This article examines a typical dilemma that vexes hospitality private equity investors: Is the critical current situation an opportunity or a threat? To be able to resolve this conundrum, the author analyzes the stepping-stones of the private equity investment process: understanding what was behind the tourism sector crisis and the key requirements for finding suitable solutions; analyzing, at a later stage, the valuation process; and providing recommendations to undertake profitable investments in a distressed hospitality sector.
The disturbance of Arabic countries especially in the MENA region called the “Arab Spring” has had a direct impact on the tourism industry of the Arab region. Volatile events, instabilities, political turmoil and extremism present the tourism industry with significant challenges. But in any event, future developments will depend in any case on the security situation in the country, as tourism is certainly a sector with many advantages in terms of foreign investment and foreign exchange. At the same time, it is a very sensitive sector. The slightest social upheaval, the smallest popular movement, these all have incalculable effects on the sector. Tunisia is an excellent example of what can happen to the tourism industry in such cases. This paper explores first the effects that the Arab Spring has had on tourism industry performance. We aim to identify the influence that events of the Arab Spring had on tourism in Middle Eastern and North African States, namely by examining the cases of other countries such as Egypt and Tunisia in comparison with Morocco and the United Arab Emirates.
Finally, the study examines the policies and strategies adopted by Tunisian governments in order to mitigate the crisis in the evolving tourism sector, and to develop recommendations on how the tourism industry can recover from the Jasmine Revolution.
Starting at years 2010 and 2011, the Arab Spring uprisings altered the landscape of the Mediterranean region. Domestic and external shocks mixed together to worsen the socio-economic situation of many countries in the area. In this context, the tourism industry has shown an important degree of resilience. In Southern Mediterranean European countries remarkable growth of tourism revenues helped to balance the impact of the global financial crisis. In contrast, in the south shore of the Mediterranean, the North of Africa region, the growing instability have resulted in a dramatic drop in the number of international visitors, exacerbating the impact of the global crisis for countries highly dependent on tourism receipts. The first chapter of this research project presents a brief overview on the performance of the tourism industry in the Mediterranean region in recent years. Egypt and Spain are taken as reference case studies, helping to illustrate the way followed by the tourism and hospitality industry since the beginning of the transition process. In the second chapter we propose a marketing mix model in order to improve the conditions of workers and efficiency of the hospitality industry in the transition process, testing the model for the Egyptian case. In the third chapter we provide evidence on changes taking place in the profile of tourists arriving to Spain as our case of analysis, and investigate how these changes have been affecting the level of expenditure and economic sustainability for the tourism sector from a microeconomic perspective.
For the last two decades, the 11 countries of the Southern Mediterranean (Algeria, Egypt, Israel, Jordan, Lebanon, Libya, Morocco, Occupied Palestinian Territory, Syria, Tunisia and Turkey) have recorded the highest growth rates in inbound world tourism, with domestic tourism increasing rapidly too. The economic performance of tourism in the ‘MED 11’ has been astonishing, given the security risks, natural disasters, oil prices rises and economic uncertainties in the region and the recent financial crisis. This trend came to an abrupt halt in early 2011 during the Arab Spring, but could well resume when the situation stabilizes.
This MEDPRO Report looks at whether this trend will continue up to 2030, and provides four different possible scenarios for the development of the tourism sector in MED 11 for 2030: i) reference scenario, ii) common sustainable development scenario, iii) polarized (regional) development scenario and iv) failed development (decline and conflict) scenario. In all cases, international and domestic tourism arrivals will increase. However, two main factors will continue to influence the development of the tourism sector in the MED 11 countries: security and adjustment to climate change.