Morocco seeks to increase tourism's contribution to economy

Morocco’s geographical variety, combined with favourable weather and its proximity to key European tourist markets, have made it one of the most attractive and competitive destinations in Africa. The country’s status as a preferred location has been strengthened by its consistently stable political and economic situation relative to the region.

Like most critical sectors in the Moroccan economy, tourism has benefitted from a dedicated sector development strategy, the most recent of which is Vision 2020. However, while arrival figures have been improving, overall results have remained below expectations. This has triggered a re-evaluation of sector policy as the kingdom attempts to increase the sector’s weight in the economy.

Performance

Despite not reaching the target laid out in the current tourism strategy – which aimed to double the number of tourists between 2010 and 2020 to 20m visitors – Morocco has seen a sustained progression of tourist volume. Arrivals rose from 9.38m in 2012 to 12.29m in 2018, according to the Ministry of Tourism, Handicrafts, Air Transport and Social Economy (Ministère du Tourisme, de l’Artisanat, du Transport Aérien et de l’Economie Sociale, MoT). The number of visitors in 2018, which increased by 8.3% on 2017 figures, was largely driven by healthy increases in tourist volume from key source markets. For instance, the number of Italian and US tourists increased by 24% and 20%, respectively, while the number of German visitors jumped by 19% and Spanish arrivals by 15%. Moroccans living aboard constituted nearly half of all international tourists that year, with arrivals from this demographic increasing by 2% and accounting for 46% of visitors. Of the 6.68m non-Moroccan foreign tourists in 2018, 27.6% were French, 12.2% were Spanish and 7.6% were British.

Growth in the number of tourist arrivals continued during 2019, with government figures showing an 8.2% year-on-year (y-o-y) increase through July 2019, with 7.54m arrivals in the first seven months of the year. The number of hotel nights also increased y-oy, rising by 6% to 13.97m. The majority of these, at 9.81m, were bought by non-residents, while 4.16m were purchased by residents.

Economic Impact

In hand with rising passenger numbers, tourism receipts have shown a positive performance in recent years, growing from $6.3bn in 2015 to $7.8bn in 2018, according to the IMF. Tourism receipts rose during the first half of 2019 as well. Over the January-June period tourism income amounted to Dh32.7bn ($3.4bn), which represented a y-o-y increase of 4.2%.

According to IMF projections, Morocco’s tourism receipts are expected to continue their upward trend in the coming years. In 2020 they could amount to as much as $8.2bn and increase to as high as $10bn by 2024. Tourism receipts as a percentage of GDP is likely to stay stable, however. After rising from 6.2% to 6.8% between 2015 and 2017, and registering 6.6% in 2018, tourism’s share of GDP is projected to be 6.4% in 2020 and 6.1% in 2024.

Tourism has proved a consistently strong performer in the economy: between 2000 and 2018 the sector grew at an average of 6% per year. In 2018 tourism accounted for an estimated 833,000 direct jobs, or 7% of total employment in the kingdom, and approximately 1.93m jobs when indirect positions were included, according to the World Travel & Tourism Council. Meanwhile, the MoT recorded the total number of nights sold by hotels and other accommodation at just over 24m that year, an 8.7% increase relative to 2017.

Sector Oversight

Public policy regarding tourism is directed by the MoT, which is in charge of executing the national tourism strategy and putting in place the necessary regulatory measures to facilitate government oversight and monitor private operators’ activities. Under the ministry, the Moroccan National Tourist Office – also known by its brand name, Visit Morocco – is in charge of promoting the Moroccan destination to both domestic and international audiences. Another entity under the umbrella of the ministry, the Moroccan Agency for Tourism Development, is charged with promoting the kingdom to tourism investors. The agency is responsible for mobilising investments, assisting in developing land plots associated with tourism infrastructure in target areas, and channelling public and private investment to specific activities.

Government tourism bodies have moved to increase cooperation with international sector institutions in recent times. Morocco’s rising profile as a global tourism player was demonstrated in September 2019 when the UN World Tourism Organisation voted to host the 24th session of the body’s General Assembly in the kingdom in 2021. The event is set to take place in Marrakech.

Guiding Policy

Vision 2020, the sector’s current development strategy that was created in 2010, has acted as a roadmap to focus efforts on expanding tourism’s footprint. The policy was built around the promotion of six products that are adapted to the kingdom’s competitive advantages: beach and resort offerings; ecotourism; entertainment; sports and leisure; local tourism; and heritage tourism.

