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MOROCCO
TOURISM REPORT
INCLUDES 5-YEAR FORECASTS TO 2018
ISSN 1752-4210
Published by:Business Monitor International
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CONTENTS
BMI Industry View ............................................................................................................... 7
SWOT .................................................................................................................................... 9
Political ................................................................................................................................................. 11
Economic ............................................................................................................................................... 13
Hotels .................................................................................................................................................. 22
Table: Hotel Accommodation (Morocco 2011-2018) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Table: Hotels and Restaurants Industry Value (Morocco 2011-2018) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
31
31
31
32
Page 4
Methodology ...................................................................................................................... 50
Industry Forecast Methodology ................................................................................................................ 50
Risk/Reward Index Methodology ............................................................................................................... 51
Table: Weighting Of Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Page 5
Morocco benefits from its geographical proximity to key markets in Europe and its perception as a stable
destination in a region where many countries have seen widespread political unrest, which has deterred
potential visitors. The country is expected to welcome over 11mn visitors in 2015, up from 10.5mn in 2014.
Europe is a major source for arrivals but Morocco is increasingly targeting affluent visitors from the Middle
East - and Emirates recently expanded its flight routes into the country from the UAE. Throughout the
remainder of the forecast period, we expect to see steady growth in arrivals, leading to an inbound tourism
figure of 12.7mn in 2018.
The outbound tourism market from Morocco is relatively small, with only around 452,000 tourism
departures expected from Morocco in 2015. Healthy domestic economic growth and increasing rates of
private financial consumption mean that we do expect to see steady growth in the country's tourism market
throughout to the forecast period to reach 577,000 departures in 2018. Most Moroccan tourists are headed to
countries in North Africa and the Middle East - aided by the relative ease and affordability of regional
travel.
Morocco's tourism market benefits from a relatively well-developed transport network, particularly in terms
of air travel, which has been the focus of extensive government investment. Further development is needed
in terms of the road and rail network, particularly in rural areas, in order to expand the reach of tourism
spending throughout the country. The hotel and accommodation sector would also benefit from
development in order to improve facilities and attract more high spend luxury travel visitors. Overall,
however, Morocco is currently well placed to keep up with the expected increases in demand and we see a
bright future for the country's tourism market.
Arrivals are expected to increase by around 5% a year to reach 12.7mn visitors a year by 2018, while the
outbound travel will be much smaller at a forecasted 577,000 departures by the end of the forecast period.
Page 7
Tourism-related expenditure will increase steadily, with transport and travel receipts forecast to reach
USD12.3bn in 2018, up from USD10.2bn in 2015.
The government has announced the construction of a new airport in Marrakech with an expected project
value of USD520mn.
Overall, Morocco is ranked eighth out of 15 countries on the BMI Tourism Risk/Reward Index for the
Middle East and North Africa region with a tourism market score of 45.2 putting it ahead of Iran and just
behind Jordan and Oman.
Key events in 2015 include the Marrakech Marathon, the Almond Blossom Festival, the Imilchil
Marriage Festival, the Festival Gnaoua et Musiques du Monde and a range of other cultural, historical,
sporting and music events.
Page 8
SWOT
Morocco Tourism SWOT Analysis
Strengths
Fairly stable destination, which was not as severely affected as other countries in the
region by the Arab Spring and related protests.
Morocco offers many different types of tourism, from beach holidays to cultural
tourism in locations such as Marrakech.
The country attracts tourists from different parts of the world, with higher numbers of
Arab tourists now complementing already high numbers of visitors from Europe.
Weaknesses
Transport infrastructure needs more development, to attract hoteliers and luxuryseeking tourists, particularly in rural areas.
More utilities infrastructure needed with both water and electricity connections in
need of development.
Opportunities
Large growth potential in arrivals and improving occupancy rates supporting growth.
Rise in tourists requires more hotels, across budget and high-end spectrums.
Smaller destinations outside main cities, such as the Atlas Mountains, attracting more
tourists.
Threats
Infrastructure and resources such as water could be put under pressure by a rapid
increase in tourism numbers and potential overcrowding in hotspots such as
Marrakech, especially once the full effects of low-cost flights from Europe kick in.
Page 9
Page 10
Political
SWOT Analysis
Strengths
Reverence for the monarchy has helped minimise anti-regime sentiment in the key
institutions of government and throughout much of the broader population. This has
reduced the risks of a Tunisia-style revolt while helping ensure the loyalty of the
security services should such a scenario unfold.
Strong diplomatic ties with the US government and increasingly warm relations with
wealthy states throughout the GCC should help anchor increased investment from
these countries over the long term.
Weaknesses
As the eruption in anti-government demonstrations since the start of 2011 has made
clear, antipathy towards the reign of Mohammed VI is strong amongst certain
segments of the population. Were the economic environment to worsen markedly and
the pace of political liberalisation to remain placid, popular opposition could become
increasingly directed towards the monarchy itself.
Decision-making power rests within a small circle of the royal family and political elite.
This alienates large segments of the population and clouds the trajectory of policy
formation for many investors.
Opportunities
Recent overtures to Algeria that have sought to resolve the underlying issues that
resulted in the closure of the land border between the two countries would strengthen
Morocco's political risk profile should they bear fruit.
Threats
As the terrorist attack in Marrakesh in April 2011 highlighted, security risks for foreign
visitors are not non-existent despite the government's ongoing efforts at diminishing
the power of extremists.
Page 11
Given high unemployment, the lure of radical militancy will continue to appear as a
way out for young people, as the significant number of Moroccan nationals fighting
with radical jihadist group Islamic State (IS) in Iraq and Syria attests.
Page 12
Economic
SWOT Analysis
Strengths
A low base (GDP per capita is estimated at around USD3,000) and strong growth
potential in the tourism, renewable energy and export-oriented manufacturing
industries, are making the economy an increasingly attractive destination for foreign
investment.
The central bank has proven relatively effective at tackling inflation despite the limited
monetary policy tools at its disposal.
Given the unprecedented events that have emerged across North Africa concomitant
with the ongoing Arab Spring, Morocco is projected to be a relative economic
outperformer over the coming five years.
Weaknesses
Dependence on the agricultural sector means growth remains prone to volatile swings
in accordance with unpredictable weather patterns.
Reliance on southern Europe as the main destination for exports provides little cause
for optimism given the eurozone's weak medium-term growth outlook.
Large government expenditure on subsidies and public sector wages not only widen
the budget deficit but also crowd out more productive capital investment.
