The Gulf Cooperation Council (GCC) countries are poised to experience a significant growth in their tourism sector, a new report suggests.
According to Fitch Ratings, the GDP contribution from the GCC’s tourism sector is expected to increase from around $130 billion in 2023 to over $340 billion by 2030, accounting for more than 10 percent of the region’s GDP.
Aviation sector’s crucial role
The GCC countries have set ambitious goals for their tourism sector, aiming to reduce their reliance on oil. In this effort, the aviation industry is expected to play a crucial role. Fitch Ratings anticipates that air passenger traffic in the region will show substantial growth.
GCC’s thriving airport sector
The GCC region already boasts some of the world’s most modern airports, including Dubai International Airport (87 million passengers), Hamad International Airport in Doha, Qatar (45.9 million), and King Abdulaziz International Airport in Jeddah, Saudi Arabia (42.9 million). A sample of GCC airports showed that traffic in 2023 was 8 percent above 2019 levels and up by about 20 percent from 2022. In contrast, most EMEA airports covered by Fitch had 2023 traffic at 97 percent of 2019 levels.
Plans for doubling air traffic by 2030
Looking ahead, the GCC’s infrastructure plans call for air traffic to double by 2030. The UAE and Qatar have invested heavily in their airports and flagship airlines, transforming them into major international passenger hubs. Similarly, Saudi Arabia has expanded its investments in airports to increase capacity and support the anticipated population growth and additional international visits, including pilgrimage tourism.
Transformation of Al Maktoum International Airport
In 2023, Dubai announced a $35 billion plan to transform Al Maktoum International Airport to accommodate 260 million passengers annually. GCC countries are also increasingly adopting public-private partnerships (PPPs) for a wide range of infrastructure projects.
Expanding infrastructure through PPPs, financing
For example, Saudi Arabia unveiled a pipeline of 200 projects across 17 sectors, including four airports. The recent procurement for Abha Airport attracted significant interest from local and international investors, as well as airport operators like TAV Airports Holding.
Financing large-scale projects
Moreover, to finance these large-scale projects, GCC countries are tapping into bond and sukuk markets, providing access to a wider pool of investors and longer-term financing options.
Read more: Abu Dhabi’s Etihad Airways launches daily flights to Boston, Toronto
Fitch’s rating criteria for EMEA airports
Fitch‘s EMEA airports are rated under the Transportation Infrastructure Rating Criteria, which will also apply to future projects in the GCC region. Furthermore, Fitch’s current portfolio includes issuers with different debt structures, ranging from corporate-like issuers with senior unsecured debt and looser covenants to those akin to project finance issuers or hybrids with strict covenants on individual assets, restrictions on additional debt, and separation from other group activities.
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