Comparative Analysis of the tourism sector of the Gulf countries and Nordic countries

                              Fig 1: Travel & Tourism competitiveness report (Source: The Armenian Observer Blog)
                                    
In the world of tourism, geographical clusters play a very important role. Attractiveness of individual states does not only depend on them, but a large part of it also depends on the attractiveness of the whole region as a tourist destination. This concept is more applicable in small states. Bigger state like India and China or heavily popular and strongly marketed states like Dubai or Singapore are quite independent of their regions but for other places regional clusters do play a very significant role. For exp: Jordan’s attractiveness as a tourist destination will be dependent on the attractiveness of Arab world / MENA region.

It has following impacts:

·         Marketing and Branding: helps in the marketing of the whole cluster/ region. If a region has quite a good number of tourist destinations, then it helps in promoting the whole region as a tourist destination, eventually helping in promoting, often overlooked locations.   

·         Complimentary packages: these days’ tourists prefer tour packages comprising two or more nations. Hence availability of a good number of tourist destinations in single region helps in developing better tour packages. For exp: lot of tourists visiting UK prefers combo packages comprising of England, Ireland, and Scotland. Tourists visiting South East Asia prefer combo packages comprising of Malaysia, Indonesia, Singapore and Thailand.      

·         Regional cooperation: Tourism is a highly capital intensive industry and it requires huge investment in infrastructure as well as marketing. Regional economic cooperation among the nations in a region enables in developing better infrastructure- in the form of hotels, resorts, roads, airports etc.

The following blog article will do a comparative analysis of two geographical cluster- Gulf countries and Nordic countries. Both the clusters consist of economically well off nations with small population and surface area. Hence they provide a good case to do comparison. The documents used for this are – The Global Competitiveness report and World Economic Forum travel and tourism competitiveness. (Some of the terms have been directly used from WEF report. Their meanings have been explained in the end. )    

COMPARISON OF Economic & social indicators FOR THE SIX GULF STATES

Table 1: Showing population of the six Gulf States. (Source: WEF, travel and tourism competency report 2011.)

Aggregate Population: 37.8 Million

Aggregate Surface Area: 2423.2 (000 SQ KM)

Fig 2: Pie chart showing GDP of individual Gulf States. (Source: WEF travel and tourism competency report 2011.)  

Aggregate GDP: US $ 863.6 Billion

Fig 3: Showing per capita GDP (PPP, US $) .Source: WEF, travel and tourism report, 2011. 

 Fig 4: Showing environment performance index of the six Gulf States. (Source: WEF, travel and tourism competency report, 2011.) 

The Gulf States are comparatively small states with Saudi Arabia being the biggest and most populous while Bahrain being the smallest and least populous. Saudi Arabia on account of being the biggest state is also the biggest economy, followed by UAE. Qatar, one of the fastest economies of the world enjoys the highest per capita GDP among the Gulf States. Other Gulf States shows a high degree of uniformity in terms of per capita GDP with per capita GDP lying between US $ 25,000- 35,000. The average environmental performance index is 127, with UAE showing the highest value of 152 and Saudi Arabia showing the lowest value of 99.

 Tourism statistics of gulf state

  Fig 5: Showing T&T industry and economy receipt (US $ Billion) of the six Gulf Nations. Source: (WEF, travel and tourism competency report, 2011.)

Fig 6: Showing, per capita T&T industry and economy receipt (US $) of the six Gulf Nations. Source: (WEF, travel and tourism competency report, 2011.)

Table 2: Showing the overall competencies of six Gulf Nations. Source: WEF travel and tourism industry report 2011.   

Analysis: Dubai is considered as gateway of, Middle East to the whole world and it gets reflected in the above figure. In both categories- Tourism receipt as well as tourism receipt as a percentage of GDP, UAE holds a numero uno position. UAE is followed by Saudi Arabia which receives a considerable amount of tourism receipt on account of conducting the very famous Hajj festival, where Muslim pilgrims from all around the globe come to Mecca. For most of the other Gulf nations, tourism still does not seem to be playing any significant role. 

Table 3: Showing population and surface area of the five Nordic nations. (Source: WEF travel and tourism competency report, 2011)

Fig 7: Showing the GDP (US $ Billion) of the five Nordic Nations. Source: (WEF travel and tourism competency report, 2011)

Fig 8: Showing the per capita GDP (PPP, US $) of the six Nordic Nations. (Source: WEF, travel and tourism competency report, 2011)

Fig 9: Showing environmental performance index of the six Nordic Nations, 2011. (Source: WEF, travel and tourism competency report, 2011) 

 Like Gulf countries, Nordic countries are also small nations with Iceland being the smallest and Sweden being the largest. Considered as one of the safest and happiest places in the globe, these states enjoy very low rate of crime, high per capita GDP and high standard of living. Most of the nations have per capita GDP in the range US $ 35,000-40,000, with Norway being an exception. The Nordic nation has a per capita GDP of US$ 51,980. One of the remarkable features of the Nordic nations is exceptionally good environmental performance index. The Numero Uno position in this ranking, which comprises of 139 nations, is with Iceland, smallest Nordic nation. Al most all the nations other than Denmark are ranked within 15 in this ranking.   