Opportunities
Relatively low wages and historic or linguistic ties with southern Europe, the GCC and
Western Africa should make the economy an attractive destination for investors.
The banking system remains relatively underdeveloped, which could see financial
institutions from more developed economies enter the market over the coming years.
The government has embarked on subsidy reform since the start of 2014.
Lower oil prices would relieve pressure on the current and budget accounts, and
strengthen Moroccans' purchasing power.
Page 13
Threats
Page 14
Industry Forecast
BMI View: We are forecasting robust and sustained growth for Morocco's tourism market, with steady
increases expected in terms of both inbound arrivals and outbound departures through to 2018. As visitor
numbers increase, we except to see healthy growth in tourism-related expenditure and an overall boost to
tourism industry value, making tourism an increasing contributor to the Moroccan domestic economy and
the focus of increased public and private investment.
Morocco has recovered from disappointing growth in arrivals in 2011 and 2012 to an extent, when the
tourism industry was affected by the economic crisis in the eurozone, which impacted upon arrivals from
several major source markets, such as France and Spain. Arrivals were also affected by the after-effects of
the April 2011 suicide bomb attack on a popular tourist caf in Marrakech, which killed 16 people, as well
as uncertainty ahead of the parliamentary election of November 2011 - a period marked by several
demonstrations across the country. The elections passed peaceably and, in general, Morocco appears to have
escaped the unrest that affected many of its neighbours.
Arrivals largely recovered in 2013 and 2014, and we are expecting to see solid growth in the inbound
tourism market moving forward; by 2018, we expect arrivals to Morocco to reach 12.7mn, up from 11.1mn
in 2015. Morocco's outbound tourism market is also growing rapidly, boosted by an expanding domestic
economy, which is improving private financial consumption. Outbound travel is forecast to increase from
452,000 to 577,000 in 2018 - a substantially smaller market than the inbound tourism market meaning
inbound travel is likely to remain the focus of investors for the foreseeable future.
Page 15
2019f
2018f
2017f
2016f
2015f
2014e
2013e
2012
2011
2010
2009
0
2008
0
2007
2006
5,000
2005
10
2004
10,000
2003
15
2002
15,000
e/f = BMI estimate/forecast. Source: Morocco Tourism, National Statistics Office, BMI.
Morocco's physical infrastructure has benefited from sizeable investment and government attention in
recent years, and both transport infrastructure and utilities have effective pipelines currently. The country is
improving its international air travel connections through airport expansion works, and the large
development of the port of Tangiers is being revamped to cater for the world's largest cruise ships.
Government estimates put additional capacity at 300,000 extra cruise tourists in 2016 and 750,000 by
2020. Travel connections to rural areas are still lacking and the accommodation sector would benefit from
further investment.
Overall, the increases in inbound and outbound travel will have a positive impact on tourism related
expenditure, which we expect to increase steadily between 2015 and 2018. At the same time, industry value
will also improve, and gradually contribute more to Morocco's national economy. It is, therefore, likely to
be the focus of greater volumes of government investment which will help to secure the long-term
sustainability of the tourism industry.
Page 16
Inbound Tourism
Inbound arrivals to Morocco increased by a healthy 5% in 2014, to just over 10.5mn. In 2015, we expect to
see similar growth with arrivals set to increase to 11.1mn. Throughout the remainder of the forecast period,
as Morocco improves its international travel connections, we expect to see similar annual growth rates with
total arrivals forecast to reach 12.7mn in 2018 - a very competitive tourism market in the region.
Europe will remain the key source markets for arrivals to Morocco, accounting for just under 4mn arrivals
in 2015. Arrivals from this region are expected to increase steadily - Morocco is an affordable holiday
destination and could benefit from a slowdown in the eurozone as it will attract more budget holiday
visitors. Total arrivals from Europe are expected to reach 4.7mn in 2018. At present, no data are available
for a further breakdown in arrivals.
Morocco is working to attract more visitors from other markets. In late 2014, the tourism office and the
Moroccan Company for Tourism Engineering agreed a strategic partnership with China to increase Chinese
tourist arrivals to Morocco and provide for more investment opportunities for Chinese companies. Over the
longer term, this could prove lucrative for Morocco's tourism market.
2011
Total arrivals, '000
2012
2013
2014f
2015f
2016f
2017f
2018f
9,342.13 9,375.16
10,046.26
10,548.58
11,076.01
11,629.81
12,560.19
12,723.58
0.4
7.2
5.0
5.0
5.0
8.0
1.3
3,510.96 3,508.76
3,603.30
3,783.46
3,972.63
4,171.27
4,504.97
4,563.57
2.7
5.0
5.0
5.0
8.0
1.3
0.6
-1.2
-0.1
France remained the most important tourist source market for Morocco in 2014, with 1.86mn tourists
arriving over the course of the year, according to our forecasts. We expect this number to rise in 2015 to
reach 1.93mn and increase further throughout the forecast period to reach 2.16mn in 2018. Morocco's
second most important source market is Spain. However, Spanish tourists totalled less than half of
France's, at 776,000 in 2014. Arrivals from Spain are forecast to rise to 944,000 by 2018.
Page 17
Continuing this positive note, arrivals from other important source markets, Belgium, Germany and Italy,
all increased sharply in 2014 and are set to continue expanding. Belgian arrivals will rise to 298,000 in
2015. German arrivals will grow to 264,000 and Italian tourists will top 240,000. By 2018 these should
reach 335,000, 306,000 and 251,000 respectively.
Britain, currently the third biggest market by arrivals, is being targeted as a key source market and the
tourism ministry is aiming for over 1mn UK tourists a year, though such a large figure seems unlikely in the
short term. We do not think that such an aim will be achieved in our current forecast period, and project
2015 tourist numbers to be in the region of 431,000, rising to just over 566,000 by 2018. There are some
concerns in late 2014 that arrivals from Britain will be affected by the controversial imprisonment of a
British tourist, with hotel searches reportedly down by 46% in the latter half of the year. It is unlikely this
will have a substantial long-term impact on arrivals from the country however.
