Mon, 10 January 2022
The Kingdom of Bahrain has a foresighted investment plan in place. Pria Masson Tanwar explores the positive impact of tourism on the economy as part of such plans.
Bahrain’s economy seems to be on an upward trajectory. There are definitive steps towards economic diversification into technology, manufacturing and tourism among other sectors. Of these, tourism made me think, and I realised a number of very concerted steps are already under way. These can be seen through seafront property developments, new entertainment avenues and, of course, a commendable management of the pandemic.
However, the above is simply the tip of the iceberg. The very real value of tourism development is in its vast value chain and the ripple effects that it has across that very value chain. Take for example, the development of the metro project. Once completed, it is likely to generate substantial employment spread across technical and maintenance staff, technology companies, fuel and energy services, cleaning staff, transportation staff, etc. With ease of access, venues across the island will no longer be restricted by location and tourism movement will flow more easily.
Further from infrastructure we have service providers such as travel agents, tour operators and local guides. All the above are likely to provide local employment and local ownership all of which has a significant economic ripple effect. Tourists benefit from ease of payment systems, ease of visa systems integrated with established global protocols. Economies benefit from such digitalisation because digital economies are able to track revenues and money flows better and hence utilise them more optimally.
There is also the obvious impact on hospitality service providers such as hotels and restaurants – which allows real estate to be utilised effectively, generates employment and attracts tourists. The cycle is quite robust and effective in bringing in revenue. It not a surprise then that Bahrain expects that if things go as planned by 2026, there will be around 14 million visitors translating into a tourism revenue of BHD 2 billion.
A key component for tourism provisions is real estate. Real estate costs are often what determine whether a project is successful or not. Government incentives through reasonably priced real estate engaging in tourism is one of the many ways to motivate hospitality service providers. Other economic incentives could include support for salaries when hiring locals (as is the current system), potential tax rebates and national level tourism promotion. In the long run, sometimes, a few freebies can be the best investment that is made.
However, with a small economy and small geographic space, the value lies in integrating with the neighbourhood. Just like the European region acts cohesively and when one destination gains popularity, it has a ripple effect with spill over tourists, the same holds true for any physically proximal countries. The key to unlocking this impact is ease of travel and access between these countries for citizens as well as expatriate visitors.
Tourism has the power to increase liquidity in the economy which is what keeps the economic system running smoothly. Investing in tourism is akin to injecting cash into circulation – but with far more long term benefits and a deeper more robust economic foundation.