How Can The Region’s Megaprojects Navigate Global Trends?
The Middle East, like the rest of the world, is riding an unprecedented wave of global megatrends. Worldwide demographic shifts, a rise in populism, climate change and resource scarcity are just some of the complex and challenging trends the region must navigate in the years to come. Against this backdrop, Dr. Martin Berlin, partner at PwC, considers how best to ensure the region’s many huge projects stand the test of time.
The Middle East is showing significant growth momentum. Its economic diversification ambitions are propelling a growth spurt that has seen the GCC hospitality project pipeline valued at USD 147 billion this year.
In the UAE, in particular, hospitality construction activity has accelerated in the march toward Dubai’s World Expo 2020 mega-event. Meanwhile, in Saudi Arabia, a radical societal transformation is underway as the Kingdom’s ambitious Vision 2030 takes shape. Many strands of the Saudi Arabian economy are being overhauled, liberalized and injected with billions of dollars in investment and privatization, including the hospitality industry.
Mega hospitality project execution
To date, the GCC has broken ground on numerous billion-dollar mega-projects, including the Hospitality District in Dubai’s Mall of the World in the UAE, and Phase One of the Red Seas Touristic Development in Saudi Arabia. Oman follows the UAE and Saudi Arabia, with the third-highest value of hospitality investment, thanks to its Tourism Resort project in Duqm, which is valued at USD 20 million.
The question is this: how can the region ensure its mega-projects stand the test of time and become commercially viable amid such a radically shifting global landscape? Today’s megatrends are moving at such a fast pace that the Middle East won’t be afforded the luxury of a delayed or ineffective response.
Our answer is to focus on the near-term manifestations of the challenges confronting us, using a framework dubbed ADAPT. It addresses increasing wealth disparity (asymmetry), disruption of business models (disruption), demographic pressures on businesses (age), increasing nationalism (populism) and the declining trust in organizations (trust).
So what do these megatrends mean specifically for hospitality?
Asymmetry
Around 10 percent of the population now accounts for 61 percent of global income, which is creating complexities in both hospitality employment and products. How will the region cater for a changing employee and customer base?
In the case of a huge transformative nation such as Saudi Arabia, which is funneling billions of dollars into the tourism development of over 50 Red Sea islands, will the focus be on international or domestic tourism? And will nationals be encouraged to develop a service mindset so they can be employed in large numbers across the tourism sector?
Disruption
Disruption is being caused by technology and the impact of resource scarcity. How long will it be before Dubai or Saudi Arabia face the kind of water-use restrictions Cape Town is currently imposing, with tourists asked to restrict showers to 90 seconds and swim in the sea rather than in pools? Now is the time to creatively think how the hospitality industry can become sustainable as it grows – a shift that requires alignment from governments, hotels, tourist facilities and the tourists themselves – and innovate.
Age
For the regional hospitality industry, demographic pressures bring a wide range of both opportunities and challenges. Saudi Arabia’s Crown Prince Mohammad Bin Salman has responded to young people’s call for more entertainment, sport and tourism, opening up huge potential in everything from theme parks to cinemas. But it will take careful and managed transformation to get the positioning right and avoid mixed messages. For example, does a Red Sea resort sit well with heritage and religious tourism?
Populism
In the Middle East, the challenges of nationalism and identity are turbo-charged. In the Gulf countries, at least, expatriates make up a large portion of resident populations. How open will regional countries be to visitors and what will the visa restrictions look like?
Trust
For the tourism and leisure industry, moving toward greater trust in a national vision and consensus is essential for continuity and growth. How will government authorities react to the challenges posed by the global megatrends?
Taking action
The world of hospitality has become endlessly diversified and a one-size-fits-all approach is doomed to failure. If the region wants to continue to establish itself as a global tourism hub, it will need to cater for an even bigger range of offerings and customers.
In terms of the region’s megaprojects, it is imperative that hospitality leaders ‘glocalise’ their assets and seek to find global USPs for their local attractions. For example, Saudi Arabia or Oman may choose to use their respective heritage and culture to attract leisure tourists.
It also goes without saying that companies need to implement digitization strategies – as fast as they can. Hospitality firms should focus on end-to-end digitization and cybersecurity.
Finally, for any hospitality strategy to be effective, it must be drilled down to all the relevant authorities to create alignment across stakeholders. Saudi Arabia is leading the way in this respect, by ensuring hospitality is high on its diversification agenda.
If regional countries are able to take on board the principles of the ADAPT framework, there is every chance that they will be able to address the challenges of global megatrends in the right way and within the required timeframe.
pwc.com
Future-Proofing Hospitality
How Can The Region’s Megaprojects Navigate Global Trends?