2011
2012
2013
2014f
2015f
2016f
2017f
2018f
1,775.96
1,769.71
1,769.71
1,858.22
1,925.33
2,001.18
2,147.04
2,160.17
Spain
693.26
730.88
730.88
776.13
813.28
854.90
927.60
943.85
UK
352.14
357.35
357.35
395.29
431.48
472.46
534.02
566.02
Belgium
258.62
255.29
272.59
286.76
297.66
309.97
333.17
335.83
Germany
219.58
199.35
237.85
252.44
264.38
277.76
301.22
306.33
Italy
211.41
196.19
234.91
214.63
240.52
255.01
261.91
251.37
France
Outbound Tourism
Morocco is poised for a rebound in economic growth over 2015, driven by improvements in the external
sector and investment outlook. Both manufacturing exports and tourism should continue to strengthen,
benefiting from a slight uptick in eurozone economic activity as well as growing diversification towards the
Middle East and Africa. We also expect a moderate acceleration in household consumption on the back of
lower international food and oil prices, as well as a recent hike to the minimum wages of both the public
and private sectors. Overall, we forecast real GDP growth to rise to 4.0% in both 2015 and 2016 - in line
with the average annual growth rate of 4.1% recorded between 2009 and 2013, and making Morocco one of
the best performers in the Middle East & North Africa region.
Page 18
The healthy economic outlook will benefit outbound departures from Morocco, which we expect will
expand by 7.9% in 2015 to reach over 452,000. Although the outbound travel market is currently small, it is
expanding rapidly with growth of over 8% a year forecast throughout the remainder of the forecast period.
Therefore, by 2018, we anticipate outbound departures to reach over 577,000. We expect to see growth in
travel to all markets with the exception of North America which may see minor declines - North America is
an expensive long haul destination and at risk of losing out to more affordable regional destinations.
Europe is the most popular region for departures from Morocco, accounting for some 173,750 departures in
2015, increasing to 237,620 departures in 2018. The Middle East is not far behind, with Moroccan visits
forecast at 136,400 in 2015, rising to 167,500 by the end of the forecast period. Africa is also a popular
region, due to the relative ease and affordability of regional travel, and departures to Africa are expected to
reach 148,240 by 2018.
2011
Outbound, total departures, '000
Outbound, total departures, % y-o-y
2012
2013e
2014f
2015f
2016f
2017f
2018f
-13.6
8.1
8.1
7.9
8.4
8.8
8.3
12.95
11.03
11.75
12.51
13.31
14.25
15.32
16.40
4.6
8.2
2.6
4.4
7.7
8.2
8.6
6.6
26.00
21.59
21.46
21.33
21.20
21.06
20.92
20.76
5.3
-16.9
-0.6
-0.6
-0.6
-0.7
-0.7
-0.7
1.55
1.60
1.74
1.89
2.10
2.20
2.36
2.54
13.27
2.64
8.84
9.10
10.77
4.62
7.56
7.54
0.21
0.23
0.24
0.27
0.29
0.31
0.33
0.36
111.9
7.5
6.1
9.0
8.6
7.6
7.1
7.5
-21.6
13.3
12.5
9.7
10.4
11.4
11.1
-19.3
9.1
7.7
7.1
7.3
6.9
7.1
Morocco's top ten destinations by departures list is dominated by countries in the Middle East and Africa,
which account for eight out of the ten positions. Italy sits in third spot, with an estimated 90,000 visitors
Page 19
from Morocco in 2015, increasing to 112,000 by 2018. The USA is currently in 6th position, but with
departures to North America set to decline over the forecast period we expect the USA to be overtaken by
Algeria, currently in 7th position, by the end of the forecast period.
Saudi Arabia and Turkey are currently the most popular destinations for tourists from Turkey, together
accounting for some 200,000 departures in 2015, and increasing in popularity throughout the forecast period
to reach approximately 250,000 in 2018. Morocco is increasing ties with Saudi Arabia (which in turn is
investing heavily in the Moroccan tourism industry) and benefits from a multitude of travel connections
with Turkey. With the exception of the USA, departures to all countries are expected to increase throughout
our forecast period.
2011
2012
2013
2014f
2015f
2016f
2017f
2018f
108.34
81.11
89.66
97.88
106.14
115.12
124.26
134.15
Turkey
68.65
77.90
82.00
87.28
90.38
95.22
103.66
112.80
Italy
87.00
43.00
55.31
67.14
79.04
91.97
105.13
119.36
Egypt
44.12
47.13
48.45
50.62
54.20
58.83
64.57
68.06
Tunisia
32.26
36.63
36.82
37.60
40.75
44.01
47.33
50.92
USA
26.00
21.59
21.46
21.33
21.20
21.06
20.92
20.76
Algeria
17.22
18.80
19.90
21.61
23.33
25.20
27.10
29.15
Kuwait
11.45
12.10
12.98
13.67
14.25
14.89
15.52
16.31
Lebanon
6.32
6.22
6.28
6.33
6.38
6.42
6.45
6.48
Jordan
3.34
4.02
4.07
4.01
3.96
3.90
3.84
3.79
Saudi Arabia
Of this the majority will come from travel items. International tourism receipts for travel items are
expenditures by international inbound visitors in the reporting economy. The goods and services are
Page 20
purchased by, or on behalf of, the traveller or provided, without a quid pro quo, for the traveller to use or
give away. These receipts include any prepayment made for goods or services received in the destination
country. They also may include receipts from same-day visitors, except in cases where these are so
important as to justify a separate classification. Travel items can include sun cream and other common
travel accessories, travel luggage bought in Morocco, tickets to get into national parks, cruise excursions,
for instance. We are forecasting growth of just over 6% for travel items receipts in 2015 to USD10.2bn increasing further to USD12.3bn by the end of 2018.
2011
9.10
8.49
8.89
11.3
-6.7
4.7
7.9
6.2
5.4
8.7
5.5
1.78
1.79
1.57
1.71
1.83
1.94
2.12
2.25
20.8
0.8
-12.4
8.8
6.9
6.0
9.6
6.0
14.41 15.50
16.0
7.5
-14.8
8.4
8.0
6.6
9.6
6.0
1.28
1.41
1.19
1.28
1.46
1.62
1.77
1.88
15.2
10.3
-15.7
7.2
14.6
10.4
9.6
6.0
7.32
6.70
7.32
7.88
8.35
8.79
9.2
-8.5
9.2
7.7
6.0
5.3
59.27 57.84
9.54 10.06
8.5
5.4
4.97 -2.40
6.18
7.25
7.11
5.87
8.53
5.37
5.27
5.27
5.54
5.88
6.68
7.33
7.95
8.38
4.2
0.1
5.1
6.0
13.7
9.7
8.5
5.4
Transport receipts will also bring in over USD1.8bn in 2015, increasing steadily throughout the forecast
period to reach USD2.3bn by 2018. These items cover costs by tourists on all tourist transportation within
Poland, fares on buses, railways, airplanes and boat trips where the company operating is domestic, carrier
charges and fees, excess baggage fees, car transportation costs, package holiday trips within that country
excluding cruises, possibly car hire within that country, food and drink costs the transport in question.
