Tourism sector in Morocco emphasises diversification and improved air connectivity

Welcoming more than 10m tourists annually since 2014, Morocco is Africa’s number-one tourism destination in terms of foreign arrivals. This comes on the back of a decade of steady development under the framework of two successive sector development plans, Vision 2010 and Vision 2020 aimed at structuring and consolidating the tourism industry.

The sector accounts for around 12% of Morocco’s GDP and directly employs roughly 507,000 workers, according to the Ministry of Tourism (MoT). In spite of an increasingly challenging regional environment, thanks to its stability, the kingdom’s tourism sector has proved resilient, with a minor drop in tourist arrivals in 2015. Authorities are, however, expecting the sector to pick up in 2016, driven by increased air connectivity, a further diversification of source markets and a more specialised tourism supply.

Sector Performance 

After several decades of continuous growth, in 2015 Morocco’s tourism sector experienced a 1% decline in the number of tourist arrivals, from 10.3m in 2014 to 10.2m. This slight decrease stemmed largely from growing regional insecurity and political instability in the broader MENA region. “Even though Morocco is in a stable political and security situation, the country – as part of the MENA region – has been somehow associated with the security disturbances seen in Tunisia, Libya or the Middle East,” Abdelaziz Samim, managing director of the National Hotel Industry Federation, told OBG. ”The downturn in the number of visitors has mostly concerned France, our main source market.” According to the MoT, tourism revenues totalled Dh58.6bn (€5.4bn) in 2015, a slight decrease of 1.4% compared to the previous year.

Three of Morocco’s main source markets have experienced a slowdown, including France (-5%), Italy (-5%) and Belgium (-2%). This, however, was partially offset by an increase in visitors from Germany (+8%), the UK (+6%) and the US (+6%), as well as the emergence of new clientele from Russia and China. Other growing markets in 2015 included the Gulf states (+12) and Brazil (+16). Europeans still account for the vast majority of foreign tourists in Morocco, with a share of 82% divided between France (33%), Spain (21%), the UK (7%), Belgium (6%), Germany (6%), the Netherlands (5%) and Italy (4%).

According to Mehdi Chakir, equity research analyst at CFG Bank, Morocco’s tourism sector, which has proved quite resilient over the years, should see revived growth as of 2016. “Morocco has in the past demonstrated an ability to absorb within two quarters the negative effects of external shocks, as seen during the Gulf War or the 2008 economic crisis. As such, we expect the number of foreign visitors to rebound by 2% in 2016, as a result of the better economic situation prevailing in Europe,” he told OBG.

From a regional perspective, Morocco has been Africa’s top tourist destination since 2014, ahead of Egypt with 9.6m visitors and South Africa, with 9.4m in 2014. Despite the 1% drop in 2015, Morocco outperformed the region, as tourist arrivals decreased by 3% in Africa and 8% in Northern Africa, according to the World Tourism Organisation (WTO).

Governance

In 2001 tourism was the first economic activity to be subject to a sector-specific development plan in Morocco, with the launch of Vision 2010, aimed at structuring the tourism sector’s governance, boosting investment and professionalising operators. The strategy led to the consolidation of the sector’s supervision with the creation of Regional Tourism Councils in charge of supporting locally the MoT’s development plans as well as the set-up of a new agency, the Moroccan Agency for Tourism Development (Société Marocaine d’Ingénierie Touristique, SMIT) in 2007, responsible for boosting local and foreign tourism investments. The implementation of Vision 2010 has led to notable progress, including the significant increase in the number of tourists (9.3m in 2010), the development of tourism promotion via the Moroccan National Tourism Office (Office National Marocain du Tourisme, ONMT), the implementation of open-skies agreements, a growing number of vocational training programmes in the industry, and a surge in foreign direct investment. In 2010 authorities initiated a new roadmap, Vision 2020, aimed at doubling the size of Morocco’s tourism sector by 2020 in terms of number of visitors (20m tourists), foreign exchange earnings ($14bn annually) and accommodation capacity (200,000 additional beds).

In a bid to ensure the diversification of Morocco’s tourism portfolio, Vision 2020 comprises six specific programmes: Plan Azur 2020 aims at consolidating Morocco’s seaside tourism offer via the development of integrated seaside resorts around Agadir and the Mediterranean Rif; Patrimony and Heritage focuses on the enhancement of Morocco’s material and immaterial heritage, mainly in imperial cities (Marrakech, Fez, Meknès), Casablanca-Rabat and the North; Eco and Nature is geared towards the development of green projects, mainly in the south, the High Atlas and Ouarzazate areas; Entertainment, Leisure and Sports targets the construction of new theme parks and recreation centres; Niches with High Added-value programme is dedicated to fostering both business and health-and-wellness tourism as well as the meetings, incentives, conferences and exhibitions offering; and Plan Biladi aims to boost local tourism. A High Authority for Tourism is also set to be established to ensure the implementation of Vision 2020. The authority will be supported by the creation of eight regional tourism development agencies.

