“Tourism is a major contributor in the Moroccan economy being the second contributor in national GDP and first contributor of foreign currency reserves. This has been mainly driven by an important investment dynamic in the tourism sector, averaging 45% of total investment agreements signed over the past decade” Yassir Zenagui, Minister of Tourism & Handicraft, Morocco.
Investment in Moroccan tourism had a strong year in 2010. The tourism industry contributed 7.7% towards Morocco’s GDP. Foreign Direct Investment (FDI) in 2010 was 3.3 billion dirham (out of 32 billion dirham) and for the first eight months of 2011, tourism investment has remained strong. It is estimated that by the end of 2011 new contracts will be worth a total of 12.8 billion dirham (Minister of Tourism & Handicraft, Morocco). Not surprisingly therefore Morocco has been voted “African Country of the Future 2011/12” by FDI Intelligence (a division of the Financial Times), making it the ideal host for the Hotel Investment Conference Africa (HICA) taking place in Casablanca over 26 and 27 September.
According to the CEEMA Business Group Morocco, is becoming a top priority for international companies, a phenomenon co-founder Nenad Pacek will delve into during his opening keynote at HICA.
Growth in investment in the sector can be put down to two strategic initiatives. Vision 2010, was created by King Mohammed VI, and aimed to grow tourism and rejuvenate its infrastructure; its ultimate aim was to achieve 10 million visitors per year by 2010 with the additional aim of creating demand for rental accommodation. Vision 2010’s 95% successes according to the Oxford Business Group led ultimately to the creation of Vision 2020, which continues to provide funding and support towards fulfilling Morocco’s aim of becoming one of the world’s leading tourist destinations.
Undoubtedly, both Vision 2010 and Vision 2020 have helped Morocco’s tourism sector rebound from the global economic downturn. International tourism arrivals have increased by 11.4% from 8,341 in 2009 to 9,288 in 2010. Bed capacity during the first eight months of 2011 has been consolidated by the creation of 7000 new hotel beds (investment equivalent of 2.3 billion dirhams - Minister of Tourism & Handicraft, Morocco). Morocco’s tourism share of the entire African continent was 21.2%, second only to South Africa in 2010.
Additionally, airlines have begun increasing flights to Moroccan destinations, for instance, Thomson will add services to Marrakech from Gatwick and Manchester. Ryanair will shortly introduce new flights from London Stansted to Fez and Marrakech, whilst British Airways will fly three times a week from London Gatwick to Marrakech. Additional new routes are also rumoured to be announced from airberlin, bmi and Brussels Airlines. The renewed interest in growing flight paths has been due to creation of the “Open Skies” policy, which allows low cost EU airlines to service Morocco at competitive rates. Since its inception over the last five years international connections have increased from 10 to 40.
According to UK CAA data, the UK market grew by an impressive 38.3% last year from 544,122 passengers to 752,372, representing around 5% of the total Moroccan market. This key topic of airline infrastructure will be addressed at HICA by David Scowsill President and, CEO of World Travel & Tourism Council and Driss Benhima, Chairman & CEO Royal Air Maroc.
Morocco’s benefits have long been of interest to international companies seeking returns from North Africa. The country’s economy is forecast to grow as much as 5.2% in 2012.
Morocco has sought to build on its relationships through the creation Free Trade Zones (FTZs), the biggest being in Tangiers, which offers a number of incentives to investors who create businesses on undeveloped FTZ land. Incentives include “exemptions from: duties and taxes associated with the acquisition of land, license and “urban taxes” for 15 years, VAT on all exported goods, and corporate taxes for five years, with a reduced 8.75 percent corporate tax thereafter”.
Why Property Investment
Morocco offers some of the worlds best property prices, 50% less than European resorts. The country is also in the grip of a booming property market with high capital growth, almost 20% based on 2006 figures.
In an effort to create an amenable environment for hotel owners, Morocco offers no more than 20% tax on any capital gains, and no annual property tax for the first 5 years of ownership.
Morocco has seen massive investment in its hotel sector, led by The National Tourism Investment Association (ANIT), which was established in June 2010 to represent the sectors key investment funds (H Partners, T Capital, Actif Invest and Madaef) as well as developers (Fadesa Maroc, Alliances Developpement Immobiliere) and investors (Risma, Tikida and Palmeraie Devloppement). ANIT and its members have been key supporters of HICA from its inception and have undertaken investment close to 3.6 billion Euro, equivalent to 80,000 hotel beds (Oxford Business Group, The Report: Morocco 2011).
Leaders of its member organisations such as Nafawl Bendefa, Managing Director of Actif Invest, will be speaking at th conference and have increasingly positive views on the lodging sector not just in Morocco but the whole of Africa. According or Nafawl “African lodging remains the best kept secret in the global lodging industry. In short, the next five years are the appropriate time to start investing in the continent and partnering with local players. These markets certainly lack liquidity, but we have all seen how Latin American or Eastern European markets did evolve and I see no reason for the African markets not to have similar progress. In fact, such progress is well underway in Morocco for example where local institutional players (insurance companies and pension funds) are providing this liquidity.”
The sector’s infrastructure has changed considerably in the past decade for instance, total bed capacity has increased by 70% (Oxford Business Group, The Report: Morocco 2011). Five star hotels currently make up just 17% of hotel beds, thus offering a serious investment opportunity for the five-star market.
Regional tourism incentives have also been undertaken to increase the tourism competitiveness of Fez, Casablanca and Agadir. The project for Fez, now in its sixth year, aims to double bed capacity to 10,400 by 1015, triple nightly stays to 1.89 million and raise occupancy rates to 58%. The project will cost an estimated 273 million Euro and is primarily privately financed.
Additionally, Morocco, unlike some of its neighbours, is an open free economy that allows the free movement of money. Banking services are designed the same way as any other EU or Western country with large amounts of companies accepting credit cards. Morocco is considered by some to be as safe an investment destination as France or Spain.
Through the creation of sound strategic plans designed to rejuvenate the tourism sector Morocco has been able to take advantage of investor concerns in other North African countries.