Page 21
As the table below shows, the majority of tourists come via air to Morocco, however, railways represent one
of the main and most efficient means of travelling within Morocco and their heavy usage by domestic and
international tourists has led to a number of investments and new developments, as discussed in the Market
Overview section. These expansions will result in domestic rail traffic rising from 5.8mn in 2015, to 6.6mn
by 2018.
As arrivals from key international source markets increase, we expect to see greater volumes of
international passengers on domestic airlines, which we forecast will increase from 7.7mn in 2015 to around
9.5mn in 2018 - this represents substantial growth throughout the forecast period. At the same time, the
number of airline take-offs will also increase rapidly, from 69,240 in 2015 to 83,390 in 2018. It is essential
that Morocco continues to invest in expanding and improving its air travel capacity in order to keep up with
the expected increases in demand.
2011
2012
2013e
2014f
2015f
2016f
2017f
2018f
International passengers on
domestic airlines, mn
7.5
6.6
6.7
7.2
7.7
8.2
8.9
9.5
International passengers on
domestic airlines, % y-o-y
5.0
-12.5
2.3
6.9
6.8
7.3
7.8
7.4
69.94
61.16
61.95
65.50
69.24
73.53
78.41
83.39
-7.1
-12.6
1.3
5.7
5.7
6.2
6.6
6.4
6,571.35
9.6
0.0
6.7
6.2
5.6
4.9
4.4
4.0
Hotels
The hotels sector in Morocco is set to see strong growth over the next few years as tourist numbers get back
on track and hotels flock to invest in the country. There are currently around 40 new hotels being built and
franchises are also expanding rapidly, particularly for some of the larger international hotel groups. The
number of overnight stays has recovered and continues to grow, reaching 20,373 in 2015 and expected to
reach over 23,000 by the end of 2018.
Morocco's hotel occupancy rate is expected to hold steady at around 43%, despite the expansion of the
number of inbound tourist arrivals as this growth will be somewhat offset by an expansion in the number of
Page 22
hotel rooms available. There is still plentiful room for development in the country's hotel and
accommodation sector however, particularly in underdeveloped rural and coastal areas, which are attracting
greater numbers of tourists but do not currently have the supporting infrastructure in place.
2011
Total overnight stays, '000
2012
2013e
2014f
2015f
2016f
2017f
2018f
23,171.8
-6.4
3.6
6.5
4.6
4.6
4.6
7.4
1.2
Occupancy rate, %
40.0
40.0
43.0
43.0
43.0
43.0
43.0
43.0
e/f = BMI estimate/forecast. Source: Ministry of Tourism Morocco, BMI Calculation. Occupancy Rate = Room occupancy
rate
The increase in hotel numbers, at both the high end and budget levels, will result in steady growth in hotel
industry value. Although the rate of growth saw a slight slowdown in 2014, following the projected influx
over December 2013, between 2015 and 2017 we are expecting steady y-o-y growth of around 7%. As such,
we are forecasting that the hotel industry value will rise from USD2.8bn in 2015 to USD3.4bn by 2018.
This represents around 2.5% of GDP, while the total tourism industry contribution to GDP is estimated at
around 9%. Throughout the forecast period the hotel and restaurant industry value per capita (and per
employee) is expected to increase steadily, reflecting the growing importance of the tourism industry to
Morocco's economy.
2011
2012
2013e
2014f
2015f
2016f
2017f
2018f
18.85
19.75
21.47
22.02
23.41
25.07
26.91
28.86
-3.1
4.7
8.7
2.6
6.3
7.1
7.3
7.3
2.3
2.3
2.6
2.6
2.8
3.0
3.2
3.4
0.9
-1.8
11.9
2.9
5.3
6.5
7.3
7.3
1.7
1.8
1.9
2.0
2.2
2.5
2.6
2.8
-3.7
7.4
7.6
1.4
12.9
10.9
7.3
7.3
Page 23
2011
2012
2013e
2014f
2015f
2016f
2017f
2018f
2.3
2.4
2.5
2.5
2.5
2.5
2.5
2.5
72.64
70.29
77.47
78.60
81.62
85.84
91.03
96.58
-0.4
-3.2
10.2
1.5
3.8
5.2
6.1
6.1
9,373.29
-6.1
-2.7
5.0
1.0
0.4
0.9
1.4
1.3
f = BMI forecast. Source: National Statistics Office, Morocco High Commission For Planning, BMI Calculation.
Overall, we see a very bright future for Morocco's tourism industry. As the country improves its regional
and global transport links we expect to see greater tourism arrivals throughout the forecast period. Although
small by comparison, Morocco's outbound travel market is also demonstrating robust and sustained growth.
As such, we are also forecasting an increase in tourism related expenditure and an overall increase in
industry value. Although Morocco will need to ensure it invests in expanding and modernising key
infrastructure (such as the hotels, utilities and transport network) at present it is relatively well placed to
keep up with the expected increases in demand.
Page 24
This section gives an evaluation of the tourism market's size and growth potential in each state, along with
broader industry/state characteristics that may inhibit or enhance its development. The reward scores for
tourism take into account the numbers and percentage growth of tourist arrivals over the past year and our
forecasts for future growth beyond 2015. Morocco has experienced steady growth in tourism arrivals,
though it may lose out to European destinations such as Greece. The overall figures for tourism receipts and
hotel occupancy were similarly enhanced and offset, and factored in accordingly, giving Morocco a tourism
market figure of 51.67 - joint second highest in the region behind the UAE.
The country structure score takes into account labour costs and infrastructure. Morocco has an
underdeveloped transport network across much of the country, with road and rail networks extremely
limited in rural areas. Labour is relatively inexpensive, however. The country continues to invest in
expansion and improvement of the transport network, but there are still significant inroads to be made at the
time of writing. Morocco has a low country structure score of 25.16, the lowest in the region.
Risks
This section offers an evaluation of industry-specific dangers and those emanating from the state's political
and economic profile that call into question the likelihood of anticipated returns being realised over the
assessed time period. Morocco achieves a middling score of 54.84. The market risks score takes into
account short-term political stability and regional stability, which is relatively secure in Morocco. It also
considers Morocco's vulnerability to external factors, such as threats posed by large-scale illegal
immigration and regional security concerns. Overall, Morocco has a score of 58.16 for market risks, about
average for the region.
