SGIE 2022 Report: Muslim-friendly travel | Salaam Gateway

Amy Stewart

Muslim spend on tourism reached $102 billion in 2021 and is expected to grow by 50% in 2022 to $154 billion and reach $189 billion by 2025.

 

Tourism had its worst-ever year in 2020 with international travel down nearly 75%, and destinations receiving 1 billion fewer tourists. Last year and 2022 has had more sunshine amid the clouds with vaccination drives in developed economies helping the sector rebound, propelled by pent-up demand for vacations.

However, many countries have been on red lists, warding off foreign tourists, while pandemic-related restrictions – from quarantining to vaccine passports – has also dented foreign travel. The Organisation of Islamic Council (OIC) countries were negatively affected, especially the tourism hot-spots of Egypt, Turkey, Indonesia and Malaysia. Domestic tourism offset some of the losses with governments launching tourism campaigns while stimulus packages have helped businesses survive.

DinarStandard’s State of the Global Islamic Economy Report 2022 estimates Muslim spend on tourism increased from $58 billion to $102 billion in 2021 and is expected to grow another 50% in 2022 to $154 billion and reach $189 billion in 2025 at a four-year compound annual growth rate (CAGR) of 16.5%.

See – Infographic SGIE 2022: Muslim-friendly travel

“Some of the trends over the past year include travel companies expanding their services across other sectors to create new revenue streams including food and grocery delivery and e-commerce. Saudi Arabia continued investing heavily in leisure tourism with the aim of becoming a top luxury destination within the region, and several online travel agencies (OTAs) secured funding despite the pandemic,” said Reem El Shafaki, a partner at DinarStandard.

She said these trends identified various opportunities: financiers are investing in travel technology in emerging markets including Pakistan, Bangladesh, Egypt, Nigeria and Algeria that have large populations of young digitally savvy individuals. Private sector investors have opportunities to invest in Saudi Arabia’s luxury tourism projects currently mainly being financed by the kingdom’s Public Investment Fund (PIF).

In terms of travel businesses, there’s an opportunity in new technology that focuses on operational transformation as well as on new products such as travel fintech and insurance. Despite billions of dollars lost in unrealised revenues from pilgrimages, with Hajj and Umrah numbers heavily reduced, Saudi Arabia’s PIF is investing in luxury resorts, an airline and a cruise line in its efforts to expand leisure tourism.

The kingdom’s Tourism Development Fund is also financing a $347 million complex near the Prophet Mohamed’s Mosque in Medina, and launched Kidana, a $270 million company to develop holy sites. Due to the impact on pilgrimages, Hajj savings schemes have taken on greater importance in Nigeria and Malaysia.

Also indicating a potential upswing in travel is that several OIC airlines are expanding their operations, while tourism infrastructure and transport is attracting investment. However, the pandemic impacted on large-scale national and international events, including the Tokyo Olympics, that was a particular blow for Muslim-friendly tourism and halal restaurants banking on millions of tourists. Qatar continues building accommodation ahead of the FIFA World Cup Soccer tournament next year.

The digitalisation of Muslim-friendly tourism has been particularly active, with contactless travel becoming increasingly commonplace and travel businesses diversifying their offerings to create new revenue streams, from e-commerce to food delivery.

Malaysia’s AirAsia launched a Muslim-friendly e-commerce platform and expanded into food delivery as well as ride-hailing, after acquiring food delivery platform Delivereat. Similarly, Traveloka, the Indonesia-based travel unicorn, expanded into food delivery via Traveloka Eats. The platform was launched in 2018 as a restaurant directory and review space.

Meanwhile Pakistan’s mass transit app Airlift suspended its main business selling air-conditioned bus rides and pivoted into grocery delivery.

“These companies are proving to be role models in resilience and agility, but have had to rely on their ability to raise investment to fund their pivots,” said Shafaki.

There has also been significant investment activity with Traveloka and Indonesian online travel company Tiket.com planning to go public, while HalalBooking.com secured $5 million in a pre-Series B funding and Pakistan-based travel start-up FindMyAdventure raising $600,000.

“The public listing and mergers and acquisitions within the travel technology space in OIC countries will further boost their standing as global contenders, while their expansion into food, transportation and lifestyle offerings allows them to permeate customers’ daily lives and not just as it relates to travel,” El Shafaki said.

While tourism is set to rebound in many OIC countries, others like Lebanon and Tunisia that were adversely affected by political instability on top of the pandemic, are not expected to be as fortunate. However, the report does show as the world reopens for tourism, Muslim-friendly resorts, hotels and restaurants are slated for major growth in the years ahead.

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