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Sun 31 Jul 2011 12:31 PM

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A time for reflection

The holy month of Ramadan is meant to be a period of reflection for Muslims. But has it become too commercial?

A time for reflection
Thousands of Muslims gather in the Grand Mosque, in Islams holiest city of Makkah as they take part in dawn prayers

Ramadan is unlike any other time of the year. In 2011, it will be characterised by long days and hot weather. But every year, it is a period when discipline, patience, humility and reflection are of the upmost importance.

But contrary to popular opinion, tourist-related companies such as travel agencies, hotels and airlines can and do take advantage of the holy month. Though there is typically less international travel during the period, with most Muslims not wishing to venture too far from home and business trips seeing a sharp downturn, there are several opportunities for companies to capitalise.

For example, according to travel agents, many expatriates and non-Muslims will opt to go home during Ramadan, or alternatively, select trips either side of the holy month so they can take advantage of the shortened working hours.

For airlines this means the average person is buying double the tickets. A proportion of affluent locals meanwhile, often choose to visit their families in the region at some point during the month, spurring plenty of opportunities for travel firms to launch deals on regional flights and hotel stays.

“Also, in preparation for Eid, most of the locals and expats begin buying their travel packages starting from the middle of Ramadan,” says Basel Abu Alrub, managing partner at Dubai-based travel agency U-Travel, adding that most of these Eid holidays last for around four to five days.

“This year, Ramadan falls in the middle of the summer, which means people can still [have time to] go on beach holidays to places such as Turkey and Greece.”

Despite falling occupancy levels, hotels are another group that tend to do particularly well at this time of year.

In an attempt to make up for the lack of guests, most of them host huge iftars (evening break-fast meals) every night for the whole month, in what have become colloquially known as ‘Ramadan tents’, providing huge feasts for both Muslims and non-Muslims.

The irony, according to some analysts, is that many of the hotels waste a significant amount of food during the Holy month, whilst defeating the point of fasting in the first place by perpetuating the principle of over-indulgence.

“Hotels adjust their F&B offerings to suit the season of fasting, and evidently, make a lot of money from this season,” says Guy Wilkinson, general manager of hotels consultancy firm Viability. “During the evenings, many Muslims prefer to break their fast with family and friends, although afterwards it is common to go out to hotels and street outlets for traditional Ramadan snacks, sweets and shisha.”

Of course, the biggest player during Ramadan (at least in terms of tourism) is Saudi Arabia, to which more than six million pilgrims flock annually to take part in the Umrah or Hajj pilgrimages.

According to a recent report by the National Commercial Bank (NCB) in the country, religious inbound tourism accounted for 47.1 percent of all trips to the kingdom in 2009, the numbers of tourists having steadily increased from 8.6m in 2006 to 10.9m visitors that year.

The problem with the flock of visitors to Saudi is that with the growth of tourism has come a spectacular increase in the hotel industry, which, unfortunately, some people claim is destroying the religious feel of the city.

The NCB report says that although inbound tourism to Saudi Arabia has always been dominated by religious trips, it is growing even more now that the Ministry of the Hajj has introduced more flexible visa arrangements, and given the ongoing developments in the holy cities of Makkah and Medina, where the pilgrimages take place.

Looking ahead, the situation is only likely to get worse, with major hoteliers such as Hilton, Marriott and Hyatt all yearning for a piece of the action, fuelling a widespread construction boom.

In 2010, the Ministry of the Hajj increased the number of Ramadan visas for foreign pilgrims by sixteen percent, allowing the total number of visas issued to reach 911,000 rather than the planned 792,000.

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Earlier this month, the ministry said it had issued a massive 4.6m Umrah visas between January and 16 July this year, 1.1m more than the number issued during the same period last year.

Officials attributed the increase to the growing capacity of the holy city to receive pilgrims, following new residential projects and roadworks, but others say the country is simply trying to bring in more tourism, stimulating the need for new projects and developments in the first place.

In an interview with Arabian Business, operations and maintenance firm Serco - which recently won the contract to maintain the Makkah Metro — said the tramline will carry up to two million passengers this year during the ten-day Hajj, greatly boosting the line’s income over the period.

Probably the biggest paradox during Ramadan, and the main evidence for its commercial nature in the modern day, is the sales figures recorded by the region’s biggest supermarkets.

Though they are under strict restrictions to reduce their prices almost every year, 2011 being no exception, the truth is that the holy month means big business for the Middle East’s retailers.

In 2008, market research by AC Nielsen recorded that UAE residents spent $441m (AED1.61bn) on food, which was a 27 percent increase on the year before.

Other grocery stores such as Spinneys typically report a five percent surge in profits during the period in comparison to the rest of the year, whilst many supermarket chains struggle to keep up with demand and totally run out of stock.

Even clothing brands, such as Marks and Spencer, launch Ramadan and Eid collections, targeting women and girls particularly with what they call a must-have range of “celebratory outfits”.

Certain products, of course, such as the sugary purple cordial Vimto, which has long been associated with Ramadan and is popular among Muslims for providing a quick energy boost after fasting, are renowned for raking in huge profits, year on year.

