tourism industry in a multitude of ways, with everything from influencing traveling decisions, to collecting feedback and improving the delivery of their products and services all affected. A business strategy which reflects and befits digital age, will need the order of the day for the industry to ensure that it can survive and continue to grow.
5 minutes with... Janthana Kaenprakhamroy, CEO, Tapoly
Founder and CEO of award-winning insurtech firm Tapoly, Janthana Kaenprakhamroy heads up Europe’s first on-demand insurance platform for the gig economy, winning industry awards, innovating in the digital insurance space, and leading with inclusivity.
Here, Business Chief talks to Janthana about her leadership style and skills.
What do you do, in a nutshell?
I’m founder and CEO of Tapoly, a digital MGA providing a full stack of commercial lines insurance specifically for SMEs and freelancers, as well as a SaaS solution to connect insurers with their distribution partners. We build bespoke, end-to-end platforms encompassing the whole customer journey, but can also integrate our APIs within existing systems. We were proud to win Insurance Provider of the Year at the British Small Business Awards 2018 and receive silver in the Insurtech category at the Efma & Accenture Innovation in Insurance Awards 2019.
How would you describe your leadership style?
I try to be as inclusive a leader as possible. I’m committed to creating space for everyone to shine. Many of the roles at Tapoly are performed by women and I speak at industry events to encourage more people to get involved in insurance/insurtech. Similarly, I always try to maintain a growth mindset. I think it’s important to retain values to support learning and development, like reliability, working hard and punctuality.
What’s the best leadership advice you’ve received?
Build your network and seek advice. As a leader, you need smart people around you to help you grow your business. It’s not about personally being the best, but being able to find resources and get help where needed.
How do you see leadership changing in a COVID world?
I think the pandemic has proven the importance of inclusive leadership so that everyone feels supported and valued. It’s also shown the importance of being flexible as a leader. We’ve had to remain adaptable to continue delivering high levels of customer service. This flexibility has also been important when supporting employees as everyone has had individual pressures to deal with during this time. Leaders should continue to embed this flexibility within their organisations moving forward.
They say ‘from every crisis comes opportunity’, what opportunities do you see?
The past year has been challenging, but it has also proven the importance of digital transformation in insurance. When working from home was required, it was much harder for insurers to adjust who had not embedded technology within their operating processes because they did not have data stored in the cloud and it caused communication delays with concerned customers at a time when this communication should have been a priority, which ultimately impacts the level of customer satisfaction. This demonstrates the importance of what we are trying to achieve at Tapoly in driving digitalisation in insurance and making communication between insurers and distribution partners seamless.
What advice would you give to your younger self just starting out in the industry?
Start sooner, don’t be afraid to take (calculated) risks and make sure you raise enough money to get you through the initial seed stage.