Finally, BMI's proprietary country risk scores cover corruption, legal framework, bureaucracy, market
openness and security risks. Morocco again has an uninspiring score of 52.12, reflecting the concerns
surround the openness of the market and transparency in the business environment. Overall, Morocco is
ranked eight out of 15 countries in our Tourism Risk/Reward Index for the Middle East and North Africa
region with a tourism market score of 45.20 putting it ahead of Iran and just behind Jordan and Oman.
Page 25
Rewards
Risks
Limits of
potential
returns
Tourism
Market
Country
Structure
Risks to
realisation of
potential returns
Market risks
Country
Risk
UAE
66.31
68.33
63.28
62.73
78.15
50.10
65.23
Israel
60.00
50.00
75.00
61.06
61.85
60.41
60.32
Qatar
52.15
48.33
57.88
64.91
73.73
57.69
55.98
Bahrain
50.55
51.67
48.86
66.76
68.00
65.75
55.41
Saudi Arabia
48.12
55.00
37.79
60.04
72.51
49.83
51.69
Jordan
47.22
51.67
40.54
60.08
60.91
59.39
51.07
Oman
39.37
43.33
33.43
60.51
75.63
48.14
45.71
Morocco
41.07
51.67
25.16
54.84
58.16
52.12
45.20
Iran
44.30
50.00
35.74
39.99
58.75
24.65
43.00
Kuwait
33.13
25.00
45.33
62.58
67.48
58.58
41.97
10
Yemen
40.19
50.00
25.48
42.50
54.58
32.62
40.88
11
Lebanon
35.87
36.67
34.66
51.40
56.56
47.17
40.52
12
Tunisia
34.78
29.17
43.19
51.50
57.27
46.79
39.79
13
Egypt
31.19
23.33
42.96
49.49
55.22
44.81
36.68
14
Iraq
37.67
30.00
49.18
31.53
52.81
14.11
35.83
15
Tourism
Index
Rank
Source: BMI
Page 26
Market Overview
BMI View: Morocco's tourism industry is experiencing a period of rapid growth, with solid increases
expected in terms of inbound and outbound travel throughout our forecast period, though inbound arrivals
will remain by far the more substantial market. In order to keep up with demand the country is investing in
expanding its transport infrastructure network, as well as the hotel and accommodation sector. Many
projects are being undertaken with international investment partners, bring additional expertise to the
development of the market.
The transport network in Morocco has expanded rapidly in recent years, benefiting from targeted
investment programmes. The country's main airport is Mohammed V International Airport, 30km south-east
of Casablanca. It is Africa's fourth-busiest in terms of total passenger traffic. All Moroccan airports are
operated by the state-run Office Nationale des Aroports (ONDA). Mohammed V Airport is served by
some 45 airlines, according to ONDA website. The country's aviation industry is regulated by the
Directorate of Civil Aeronautics.
ONDA manages Morocco's 12 international and four domestic civilian airports. These are Al Massira
(Agadir), Cherif el Idrissi (Al Hoceima), Anfa (Casablanca), Mohammed V (Casablanca), Moulay ali Cherif
(Errachidia), Mogador (Essaouira), Saiss (Fes), Hassan I (Laayoune), Menara (Marrakech), El Aroui
(Nador), Ouarzazate, Angads (Oujda), Sale (Rabat-Sale), Ibn Batouta (Tangiers) and Saniat R'Mel
(Tetouan).
The Moroccan national flag carrier is Royal Air Maroc (RAM), which operates a fleet of 40 aircraft out of
its hub at Mohammed V to over 90 domestic and international destinations. In June 2012, Belgian budget
airline Jetairfly started twice-weekly services linking Rabat and Brussels. Other expansions have been
completed at Oujda and Dakhla. Many airlines are expanding their routes to Morocco: UAE-based
Emirates airline increased services to Morocco by launching a second daily flight on the Casablanca-Dubai
route in late 2014. The move will boost the airline's service to 14 weekly flights between the two cities.
Emirates also upgrade its aircraft on the route from an Airbus A340-500 to a Boeing 777-300ER. The new
service and the aircraft replacement together will double the company's weekly capacity by offering 2,520
additional seats in each direction. The move will boost trade and tourism ties between the two nations.
In recent years, Morocco has invested heavily in its airport infrastructure. In January 2012, a new
MAD280mn terminal opened at Rabat-Sal Airport, with annual capacity of 1.5mn passengers. This is part
of a wider transport construction trend seen in the country with Morocco keen to expand its regional and
Page 27
global travel connections. The government has announced plans to construct a new airport in the capital,
Marrakech. On July 2 2014, a meeting chaired by Minister of Equipment, Transportation and Logistics Aziz
Rebbah analysed the prospects of the new airport in the city. Rebbah stated that the construction cost of the
project could reach MAD4.3bn (USD520mn). With a capacity of 10mn passengers annually, the new
Marrakech airport will address the existing problems of the current city airport, whose development has
been halted by rising urbanisation. The meeting was organised to discuss the various potential locations for
the new airport, which should be situated within 30km of the city. Neighbourhoods, including Sidi Zouine
and Sidi Bouatmane, have been identified as possible sites for the new airport.
Project Name
Sector
Value
(USDmn)
Size
Unit
Airports
520
10
mn passengers/
yr
At planning stage
Status Select
Status Notes
July 2014
Rail travel is also the focus on investment, which will help to improve the domestic reach of tourism within
the country. Morocco's national rail company Office National des Chemins de Fer (ONCF) is investing
heavily in Morocco's transport infrastructure, with a USD13bn investment plan running to 2035. Plans
include the construction of almost 2,000km of major rail lines linking the country's largest cities, as well as
urban rail and high-speed lines. A consortium has been awarded a contract to design and build a new highspeed railway track in Morocco. Colas Rail, Colas Rail Maroc and Egis Rail will undertake the project,
which will involve the construction of a 183km line between Tanger and Kenitra. Trains will be capable of
travelling at speeds of up to 320km per hour on the line, which is scheduled for completion by the end of
2015.
However, the most notable transport development to impact tourism will be the new expansion of the Port
of Tangiers. Already Morocco's main maritime gateway, the port will have new facilities able to
accommodate even the largest cruise ships currently in operation. These developments are expected to bring
in an additional 300,000 tourists by 2016 and 750,000 by 2020, according to the Moroccan government.