Earlier this month, the CEO of the drink’s distributor in the Middle East Aujan Industries said sales typically average around 25m bottles during the four-week period, and that Gulf Muslims drink approximately eight months’ worth of sales at this time.

Muslims in Saudi Arabia are thought to drink so much of the cordial that last year some stores began restricting sales to shoppers to keep pace with supply.

“Last year in Saudi Arabia, shops restricted sales to three bottles per shopper to meet the increasing demands,” says Mohammed Maameri, a Muslim faster from Riyadh.

“Many Muslims visit Makkah during Ramadan and you see everyone drinking Vimto,” he adds.

In tune with the commercial hype, Saudi Arabia-based Aujan said this month it had invested in a multi-million-riyal advertising campaign to further ramp up sales as Ramadan approaches.

“More than 50 percent of our Vimto sales happen during the Ramadan period,” Kadir Gunduz, CEO and president of the company tells Arabian Business.

“A lot of times people buy in bulk to cover the whole Ramadan period, and more and more people are using Vimto cordial as an ingredient for alternative uses, which includes smoothies, desserts, mocktails and milkshakes,” Gunduz says.

He adds that, as a result, the firm had seen a double-digit growth over the last few years, and was currently investing more than $100m in upgrading its distribution network and ramping up capacity by 40 percent, in the hopes of meeting its 2012 target of a mammoth $1bn in sales.

As expected, the UK soft drinks group Nichols, the maker of the cordial, is also benefitting from its partner’s efforts. Last year, the company posed a 39 percent rise in profits on the back of a surge of pre-Ramadan shipments to the Middle East.

A less obvious group known to take advantage of modern day Ramadan habits are the broadcasters and TV advertisers.

During Ramadan, Muslims or ‘consumers’ tend to work shorter hours, longer evenings, have limited sleep, bigger evening meals and more family time, thus offering the perfect targets for those looking to market their products or lure in new viewers.

Production firms spend vast amounts of money creating specific soap operas or mini-series, which are often popular with the whole family. In 2010, TV viewing was up six percent during Ramadan in Saudi Arabia, and thirteen percent in Egypt.

Highlighting the impact on consumers and the opportunities for the industry, was a recent report by Omnicom Media Group, which said that the change in media behaviour has been particularly significant in affecting sales among TV stations, as well as media investments.

“Although there are some variations between countries, the evening entertainment features a heavier TV viewing than normal, thanks to the many hit programmes laid on by TV stations at great expense,” says the report.

“This investment is designed to attract a high share of the audience and the many TV advertisers that seek to capitalise on this special time of the year, during which a significant share of annual sales can be achieved.”

Local broadcasters agreed that they do indeed change and intensify the programme line up over Ramadan to cater for the increase in viewing and intensity of TV watching during the period.

They also admitted that advertising does increase during Ramadan, but failed to say the change in the proportion of advertisers when approached by Arabian Business.

“Ramadan traditionally marks the start of the broadcast programming seasons for all Arabic TV productions, specifically TV series. Many of the big series will premiere at the beginning of Ramadan and continue through the month,” says the senior vice president for programming at OSN, Khulud Abu Homos.

“Also, Ramadan programming is designed to support the concept ‘prime time all the time’, and across the fifteen Arabic channels on the OSN platform we have special Ramadan content.” He adds: “Similar to all platforms in the region there is an increase in advertising during Ramadan.”

The question today of course is where to go from here. At the moment, an increase in supply is continuing to create more demand for expensive hotels, iftars, special food and drink, and superficial TV shows, which in turn is encouraging more supply and commercialisation.

Without intervention from government regulators and authorities, it could be difficult to break the cycle. In the end though, it may be down to the authorities to decide whether Ramadan becomes the Christmas of the Western world — with all the rampant commercialism that entails — or the season of humility, firmly rooted in tradition, that it has always been.

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Ramadan thoughts

1 Safety during the Hajj: what to bear in mind this year

The Hajj in Makkah is the largest pilgrimage in the world, drawing in 2.5 million Muslims every year. But as the number of pilgrims has gone up, so has the number of accidents. Over the last 20 years, there has even been a spate of deaths spurred by the lack of crowd management and inability of the city to cope with huge numbers. In 1990, 1,426 pilgrims were trampled in an overcrowded pedestrian tunnel, and then in 1994, 270 people died during the stoning of the pillars at the Jamarat Bridge. In 2004, a further 251 people were crushed at the same bridge.

2 Jadwa Investment on the Saudi stock market during Ramadan

“International events impact on stock market performance throughout the year, and Ramadan is no different. The collapse of Lehman Brothers in 2008, which dramatically intensified the global financial crisis, occurred during Ramadan. One potential risk this Ramadan is the market reaction if the US fails to reach an agreement on extending its debt ceiling by August 2, after which it would be unable to honor all its debts. Concerns about Eurozone debt, which have recently pushed the TASI down recently despite encouraging second quarter results, should ease over the near terms following the agreement of another debt restructuring for Greece. Major moves in global markets would outweigh the impact of the seasonal pattern around Ramadan on the Saudi stock market.”

– The Saudi stock market in Ramadan, July 2011.