Through the development of these segments, Moroccan authorities endeavoured to make the country one of the world’s top-20 tourism destinations by 2020. Other objectives included reaching 20m visitors per year; doubling the number of beds at accommodation units to 400,000; and creating 470,000 new jobs in order to take the total number of sector jobs to 1m. Vision 2020 also underlined the need to increase domestic tourism, and aimed to triple the number of domestic trips and make tourism more accessible to average Moroccans. The plan also stated the goal of lifting annual tourism income to Dh140bn ($14.6bn) and adding an extra two percentage points to the sector’s weight in national GDP. The vision further outlined specific branding and positioning objectives, such as making Morocco the most sustainable tourism destination in the Mediterranean basin.

Execution

Vision 2020 was to be implemented through various subsector strategies unique to the kingdom’s different tourism products. For instance, Plan Azur 2020 aimed to expand the country’s beach tourism offer; Plan Biladi was formed to enhance the domestic travel experience; and the plan for entertainment, sports and leisure was to pair such offerings with existing infrastructure.

Under Vision 2020, policymakers also highlighted the need to strengthen the sector’s tourist operators and other businesses. For this, two programmes were launched. Moussanada Siyaha was allocated a budget of Dh420m ($43.8m) to support 600 small and medium-sized enterprises. The programme was aimed at accommodation providers, tourist transport companies and tour operators, and involved tax breaks and financing to improve information systems and modernise operations. The other programme, Renovotel, was tasked with supporting the increase in hospitality capacity across the kingdom. Although it had been originally established as a renovation fund for the hotel industry in 2003, Renovotel was relaunched in mid-2012 through a partnership agreement among the MoT, the Ministry of Economy and Finance, the National Federation of the Hotel Industry and the National Federation of Tourism. The revamped support mechanism set aside Dh500m ($52.1m) to be used as incentives to encourage private investments of up to Dh1.3bn ($135.4m) for the upgrade of as many as 16,000 beds. The improved Renovotel mechanism also made guesthouses eligible for state financial support.

High Expectations

While helping to grow the tourism sector and boost visitor volume, the implementation of Vision 2020 has fallen short, and many of the goals were unmet as of early 2020. This trajectory was made clear by the kingdom’s Court of Audit in a 2018 report that looked at the strategy’s achievements by 2015, at the midpoint of the plan. The court found that Vision 2020 had been based on excessive optimism regarding the sector’s expansion and that it had not fully capitalised on the achievements made under the government’s previous strategy for the sector, which spanned 2000-10.

Moreover, the court concluded that the strategy’s project application was advancing too slowly, with a mere 37 projects finalised as of late 2015 out of a total 944 projects that were initially planned. The total investment anticipated for those projects was Dh151bn ($15.7bn), yet up until end-2015 only about Dh1.4bn ($145.9m) had been spent, according to the report. Low levels of execution also blunted the efficiency of the Moussanada Siyaha and Renovotel support mechanisms. The court found that although the two programmes had a combined provisional budget of Dh920m ($95.8m), only about Dh37.1m ($3.9m) had been committed through 2015.

With it becoming apparent that Vision 2020 was not fulfilling many of its goals, sector operators and tourism authorities set a new course. In mid-2017 the government and the National Confederation for Tourism (Confédération Nationale du Tourisme, CNT) joined forces and established a new strategy for the sector which would deviate from some of the goals and measures included in Vision 2020. However, the completion of the sector’s upcoming strategic plan has seemingly faced delays. As of early 2020 no new comprehensive strategy for the sector had been made public, although the CNT has continued to meet with its members and the government on how best to relaunch national policy for the sector.

In December 2019 Abdellatif Kabbaj, president of the CNT, stated in a meeting with sector professionals that Morocco’s tourist industry could potentially expand its annual growth in visitor numbers, which have been rising by about 800,000 annually, to 2m. He stated that this could be achieved through several measures. One of the CNT’s suggestions was to strengthen the sector’s digital footprint by expanding tourism players’ online presence and leveraging communications campaigns through the internet. Another avenue for growth is boosting tourist figures from emerging source markets such as India, China and African countries, which would allow Morocco to reduce its dependence on traditional markets such as France and Spain.