The hotel market in Morocco is relatively well developed, particularly in well-established tourism
destinations, such as Casablanca and Marrakech. Morocco offers a range of accommodation, from hotels
and motels through to individual guest houses, self-catering and other forms of private accommodation.
Page 28
Many of the top global hotel groups already have at least some presence in the country, and some are
planning to expand their reach further.
Hotel Group
Presence in Morocco
Accor
Best Western
Best Western
Choice International
No Presence
Carlson Rezidor
Hilton
The HIlton group have one hotel in Rabat, Hilton, Hilton Garden Inn
and two more hotels in under development
in Tangier: The Hilton Tanger City Centre
Hotel & Residences and Hilton Garden Inn
Tanger City Centre are scheduled to open
by 2015.
Hyatt
Hyatt has one hotel open and others under Hyatt Regency, Park Hyatt
development. These include the Hyatt
Regency Casablanca, and the Park Hyatt
Marrakech
No Presence
Marriott
No Presence
Starwood
One hotel in Marrakech with a second due La Meriden, Sheraton, W (from 2017)
to open in 2017 and two hotels in
Casablanca.
Wyndham
Radisson Blu
Ramada
Source: BMI
Major international players with operations in the country include Accor, Four Seasons, Hilton, Hyatt,
RIU Hotels & Resorts and Starwood Hotels. Starwood is planning to open a new hotel in Marrakech
under the W brand in 2017 adding 148 rooms to its portfolio. Hilton is also opening a new property in
Tangier in early 2015.
Among the domestic hotel companies, Kenzi Hotels operates eight four- and five-star hotels in Agadir,
Casablanca, Errachidia, Marrakech and Ouarzazate. RAM also operates a hotel subsidiary called Atlas
Hospitality Morocco, which has 14 properties across the country. The best known hotel in Morocco is
perhaps the Mamounia in Marrakech, which is part of the Concorde Hotels Group.
Page 29
Many other large hotel groups are expanding into Morocco. Spain-based Meli Hotels International has
entered into an agreement with Socit de Dveloppement Saidia to manage three new properties in Saidia
Med. The first, a beach hotel, will have 396 rooms and offer facilities such as a spa, a convention centre,
four restaurants, as well as a kid's club. The property will require an investment of MAD440mn
(USD52.94mn) and will be opened in 2016. The second hotel, which will be equipped with 150 rooms, is
expected to start operations in 2016 and require an investment of around MAD200mn (USD24.06mn). The
third property, comprising luxury holiday apartments near the beach hotel, will have 190 fully equipped
rooms. It will require an investment of MAD300mn (USD36.09mn) and is expected to open in 2017.
Developments such as these reflect the widely held confidence in the Moroccan tourism industry. The
country is increasingly attracting international investors. Qatar, Saudi Arabia, Kuwait and the UAE, will
invest MAD6bn (USD737mn) in tourism infrastructure in Morocco, according to a statement from
Morocco's royal cabinet in mid 2014. The investment in the port of Casablanca will be the first of several
tourism infrastructure projects undertaken by the Wessal Capital joint venture and will include the
development of hotels, a port for cruise ships, a marina and a renovated medina.
In a separate agreement a group of Saudi and US investors are reportedly planning to invest USD1.3bn in
various hotel, tourism and recreation projects in Morocco. The private investment group has agreed with the
government to set up projects in the southern Taroudant town where some 8.7mn square metres have been
allocated for the projects, which include three 4-star hotels, restaurants, a golf course and tourist resort targeting an ambitious 2mn tourism arrivals annually.
Morocco is keen to expand its reputation as an historical and cultural tourism destination, particularly in
order to attract more visitors from affluent Middle Eastern markets. The country has no shortage of tourism
attractions with nine UNESCO World Heritage Sites including the Archaeological Site of Volubilis, the
Historic City of Meknes, the Medina of Fez and the Medina of Marrakesh. A further 12 sites are under
consideration for inclusion. Morocco also has an extensive and attractive coastline, the beautiful Atlas
Mountains and world-renowned shopping districts.
With a range of attractions to entice new and returning visitors and gradually improving regional and global
air travel connections, we expect to see healthy and sustained growth in Morocco's tourism market going
forward. The country continues to win foreign investment, both private and through collaboration with other
governments, which will help to develop the transport and accommodation sector to a higher standard.
Overall, we believe the future is looking bright for tourism in Morocco.
Page 30
Competitive Landscape
BMI View: Morocco's hotel sector is well developed and many of the top global hotel groups already have
a presence in the country. A number of large regional hotel groups are also active in Morocco, as are a
variety of small- to mid-range domestic hotel groups. Accommodation options range from small boutique
hotels through to large ultra resorts combining several hotels. With visitors numbers set to increase
steadily, we expect to see further developments in the Moroccan hotel market moving forward.
Accor
Accor is one of the leading foreign hotel chains in Morocco with a presence in the following cities: Argadir,
Ourazazate, Tetouan, Fnideq, Casablanca, El Jadida, Essaouira, Fes, Marrakech, Meknes, Oujda, Rabat, and
Tangier. The company is committed to the local market as shown by its sizeable investment of USD200mn
in Morocco between 2011 and 2013. This investment has allowed Accor to become the leading international
hotel company in Morocco with around 40 properties. Moving forward the company is planning on
focusing on the lower end of the spectrum, via its Ibis and ibis Budget brands in the future. Other brands
present in Morocco include Sofitel, Pullman, Mcgallery, Novotel and Mercure.
Page 31
BlueBay Group
BlueBay Group is a medium-sized hotel and tourism company. The group has 52 affiliated hotels located
in 27 destinations, offering a portfolio of over 12,800 rooms. BlueBay sells several million overnight stays
per year. Hotels are operated under several brands: Blue Diamond, BlueBay Hotels & Resorts, BelleVue
and BlueCity, as well as Blue Gourmey and Blue Spa. These cater to a range of markets, from budget city
centre hotels through to high end luxury resorts. The group aims to expand its portfolio in 2015 through the
acquisition of new properties - targetting Spain, Bulgaria, Croatia, Egypt and Morocco.
Rusticae
Rusticae is a boutique hotel group that was originally established in Spain in 1996. Since its first property,
the group has expanded rapidly and now offers a large range of hotels - a combination of owned, managed
and affiliated. Rusticae has over 170 hotels in Spain, 63 hotels in several countries in South America, 27
hotels along the Mediterranean coastline and 15 hotels in European capitals. The group also has 147
restaurants, 34 wineries and 22 spas. The group offers four hotels in Morocco: Riad Belle Epoque
(Marrakech), Riad Palacio De Las Especias (Marrakech).
