Israel-Palestine crisis to have no material impact on GCC tourism, says report

Since the war began, analysts fear there might be losses to regional economies


Waheed Abbas

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Published: Tue 7 Nov 2023, 4:15 PM

Last updated: Tue 7 Nov 2023, 5:13 PM

The tourism industry could take a hit in the Middle East and North Africa (Mena) region but the impact on the Gulf Cooperation Council (GCC) is “unlikely to be material” in the ongoing Palestine-Israel conflict, according to global ratings agency S&P.

“Lebanon, Egypt, and Jordan are most exposed to the regional conflict due to their geographic proximity and the potential for some aspects of the conflict to expand across their borders,” S&P analysts said in a note released late on Monday.

Based on the results of its scenario analysis, it tested the financial impact of a 10 per cent, 30 per cent, or 70 per cent loss in tourism receipts in each country in the region.

Since the war between Israel and Hamas, several tour agencies in Egypt have reported cancellations of around half of the bookings for November and December, particularly from European travellers. Airlines such as Lufthansa, Eurowings, and Swiss Air suspended flights to Lebanon in mid-October. Similar trends could emerge in Jordan's tourism sector.

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In the month-long conflict between Hamas and Israel, more than 10,000 Palestinians have died in Gaza, including thousands of children. Analysts fear a further escalation in the conflict, resulting in more casualties, as well as losses to regional economies.

According to a report from HSBC Global Research, Jet, set, go!, the Middle East saw the strongest rebound in the post-pandemic global tourism recovery. “The region is unique in recording a total recovery in terms of tourist arrivals in the first quarter of 2023, up 15 per cent on 2019 figures,” HSBC said.

Tourists diverting to UAE, Turkey

In the other GCC countries, most visitors come from within the Gulf region, hence it will relatively see lesser impact from the conflict. For Saudi Arabia and Iraq, a large part of tourism is for religious purposes and would be less susceptible to cancellations, it added.

S&P analysts say that the impact for Turkey would likely be minimal because it is geographically farther away from the conflict than the other countries. For the UAE, there is some buffer because tourist inflows already exceed pre-pandemic levels.

"Dubai saw 11.1 million visitors over January-August, compared to 10.85 million during the same period in 2019. We might even see some tourists divert their travel to these two countries from other parts of the region,” S&P said.

However, analysts do not currently expect the decline in hotel bookings and events to be significant, for now, for the UAE and Turkey.


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