Growth can also be harnessed through the development of niche segments. “Morocco is diversifying its offer and focusing on promising niches with high potential, such as sport tourism, medical tourism and ecotourism,” Omar Skalli, CEO of Société Royale d’Encouragement du Cheval, the Moroccan royal equestrian society, told OBG (see analysis).

Key Destinations

The sector’s leisure tourism activity is heavily concentrated in a small number of destinations. A 2018 report by the OECD states that approximately 70% of hotel nights are booked in Marrakech, Casablanca and Agadir. Marrakech indeed continues to be a top location for visitors. In 2019 the city registered nearly 3m tourist arrivals, an 8% increase over 2018, according to the Marrakech Regional Council for Tourism. From January to August 2019, visitors spent 5.56m hotel nights in the city, up from 5.18m during the same period of 2018 and 4.23m in 2010.

Agadir, meanwhile, is a hotspot for beach tourism. The number of hotel nights in the Agadir/Taghazout area reached 4.19m during the January-August 2019 period, compared to 4.11 in the same months of 2018 and 3.32m in 2010. The number of tourists visiting Agadir rose by 6.5% y-o-y to 1.1m over the course of 2019, with the increase driven by a 19.3% rise in French visitors and 17% growth in UK visitors.

Another city experiencing consistent expansion is Essaouira, located north of Agadir. Besides the ancient port and medina, which is undergoing significant renovation work, the city has a varied cultural offering and is near popular surfing and kite surf spots along the coast. Between January and August 2019 hotel nights in Essaouira totalled 358,097, compared to 332,676 during the same period of 2018 and a figure of 203,595 in 2010.

Accomodation

Morocco’s accommodation capacity rose by 7426 beds during 2018, leading to a total of 261,256 beds at the end of the year. Over half of this capacity, at 55%, was in hotels ranging from three stars to five stars and hotel residences, according to the MoT. During 2018 the number of hotel nights booked rose by 9% to just over 24m, and 57% of these nights were in Marrakech and Agadir alone. Some 9% of hotel nights were purchased in Casablanca, which saw its figure rise by 3% in 2018 to over 2m nights, pointing to the city’s increasing attractiveness as the economic capital.

However, data shows that while Morocco continues to attract high numbers of visitors to its main destinations, efforts to expose a larger volume of foreign visitors to the country’s other points of interest have lagged behind. For instance, Fez, which is one of Morocco’s most iconic ancient cities, captured 5% of all hotel nights spent by foreigners in the kingdom in 2018, although total nights in the city increased by 16% that year. High growth potential is also visible in Essaouira, which accounted for 2% of hotel nights, but saw its number increase by 11%.

New Hotels

In line with demand, the building of new hotels has continued across some of the kingdom’s more attractive vacation spots in 2019. India-based hotel developer Oberoi opened its first Moroccan unit in Marrakech in December of that year. The luxury hotel comprises 84 rooms and villas and was established under a partnership agreement with Moroccan group El Alami. In the north of the country African hotel operator Onomo inaugurated a 94-room hotel at Tanger-Med Port in July. Requiring an investment of Dh35m ($3.6m), the unit caters to business travellers visiting the port and associated industrial areas, as well as visitors who use the port to transit to and from the kingdom.

In late 2019 the Radisson Hotel Group inaugurated its five-star Radisson Blu hotel in central Casablanca. The unit has 120 rooms and is the group’s first hotel in Morocco’s commercial capital. Nearby, French hotel company Accor opened two hotels, an Ibis and Novotel, in the city of Mohammedia in January. Meanwhile, Spanish hotel group RIU Hotels and Resorts opened a five-star unit in Taghazout on the Atlantic coast in October. The 504-room hotel is the brand’s sixth location in Morocco.

Other domestic and international brands have a pipeline of projects to expand their presence in Morocco, such as Marriott planning to open a Marriott W hotel in Tangier in 2023. Additionally, a partnership was formed among Morocco’s OCP Group, which handles the country’s phosphate industry; the National Railways Agency; and the Hassan II Fund to develop and manage key state-owned hotels. The alliance will have responsibility for critical hospitality assets such as the Mamounia in Marrakech, the Michlifen in Ifrane, the Jamai Palace in Fez and the Marchica Lagoon Resort near Nador in the north.