Hotusa
Hotusa is a hotel organisation providing business and marketing services for independently owned and
managed hotel properties. The company was founded in 1977, headquartered in Spain, and has expanded to
now offer 2,350 hotels in 48 different countries making it the fourth largest hotels consortium globally.
Hotusa offers booking services for a wide range of hotels in Morocco at several major locations, including
Marrakech, Agadir, Casablanca, Fez and Tanger. Hotusa directly owns and manages 70 hotels in 8 countries
- primarily four- and five-star hotels catering to the high end travel market.
Page 32
There are a number of factors that support our accommodation sector projections. The main one is
anticipated strong growth in overall tourist travel. We are forecasting global tourist arrivals to increase by
4.5% over 2015, to reach 982.9bn. The rise in tourist numbers is resulting in heavy investment into the
accommodation sector in many countries. We expect hotel companies to continue to invest in new hotel
projects in order to capitalise on the growing tourist flows, especially in emerging markets that lack
developed accommodation sectors and offer opportunities in both the budget and high-end segments.
In line with the rise in tourist numbers, the number of hotels is seeing a concomitant increase to cater to the
growing tourist traffic. In 2014, we estimate that there were more than 2,207mn hotels globally (a 5%
increase on 2013 figures), and we expect this trend will continue, forecasting 2,317mn hotels in 2015, with
4.9% average annual growth through to 2018.
Supporting evidence for our expectation of accelerating growth within the accommodation sector can be
seen in BMI's Key Projects Database, which contains global hotel development projects worth in excess of
USD857.84bn. We highlight that although the largest segment of this comprises projects currently under
construction, worth around USD435bn, the project pipeline is not tapering off. With USD157bn worth of
hotel projects at the planning stage, another USD96bn with contracts agreed, and a further USD105bn worth
of developments either announced or approved, we expect hotel groups to continue to invest heavily into
new developments over the coming years.
Within this, the majority of new projects will be in Asia and the Middle East, which have hotel projects
totalling USD33,974mn and USD37,539mn respectively. Latin America is as yet not developed enough as a
high-end tourist destination to warrant the big-ticket, multi-million dollar hotel developments seen in other
regions, and both the Caribbean and the US hotels sectors are relatively mature, with limited new
development opportunities. This is also true of Europe which, although it is the largest tourist destination
with more than 498mn arrivals forecast for 2015 and a hotel industry value of around USD2200bn, has an
occupancy rate of 49%, emphasising the minimal growth opportunities. This is reflected in both the
comparatively small hotel project pipeline, with less than USD10bn worth of projects in BMI's Key
Page 33
Projects Database, and in our growth forecasts for the region's overall hotel numbers, of just 1% between
2015 and 2018.
Meanwhile, although North Africa has some extremely popular tourist destinations that are seeing
substantial investment, such as Egypt, political unrest and domestic turbulence in much of the region
continues to deter potential investors and tourists alike and has resulted in delays in existing projects and
limited new developments.
Sub-Saharan Africa also has a very modest project pipeline, as it lacks much of the basic infrastructure
needed to facilitate high-end developments, and tourist numbers have been too low to support the necessary
investment. However, this is starting to change. Although comparatively small at just USD812mn, the
developments are largely at the planning stage. Few of these projects will reach completion over the current
forecast period, but we expect stronger growth in hotel numbers over the longer term.
The Middle East is set to have the fastest growth in hotel value between 2015 and 2018, in our opinion, with
an average annual growth rate of 6%. The region will also have the highest growth rate in hotel numbers, at
5.5% annually between 2015 and 2018, bringing the total number of hotels in the region to 2.2mn by the
latter date. Our positive growth outlook is supported by the large number of planned hotel developments
detailed in our Key Projects Database.
The largest of these is the USD2,700mn Sadiyaat Island Resort development, which, like the majority of the
region's hotel projects, is in the UAE. We have an extremely positive view of the UAE's tourism sector and
are forecasting 7% growth in arrivals annually between 2015 and 2018, to reach 19.9mn. However, with
occupancy rates of more than 73%, the accommodation sector is far from saturated, and there is room for
expansion and new entrants. The influx of tourists is encouraging new developments, as can be seen in the
spate of recent announcements by major developers, which are seemingly confident in the prospects for the
UAE's hotel sector. Indeed, USD1,758mn worth of projects are now in the planning stage. Recent examples
include announcements by Switzerland-based hospitality chain Mvenpick Hotels & Resorts, Thailandbased Minor Hotel Group and Carlson Rezidor Hotel Group, all of which are planning new hotels
developments in the country that are set to open in 2017 and 2018.
Page 34
These factors are being taken into consideration in our accommodation sector forecasts, and we expect the
number of hotels to rise substantially between 2015 and 2018, by around 14.5%. This will, in turn, support a
substantial uptick in the country's hotel industry value, which will rise to USD9.93bn by 2018.
Page 35
However, we expect that growth in both the UAE's hotel sector and the wider Middle Eastern region will
taper off from 2019 onwards. This is due to a combination of factors. Firstly, with around 2mn hotels, and
occupancy rates near 50%, there will be little need for additional developments over the longer term, as the
market will start to become saturated from 2018 onwards. Secondly, although the region is the leader with
regards to the value of current hotel projects in the pipeline, almost all of these are in the construction stage,
due for completion between 2015 and 2017. Moreover, the project pipeline is very thin in the pre-tender and
pre-construction stages, emphasising the minimal growth potential beyond 2018.
Asia's project pipeline of more than USD33,974mn worth of developments is more well balanced,
indicating more sustained growth over the coming years. Although 29.4% of the current projects are under
construction, the remaining 70.6% are relatively evenly spread across the pre-tendering and preconstruction stages.
Page 36
Most of the hotels currently under construction will be completed over the 2015-2016 period, and this is
reflected in our forecast of 13.9% growth in the total number of hotels in Asia between 2014 and 2017.
However, with 6% annual growth in arrivals forecast between 2014 and 2018, we expect that occupancy
rates will remain at the high 60% level. Therefore, there will still be significant opportunities for hotel
developers and new entrants, and this is highlighted by the number of new hotels being planned. These
include UK-based InterContinental Hotels Group's agreement with Katong Holdings Private Limited to
develop a new property under its Hotel Indigo brand in Singapore; US-based hospitality
company Marriott International's planned new property under its Marriott Hotels & Resorts brand in
China, and US-based Starwood Hotels & Resorts Worldwide's plans to build new properties in New
Zealand, Thailand and India in 2018.