          Table 4: Showing Travel and Tourism competency, of the five Nordic Nations. (Source:     Travel and Tourism Competency 2011.)

Average attractiveness: 5.1

Fig 10: Showing T&T industry and economy receipt (US $ Billion) of the Five Nordic Nations. Source: (WEF, travel and tourism competency report, 2011.)

Fig 11: Showing, per capita T&T industry and economy receipt (US $ Billion) of the Five Nordic Nations. Source: (WEF, travel and tourism competency report, 2011.)

Comparison

 Table 5: Comparison of Gulf and Nordic Nations across various parameters. (Source: WEF travel and tourism report, 2011)

Fig 12: Comparison of Gulf and Nordic Nations across T&T industry and economy receipt. (Source:  WEF travel and tourism report, 2011)

 Fig 13: Comparison of scores of Gulf and Nordic Nations across, various WEF competitive parameters. (Source: WEF travel and tourism report, 2011)

Analysis: On being compared, the Nordic nations surely score better than the Gulf countries in almost all the parameters, socio-economic as well as statistics pertaining to tourism. Nordic nations have bigger aggregate GDP and enjoy higher per capita than the Gulf countries. An area where the Nordic nations have done exceptionally good is environmental performance and there seems to be a wide gap between the two clusters, across this parameter. Coming to T&T industry receipt, Nordic nations have received US $ 37.3 billion against US $ 22.93 billion received by Gulf countries. An important trend which could be seen over here is that, when compared across T&T economy receipt, the difference has narrowed down. Nordic nations have received US $ 114.83 billion against US $ 103 billion received by Gulf countries. The reason for this small difference could be the multibillion dollar tourism development projects, being incubated all across the Gulf. Given the fact that oil will not last for long, Gulf countries are realizing the significance of economic diversification and tourism is high up on their agenda. In nations where tourism does not contribute much in the GDP, huge investments are being made in developing state of the art tourism facilities. Qatar- the tourism industry in the state estimated at US $ 961 million in 2010 constitutes just 0.9% of the GDP but on account of some of the extravagant tourism development assignments, the overall economic impact is estimated at US $ 9,348 millions, constituting 8.4% of the GDP. (WEF_TravelTourismCompetitiveness Report, 2011) When compared across various WEF competitive parameters, Nordic nations again have a considerable edge over their Gulf counter parts. Comparatively lean across parameters such as T&T business environment and infrastructure and high across others such as human cultural and natural resources and regulatory frame works. With an average score of 5.1 in the overall competitiveness, the Nordic nations are among the top performers in the overall WEF ranking, consisting of around 139 nations where as with an average score of 4.3, Gulf countries are among the “slightly better than the average band”.  

Since both the clusters share a lot of similarity, in terms of various socio economic parameters, Nordic nations, with a better performance with the Gulf countries, could be a good role model for the Gulf countries.           

Use of key terms

·         The T & T competitiveness index is a measurement of factors that make a country, an attractive tourist destination. It consists of T&T regulatory frame work, T&T business environment, T&T human cultural and natural resources.  Countries are ranked on a scale of 1 to 6, with one being the lowest and 6 being the lowest.

·         T&T regulatory frame work consists of Policy rules and regulation, environmental sustainability, safety and security, health and hygiene and prioritization of travel and tourism. Countries are ranked on a scale of 1 to 6, with one being the lowest and 6 being the lowest.

·         T&T business environment and infrastructure consists of air transport, ground transport, tourism, and ICT infrastructure along with price competitiveness. Countries are ranked on a scale of 1 to 6, with one being the lowest and 6 being the lowest.

·          T&T human cultural and natural resources consist of human resources, affinity to tourism, cultural and natural resources. Countries are ranked on a scale of 1 to 6, with one being the lowest and 6 being the lowest.

·         T&T industry as a narrow perspective of T&T activity that captures the production-side

              Industry contribution that is, direct impact only (WEF report, p-105)

·         The T&T economy is a broader perspective of Travel & Tourism that takes into consideration the direct as well as the indirect contributions by traditional travel service providers and industry suppliers within the resident economy. (WEF, p-105)

  

Reference

ü  WEF_TravelTourismCompetitiveness Report, 2011, Qatar-Country/Economy profile, p-316