Other state investments are helping to expand hospitality capacity as well. In the Fez-Meknez region an investment programme worth Dh2bn ($208.4m) is scheduled to add over 5300 beds to the region’s capacity of 19,000 beds as of the end of 2019. The programme is expected to establish 79 new accommodation units across the region. Some Dh385m ($40.1m) of this will be allocated to Ifrane province to expand its 3000 beds, as of December 2019, to 5000 beds through the construction of 35 new units.

Connectivity

Access to the country’s diverse tourism offerings has been made more convenient through the development of transport infrastructure. In addition to upgrading highway infrastructure to link Morocco’s northern cities with the rest of the country and the Atlantic coast, the opening of a high-speed train connection between Kenitra and Tangier in late 2018 has added travel options for Moroccans and foreigners alike, with more highspeed train links planned for the coming years.

Air travel has intensified, as well, with the number of world cities that have an air link with Morocco growing from 48 to 121 between 2004 and 2018. From January to October 2019 Moroccan airports received 21m passengers, an 11.7% y-o-y increase. The Mohammed V International Airport in Casablanca remains the country’s busiest, accounting for around 40% of all air traffic. From 2009 to 2018 the number of annual passengers through the airport rose from 6.3m to 9.7m and the number of airplane movements jumped from 69,000 to 86,500. In 2019 the facility welcomed over 10m passengers.

Greater air connections are supporting the goal of penetrating new source markets and diversifying the make-up of travellers coming to Morocco. In early 2020 flag carrier Royal Air Maroc inaugurated a direct link between Casablanca and Beijing. The company plans to operate three weekly flights using a Boeing 787 Dreamliner with a 300-seat capacity. The move is likely to encourage more business and leisure travellers from China, and is aligned with government ambitions to increase visitor numbers from high-growth, non-traditional markets. The kingdom’s carrier has also recently increased its links with the US by launching a direct flight between Casablanca and Boston in June 2019. The airliner already had direct links between Casablanca and New York, Miami and Washington. In October 2019 low-cost carrier Ryanair opened a route between Essaouira and Brussels, further linking Morocco with traditional European markets.

Culture

With Morocco aiming to develop its cultural offer as an integral part of the sector’s expansion, an array of investment programmes are helping to both renovate existing historical sites across the kingdom and improve cultural options for citizens and visitors. Early 2018 saw the opening of the Museum of Contemporary African Art in the capital Rabat, and not long after came the inauguration of the Women’s Museum in Marrakech. More recently, in January 2020, Rabat hosted the opening of the National Photography Museum.

Sitting on the bank of the Bouregreg River, Rabat is also set to welcome the Grand Theatre complex by the end of 2020. The project includes an indoor theatre with 1800 seats, an open-air amphitheatre with seating for 7000, a smaller theatre space, workshop areas and a restaurant with panoramic views. The complex is slated to be the centrepiece of a mixed-use district that is envisioned to include shopping, dining and other recreational attractions.

In addition to the opening of new museums and theatres, renovation work on some historical sites is expanding cultural options for tourists. In Essaouira several projects are under way to increase the city’s attractiveness as a tourist destination. One critical project will be the restoration of the city’s ancient medina and port area. Authorities are also mobilising Dh350m ($36.5m) to establish a new culture and arts centre, the funds of which are to come from five ministries and the Marrakech-Safi Regional Council. In January 2020 construction began on a 3.6-ha plot to build a 1000-seat theatre, traditional arts museum, music conservatory and book shop. Completion is set to take 48 months. The city inaugurated a new handicrafts complex that same month. The Dh18.5m ($1.9m) project focuses on training programmes for the region’s artisans and developing the local handicraft offer.

Outlook

Although Vision 2020 has not achieved all of its initial goals, Morocco’s tourism sector is still well poised to continue its steady growth in the coming decade. Many of the country’s natural assets have been complemented by significant investments in infrastructure, and a new detailed policy plan for the sector is expected to continue this trend. Importantly, executing an approach that emphasises offerings along the budget spectrum – from luxury to low-cost – as well as developing niche segments to capture many interests will give the sector a certain level of resilience against external shocks.

As key tourism players around the Mediterranean continue to invest in their offering and hospitality services, competition is likely to grow, most notably to attract visitors from China, India and other countries with a growing middle class and higher disposable income. Although Morocco is perceived as safe with beautiful landscapes, continuous investment to promote the country’s brand to both established and new source markets will be essential going forward.