Enough of the bull, beware of the bear

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Talwar says tourism investors should look to the future and make contingency plans.

Investors planning developments worth trillions of US dollars are being warned to prepare contingency plans, with industry experts predicting tough times ahead in the global economy.

Future of Travel and Tourism in the Middle East author Rohit Talwar has noted that investors have been bullish about the global economic outlook and have earmarked US $3.63 trillion for Middle East tourism projects spanning hotels, leisure facilities, aviation, cruise lines, tourism promotion and supporting infrastructure.

However, there are "six critical factors that could cause turbulence and confusion and have an adverse economic impact in the coming years: the global economic outlook, environmental challenges, human resources, safety and security, infrastructure and information availability and reliability", Talwar said.

"I believe that an adverse outcome on any one or more of these factors could act to slow growth or even reduce demand."

Talwar is the CEO of UK-based Fast Future and Global Futures and Foresight (GFF), which carried out a study of tourism developments planned for 13 Middle Eastern countries for the period to 2020 in order to take a "future perspective on key trends and drivers shaping the travel and tourism sector".

Key findings include plans to invest at least US $580 billion in more than 900 hotels across the region, from Syria to Oman, equating to 750,000 rooms, while Dubai's Jebel Ali Airport, when completed, will be the biggest in the world boasting capacity of 120 million passengers annually.

However, Talwar revealed that when collecting data from the many sources to compile the study, not one had made provisions for any of the "six critical factors".

"Most said they hoped none of these would happen, but you can't build a strategy on hope; you need plan B and plan C," he said.

Talwar said the worst-case scenario would be if the US, Europe and Asia all entered recession and the growth of the Chinese and Indian economies came to a halt - a scenario, he said, that was not out of the question.

Speaking at The Economist Conferences' World in 2008 event in Abu Dhabi last month, many industry experts predicted a worldwide global downturn, with the impact on the local market unclear.

Economist Intelligence Unit editorial director Robin Bew said the the situation in America - battling a ‘credit crunch' and sub-prime market woes - was "going to get worse before it gets better".

"Certainly in the first half I see the US flirting with a recession," he said.

"Emerging markets are really going to be making the run in 2008."

But he said the future was not "all rosy" for emerging markets, with several challenges still remaining.

"We do expect growth to slow, but in broad terms growth remains very positive," he added.

"Economically it's going to be a long year, [but] politically it's going to be difficult as well. Everyone is focused on the economics, but don't forget the politics - there is an awful lot of strife out there at the moment."

Many economists and industry heads on the panel agreed it was unlikely the GCC's currency peg to the US dollar would remain in its current form - but it was still uncertain when any evaluation would occur.

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