Accommodation

In recent years, Morocco has seen a continuous expansion of its hotel bed capacity, with the number of beds increasing by 22.5% from 176,000 in 2010 to 216,000 beds in 2014, according to MoT data. In 2014 four-star hotels accounted for 23% of total beds, followed by five-star hotels (15%), three-star hotels (13%), guest houses (11%), club hotels (10%), hotel residences (9%), and one-star and two-stars hotels (7% each), and others (5%) .

Between 2010 and 2014, the segments which experienced the most growth were the high-end (+15%) and one-star (+45%) categories. The country has also been attracting more international hotel chains, with the completion of numerous large-scale facilities in 2015, including Hyatt Place Taghazout Bay in Agadir, Mövenpick and Four Seasons in Casablanca, Mandarin Oriental in Marrakech and Royal Tulip in Tangiers. Due to the decline in foreign visitors, occupancy rates fell from 44% in 2014 to 41% in 2015, according to the Moroccan Tourism Observatory. However, the drop in overnight stays by non-residents (-13%) was partially offset by domestic tourism (+11%).

Certification

To improve overall quality standards, the MoT has been working in partnership with the WTO on a new rating system for hotels. The system is set to include quality of service as part of the existing requirements, which have thus far only comprised infrastructure, design and equipment.

Investment

Over the course of the past five years, investments in tourism have totalled $12.1bn, representing 75% of Vision 2020’s objectives. Projects in cultural areas have received the bulk of investments, with a 69% share, followed by seaside projects, which have accounted for only 28% of total investments due to delays in the development of seaside resorts within the framework of Plan Azur. Investment in entertainment has meanwhile been on the rise and accounted for 20% of total investments in 2015, marked by the completion of numerous entertainment facilities, including Sindibad Park by Walibi in Casablanca, Crocoparc in Agadir, Palooza Park in Marrakech and Mohammed VI Museum in Rabat. Similarly, Morocco’s shopping offerings for tourists also expanded in 2015, with the opening of Menara Mall in Marrakech and Tanger City Centre Mall.

However, a survey led by the Association of Tourism Investors indicated the sector has been suffering from a plateauing in equity by tourism operators as well as a gradual loss of confidence by bankers in tourism projects in the past few years. Since 2010, banks have been increasingly reluctant to fund tourism projects, which they have considered as a high-risk sector due to the high level of delayed reimbursements (40% of projects) and outstanding receivables (21%). In addition, the survey also reports that some 75% of tourism investors are set to either cease or decrease their level of investment over the next five years.

In an effort to reinvigorate investment in the sector, the SMIT and the Central Guarantee Fund established a new risk-sharing mechanism, a Dh400m (€36.7m) Guarantee Fund, for the 2015-20 period, in which the state will guarantee 60% of funds for seaside resort developments included in the Programme Azur 2020, and 50% for the other tourism projects.

Plan Azur

In a bid to diversify Morocco’s tourism offer and boost the construction of seaside resorts, in 2001 authorities launched Plan Azur 2010, which aimed at developing six large-scale seaside resorts including Mazagan (El Jadida), Mogador (Essaouira), Taghazout (Agadir), Saidia (Oriental Region), Port Lixus (Larache) and Plage Blanche (Guelim). However, Plan Azur has not met its objectives with the opening of only three out of six resorts and only at partial capacity. Saidia was the first resort to open in 2009 but development has been sluggish due to several setbacks, including the withdrawal of Spain’s hotel chain Barcelo from the project mainly due to a lack of air connections. With a current capacity of 7000 beds, the resort has struggled to gain international recognition due to high seasonality and the lack of air connections and entertainment activities.

Mazagan resort is also operational but has been downsized. Completed in 2009, the first phase included the development of a 500-room hotel, a golf course and a casino. However, the second phase, which was due to start in 2013, has remained on stand-by. Port Lixus, developed by project owner Alliances, has also ground to a halt. Authorities are looking for a new investor to take over the project since Alliances has been facing financial difficulties.

Plage Blanche resort near Guelmim was never launched. Spain’s Fadesa was awarded the tender bid in 2007 but withdrew from the project. It was then taken over by Egypt’s Pickalbatros, which in turn abandoned the project. Priority is now being given to the completion of Taghazout resort, of which the first development phase was completed in 2015, including the construction of a five-star hotel Hyatt Bay as well as a golf course, for a total investment of $150m. According to SMIT, Taghazout will ultimately have a capacity of 12,400 beds and should attract 300,000 tourists annually. However, the project owner of Taghazout bay project, Alliance Dé veloppement, withdrew from the piloting company – Société d’Aménagement et de Promotion de la Station de Taghazout – in early 2016, a decision which is expected to lead to further delays.

