Transforming Kuwait's Tourism Sector - the government as a catalyst for delivering social and economic impact
Despite a history of solid economic growth, Kuwait still faces a series of structural challenges on the road towards achieving key outcomes associated with the country's Vision 2035, writes Armando Cubillan. Overcoming these challenges is essential if Kuwait is to accelerate the diversification of its economic platform and create further growth and development opportunities for its citizens.
Kuwait's tourism sector performance needs to be evaluated through an ecosystem lens
According to the World Travel and Tourism Council, compared to other countries in the Gulf region, the contribution of Kuwait’s tourism sector to the economy is the lowest (as measured by the sector’s contribution to GDP and employment). However, per capita, Kuwait has the biggest internal domestic demand and the largest expenditure on foreign travel and tourism across all countries within the Gulf Cooperation Council (GCC).
Realizing the opportunities generated by the supply and demand gap is difficult due to a weak tourism ecosystem which makes Kuwait one of the world’s worst performers in the sector across dimensions such as overall business environment, skills gap and price competitiveness. Kuwait’s position is further aggravated by the lack of effective integration of tourism into the government’s national agenda.
What if Kuwait’s tourism ecosystem could be drastically transformed for delivering social and economic value?
Since 1976, the Kuwaiti Government has been leading the development of the country’s tourism sector through the incorporation of a key State-Owned Company (SOC) tasked with the delivery of leisure and recreational ‘experiences’ to all residents and visitors. The SOC operates facilities such as amusement parks, sea clubs, marinas, and beaches and owns assets in seven out of the nine categorized tourism-related segments in Kuwait. However the SOC has generally experienced poor financial and operational performance when compared to selected benchmark organizations globally and across the GCC.
It is in this context that the SOC must lead a bold transformation within the tourism sector by advising in regards to catalysing value across the tourism ecosystem. Becoming a catalyst for value-creation across the ecosystem firstly requires envisioning an aspirational state for tourism in Kuwait, and then establishing what needs to change to get there from where we are now - the “change agenda.” This change agenda encompasses market-centric, organisational and cultural elements.
Our proposed approach for delivering social and economic impact
In order to establish a different approach to deliver on the opportunity for change the SOC should drive significant investment in a series of ambitious projects that would catalyse a robust tourism ecosystem. Ecosystem participants – ranging from hotel operators and food and beverage trucks to social media influencers and policy makers - would contribute key enabling functions such as policy re-structuring, education and training, transport and infrastructure, and technology and innovation in order to accelerate the eventual achievement of the goal of bringing Kuwait “back on the map” as a GCC destination of choice.
As its key channel for generating impact throughout the ecosystem the SOC should structure a partnership platform across the tourism and leisure value chain to align much needed resources and capabilities of multiple organisations. The alignment of such organisations will require the SOC to coordinate a shared understanding of common objectives, establish robust governance principles, and set up an agreed operating framework for driving value creation.
Based on data from the World Travel and Tourism Council, Palladium estimates that if the SOC is successful in overcoming existing challenges and realising its aspirations, the company will both create economic value for itself and socio-economic value for Kuwait’s residents. The SOC could achieve more than a two-fold consolidated Return on Assets by 2022. By 2027, it could also generate significant socio-economic benefits for all participants in Kuwait’s new tourism ecosystem by:
- Satisfying close to 80% of the unmet recreational demand of the population;
- Catalysing the potential generation of a six-fold increase in the tourism sector’s contribution to Kuwait’s GDP;
- Facilitating the feasible attraction of nearly USD 13 billion from tourism-related foreign spend; and
- Contributing to the prospective creation of about 195,000 new tourism-related jobs in the country.
Despite clear potential benefits, due to the SOC’s poor historical performance, the drive to change the landscape of the tourism ecosystem in Kuwait is being met with scepticism by the general public and some government institutions. In this regard, is the SOC should establish a clear strategic direction based on desired outcomes, as well as on strengthening core delivery and operational capabilities within the company, aligning the organisation for improved governance and performance, and effectively managing and communicating change across the ecosystem.
A challenging journey ahead, but one definitely worth taking in order to create further growth and development opportunities for all Kuwaiti citizens.