The Middle East, like the rest of the world, is riding an unprecedented wave of global megatrends. Worldwide demographic shifts, a rise in populism, climate change and resource scarcity are just some of the complex and challenging trends the region must navigate in the years to come. Against this backdrop, Dr. Martin Berlin, partner at PwC, considers how best to ensure the region’s many huge projects stand the test of time.
The Middle East is showing significant growth momentum. Its economic diversification ambitions are propelling a growth spurt that has seen the GCC hospitality project pipeline valued at USD 147 billion this year.
In the UAE, in particular, hospitality construction activity has accelerated in the march toward Dubai’s World Expo 2020 mega-event. Meanwhile, in Saudi Arabia, a radical societal transformation is underway as the Kingdom’s ambitious Vision 2030 takes shape. Many strands of the Saudi Arabian economy are being overhauled, liberalized and injected with billions of dollars in investment and privatization, including the hospitality industry.
Mega hospitality project execution
To date, the GCC has broken ground on numerous billion-dollar mega-projects, including the Hospitality District in Dubai’s Mall of the World in the UAE, and Phase One of the Red Seas Touristic Development in Saudi Arabia. Oman follows the UAE and Saudi Arabia, with the third-highest value of hospitality investment, thanks to its Tourism Resort project in Duqm, which is valued at USD 20 million.
The question is this: how can the region ensure its mega-projects stand the test of time and become commercially viable amid such a radically shifting global landscape? Today’s megatrends are moving at such a fast pace that the Middle East won’t be afforded the luxury of a delayed or ineffective response.
Our answer is to focus on the near-term manifestations of the challenges confronting us, using a framework dubbed ADAPT. It addresses increasing wealth disparity (asymmetry), disruption of business models (disruption), demographic pressures on businesses (age), increasing nationalism (populism) and the declining trust in organizations (trust).
So what do these megatrends mean specifically for hospitality?
Asymmetry
Around 10 percent of the population now accounts for 61 percent of global income, which is creating complexities in both hospitality employment and products. How will the region cater for a changing employee and customer base?
In the case of a huge transformative nation such as Saudi Arabia, which is funneling billions of dollars into the tourism development of over 50 Red Sea islands, will the focus be on international or domestic tourism? And will nationals be encouraged to develop a service mindset so they can be employed in large numbers across the tourism sector?
Disruption
Disruption is being caused by technology and the impact of resource scarcity. How long will it be before Dubai or Saudi Arabia face the kind of water-use restrictions Cape Town is currently imposing, with tourists asked to restrict showers to 90 seconds and swim in the sea rather than in pools? Now is the time to creatively think how the hospitality industry can become sustainable as it grows – a shift that requires alignment from governments, hotels, tourist facilities and the tourists themselves – and innovate.
Age
For the regional hospitality industry, demographic pressures bring a wide range of both opportunities and challenges. Saudi Arabia’s Crown Prince Mohammad Bin Salman has responded to young people’s call for more entertainment, sport and tourism, opening up huge potential in everything from theme parks to cinemas. But it will take careful and managed transformation to get the positioning right and avoid mixed messages. For example, does a Red Sea resort sit well with heritage and religious tourism?
Populism
In the Middle East, the challenges of nationalism and identity are turbo-charged. In the Gulf countries, at least, expatriates make up a large portion of resident populations. How open will regional countries be to visitors and what will the visa restrictions look like?
Trust
For the tourism and leisure industry, moving toward greater trust in a national vision and consensus is essential for continuity and growth. How will government authorities react to the challenges posed by the global megatrends?
Taking action
The world of hospitality has become endlessly diversified and a one-size-fits-all approach is doomed to failure. If the region wants to continue to establish itself as a global tourism hub, it will need to cater for an even bigger range of offerings and customers.
In terms of the region’s megaprojects, it is imperative that hospitality leaders ‘glocalise’ their assets and seek to find global USPs for their local attractions. For example, Saudi Arabia or Oman may choose to use their respective heritage and culture to attract leisure tourists.
It also goes without saying that companies need to implement digitization strategies – as fast as they can. Hospitality firms should focus on end-to-end digitization and cybersecurity.
Finally, for any hospitality strategy to be effective, it must be drilled down to all the relevant authorities to create alignment across stakeholders. Saudi Arabia is leading the way in this respect, by ensuring hospitality is high on its diversification agenda.
If regional countries are able to take on board the principles of the ADAPT framework, there is every chance that they will be able to address the challenges of global megatrends in the right way and within the required timeframe.
pwc.com
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