Outside Azur 2020, Morocco is expected to gain a new seaside resort near Tangiers, with the upcoming completion of the Al Houara seashore resort for 2017. The Dh4.8bn (€440.1m) project is a result of a partnership between SMIT and real estate investment firm Qatari Diar. It has an estimated capacity of 5500 beds and should create 1500 jobs.

Connectivity

Morocco’s air connectivity has made some important strides since the implementation of the open-skies policy in 2006. In 2014 Morocco was connected to 51 countries and 113 foreign airports, compared to 29 countries and 43 airports in 2003. Air transport accounts for 50% of tourist arrivals, with Casablanca’s Mohammed V Airport responsible for half of Morocco’s air traffic. In 2015 Moroccan airports handled a total of 17.6m passengers, an increase of 1.82% compared to 2014, according to the National Airport Agency (Office National des Aéroports, ONDA), driven by an increased number of domestic flights (+2.85%) as well as international connections, notably with Africa (+11.86%), South America (+21.72%), and Middle and Far east (+13.82%). This increasing connectivity is opening Morocco up to new source markets, bringing new opportunities for tourism and the hotel industry to capitalise on a widening visitor pool. “The development of flight connections to Asia, via the Gulf, will diversify our client portfolio, aided by the recent influx of Chinese investment – all of which will boost both business and leisure tourism in the kingdom,” Laurent Ebzant, general manager of the Hyatt Regency, told OBG.

Scheduled and charter airlines represent 66% of total flights in Morocco, as an increasing number of low-cost carriers – including Ryanair, easyJet, Vueling, AirArabia and, more recently, Transavia – have introduced new routes to the kingdom. Additionally, the MoT envisages the creation of one or two local low-cost airlines to increase the number of flights.

Morocco currently has a network of 18 airports, which have been regularly upgraded. The renovation works at Marrakech airport’s first terminal were completed recently, with extension works for the second terminal due to start in 2016. Casablanca’s Mohammed V Airport is also extending its first terminal, with completion due in 2017. In addition, ONDA is planning to start works the same year for the expansion of a second terminal, which will be entirely dedicated to the national carrier Royal Air Maroc, as well as the construction of a new control tower.

Ferries are also an important means of transportation, accounting for 80% of tourism arrivals from Spain and 40% from France. The Tangiers-Tétouan regional tourism board is looking to reinstate a ferry route between Algarve in Portugal and Tangiers. A ferry route between the cities was abandoned in the 1990s. According to the tourism board, the crossing could be operational within 18 months and would be operated by Moroccan company Inter Shipping.

Promotion

ONMT aims to attract 1.5m additional visitors during the next couple of years via the roll-out of a Dh400m (€36.7m) plan focused on two major areas: air connectivity and digital promotion. The programme includes the opening of 57 new air routes between Morocco and its source markets. Priority will be given to British and German secondary cities and further efforts will be made to court visitors from Russia, Africa, Scandinavia, the US and Central Europe. According to Abderrafi Zouiten, managing director of ONMT, flight capacities increased by 1.3m seats during summer 2015 and by 1m during winter.

ONMT is also set to introduce a new website for information and distribution, implement an aggressive strategy with regards to online image and take action in social media as a means to respond to the rising use of internet by travellers. Since 2015, ONMT has benefitted from an increased budget funded by the introduction of a new 10% tax on flight tickets. In 2016 the agency’s budget is estimated at around $60m, which represents 0.7% of tourism’s total earnings, a level well below Turkey or Tunisia which dedicate 2-3% of total tourism earnings to promotion.

Medical Tourism

In recent years, Morocco’s medical tourism segment – in particular the field of cosmetic surgery – has been attracting a growing number of patients from Europe and Africa due to numerous budget airline connections and affordable treatment prices, which are 30-50% lower than in Europe. The first medical tourism centre in Morocco, Malo Clinic Casablanca, opened in 2011 in Dar Bouazza near Casablanca as a result of a Dh200m (€18.3m) investment by Portuguese company Malo Clinica. Since then, the sector has seen steady progress, although the pace of development has been slower than in Tunisia, for example, due to restrictions that allowed only doctors to own private health care facilities in the kingdom. These restrictions were, however, lifted in 2015, paving the way for a rapid development of private clinics and an increasing medical offer for foreign clients (see Health chapter).

The sector’s capacity will be further boosted by the expected completion in late 2016 of Marrakech Health Care City, a $60m high-end health resort developed by Abu Dhabi-based Tasweek Real Estate Development and Marketing. The company has already announced a new $3bn investment cycle to develop similar projects in cities including Casablanca, Tangiers and Agadir.

Human Resources

In the past few years, Morocco has substantially consolidated its training capacities in tourism as a means to meet the sector’s growing need for qualified human resources. Today, there are some 150 training facilities providing vocational programmes in tourism and hospitality. The country’s main public provider of professional training, the Bureau of Professional Training and Employment Promotion (Office de la Formation Professionnelle et de la Promotion du Travail, OFPPT), is also the main training provider for the sector, accounting for 66% of Morocco’s tourism and hospitality students. With 16% of the student body, the MoT oversees 11 institutes and four professional qualification centres, including Higher International Tourism Institute in Tangiers (Institut Supérieur International du Tourisme de Tanger, ISITT), the major public training institution for hotel management. Private institutions, which account for the remaining 18% of students, are mainly located in Rabat and Casablanca. They have played an increasingly important role in the education of tourism workforce over the past decade.

In a bid to meet the increasing need for qualified human resources in the sector, authorities introduced a Training and Human Resources Plan within Vision 2020, which aims to provide 130,000 additional workers to the sector by 2020. The plan includes the development of a new generation of training institutions aligned with international standards. More precisely, authorities are looking to reposition ISITT as a regional reference institute through partnerships with France’s Paul Bocuse Institute, Harvard University in the US and Toronto Universiy in Canada. In addition, authorities plan to create an international hotel management school and regional vocational schools.

The number of trained students has significantly increased in recent years from 2172 in 2001 to 14,082 in 2014. So far, the sector has not experienced any major shortage in trained personnel apart from a momentary deficit seen in Marrakech in 2014. “Though there is still room for improvement, our training system provides a workforce with good-quality standards. Nonetheless, if the sector is poised to double by 2020, training capacities will have to be significantly upgraded to make sure needs in human capital are met,” Samim told OBG. In 2014 the MoT, along with private and public training institutions, outlined a 2014-20 strategy to increase Morocco’s training capacities and improve students’ employability through the re-orientation of training programmes based on operators’ requirements. OFPPT is expected to train 75,000 students by 2020. Similarly, the MoT recently launched an “Excellence” label to certify training facilities to improve overall quality standards and raise tourists’ satisfaction rate from 70% to 90% in the medium term. Authorities are also piloting a vocational baccalaureate programme in tourism and hospitality in Marrakech and Fez, where two new specialities – catering services and culinary arts – have been introduced.

Going Green

Vision 2020 includes a supporting sustainable development plan, which provides for the implementation of a steering body for tourism sustainability and the provision of an environmental subsidy to support the development of eco-territories and innovative, best-in-class products. In January 2016, the MoT signed the Moroccan Charter of Sustainable Tourism, which relies on four pillars: protection of environment and biodiversity, perpetuation of culture and heritage, prioritisation of local development, and the implementation of ethics and equity standards. The charter which includes the implementation of eco-labels and environmental management systems, is expected to encourage operators to implement environmental strategies for impact prevention. As a whole, sustainability standards have been incrementally implemented in the tourism sector in recent years: authorities have made environmental impact studies mandatory for the development of tourism projects. Sustainable parameters have also been included in every programme contained in Vision 2020. For example, Plan Azur includes the completion of integrated water treatment plants in all seaside resorts, with capacity to serve neighbouring cities. It also focuses on the preservation of fauna and flora through reforestation. In Taghazout Bay, all partners have adopted a sustainable development charter with concrete commitments in terms of environmental friendliness and preservation of biodiversity. The resort has also implemented a certification of high-quality environmental standards, known as Haute Qualité Environnementale.

Domestic Market

Domestic tourism is playing an increasingly important part in the development of the tourism sector. In 2014 it generated Dh40bn (€3.7bn) in revenue, accounting for 30% of total earnings. This can be attributed mainly to better road connections. A 2014 study led by the Ministry of Industry indicated that key growth drivers for domestic tourism include Agadir, Marrakech and Casablanca, and that the segment has still further room for growth.

Outlook

According to CFG estimates, Morocco’s tourism sector is set to post 6-7% growth annually until 2020, driven by a diversification of its offering towards beach resorts, city breaks, medical tourism and cultural tours. Still, the kingdom’s potential for tourism remains largely under-explored. While over 1350 tourism assets have been identified, just 350 have so far been developed. To reach its target of 20m tourists by 2020, Morocco will have to overcome many challenges, such as preserving its international image in a difficult regional context, ensuring the growth of qualified human resources, and attracting a high-end clientele while boosting air connectivity.