Our forecasts show that the total industry value of the hotels industry across BMI's global tourism universe
will reach USD14,637bn over 2015 and will continue to see steady growth through to 2018, when it will top
USD17,700bn as the number of hotels expands to cater to the rising tourism markets, particularly in Asia
and the Middle East.
Page 37
Global Assumptions
The sharp contraction in US GDP in Q114 and deterioration in economic activity across the euro area
during the first half of the year has led to several downgrades to our global growth forecasts over the course
of 2014. Although we have made additional downward forecast revisions over the past month, our global
forecast remains unchanged at 2.8% as a result of statistical rounding effects. Downgrades to several major
European states have shaved 0.1pp off our developed states growth forecast for 2014, while a deterioration
in our outlook for the Latin America region has similarly cut the emerging markets growth aggregate by
0.1pp. The trajectory improves slightly in 2015, with an upward revision to our China real GDP growth
forecast pushing up EM growth by 0.2pp in that year.
2013
2014f
2015f
2016f
2017f
2018f
2019f
1.9
2.1
2.6
2.4
2.4
2.4
2.4
-0.4
0.8
1.2
1.4
1.4
1.5
1.5
Japan
1.6
0.9
0.8
0.7
0.7
0.7
0.7
China
7.7
7.3
6.7
5.8
5.8
5.8
5.8
World
2.6
2.8
3.2
3.2
3.3
3.3
3.4
USA
1.5
1.8
2.1
2.1
2.1
2.1
2.1
Eurozone
1.4
1.0
1.5
1.7
1.9
1.9
1.9
Japan
0.4
2.4
2.5
2.4
2.5
2.6
2.7
China
2.6
2.6
2.8
2.7
2.7
2.7
2.7
World
3.1
3.5
3.5
3.3
3.2
3.1
3.1
0.00
0.00
0.75
2.00
3.00
3.50
4.25
0.25
0.05
0.05
0.05
0.50
1.00
1.50
0.10
0.10
0.10
0.10
0.10
0.10
0.10
Interest Rates
(Eop)
Page 38
2013
2014f
2015f
2016f
2017f
2018f
2019f
USD/EUR
1.32
1.34
1.25
1.20
1.20
1.20
1.20
JPY/USD
97.61
102.30
105.00
106.50
107.50
108.50
109.50
CNY/USD
6.15
6.13
6.23
6.25
6.25
6.25
6.25
105.87
106.90
105.50
100.50
97.50
97.50
97.00
108.70
105.52
100.50
98.00
96.00
95.00
97.00
Table: Global And Regional Real GDP Growth, 2013-2016 (% change y-o-y)
2013
2014f
2015f
2016f
World
2.6
2.8
3.2
3.2
Developed States
1.2
1.7
2.1
2.1
Emerging Markets
4.6
4.3
4.8
4.7
Asia Ex-Japan
6.8
6.6
6.4
5.8
Latin America
2.6
1.8
2.6
3.1
Emerging Europe
2.3
1.6
2.3
3.2
4.9
4.9
5.4
5.7
2.5
2.8
4.9
4.0
2013
2014f
2015f
2016f
Eurozone
USD/EUR, ave
1.32
1.34
1.25
1.20
Japan
JPY/USD, ave
97.61
102.30
105.00
106.50
Switzerland
CHF/USD, ave
0.92
0.96
0.97
1.00
United Kingdom
USD/GBP, ave
1.55
1.66
1.61
1.64
Page 39
Global And Regional Real GDP Growth, 2013-2016 (% change y-o-y) - Continued
2013
2014f
2015f
2016f
2013
2014f
2015f
2016f
China
CNY/USD, ave
6.15
6.13
6.23
6.25
South Korea
KRW/USD, ave
1094.62
1050.00
1000.00
1000.00
India
INR/USD, ave
58.58
60.00
59.25
58.50
Brazil
BRL/USD, ave
2.16
2.33
2.45
2.50
Mexico
MXN/USD, ave
12.76
13.00
12.70
12.50
Russia
RUB/USD, ave
31.86
35.20
35.90
37.25
Turkey
TRY/USD, ave
1.91
2.18
2.24
2.29
South Africa
ZAR/USD, ave
9.65
10.80
11.22
11.67
Developed States
Earlier in the year we stressed that the weather-induced slowdown in the US economy during the first
quarter would mark a temporary soft patch in an otherwise resilient economic recovery. Robust headline
growth and a fundamental improvement in labour market functioning support our relatively upbeat
assessment of the US economy over the medium term. We currently forecast real GDP growth of 2.1% in
2014 and 2.6% in 2015, with the US outperforming the developed states aggregate, with growth of 1.7%
and 2.1% pencilled in over the same period.
The eurozone, meanwhile, continues to struggle in the face of tight credit conditions and a lack of structural
economic reforms. Although our euro area growth forecasts for 2014 and 2015 remain unchanged at 0.8%
and 1.2% respectively, we have made further downward revisions to several of the smaller European
economies for 2014. These include Austria (0.9% from 1.5%), Belgium (0.9% from 1.2%), Sweden (1.9%
from 2.5%) and Switzerland (1.9% from 2.5%).
Given that the eurozone economy ground to a halt in the second quarter of 2014 (quarter-on-quarter growth
was zero) and the lagged impact from the European Central Bank's new array of stimulus measures, the risk
Page 40
to our euro area aggregate growth forecast for 2014 is to the downside. While chronic underperformance in
the periphery has become the status quo (the Italian economy has now only expanded once in the past 12
quarters), it is the sharp drawdown in German growth from 0.7% q-o-q in Q114 to -0.2% in Q214 that is
most concerning. Despite the growing resolve of the ECB to pursue more aggressive and unorthodox
monetary easing, any fillip to economic growth is likely to prove fleeting absent serious structural economic
reforms along the lines of a combined banking, fiscal and political union.
On a more positive note, we have nudged up our 2014 UK economic growth forecast to 3.1% from 2.9%
previously (2015 is unchanged at a still solid 2.5%). In contrast to the eurozone, there has been no material
deterioration in the data flow in recent months, although persistently weak inflation and wage growth could
deter the Bank of England from hiking interest rates by early 2015 as the market expects.
2013
2014f
2015f
2016f
1.2
1.7
2.1
2.1
G7
1.3
1.7
2.0
1.9
-0.4
0.8
1.2
1.4
0.1
1.3
1.6
1.7
Australia
2.4
2.3
2.3
2.5
Austria
0.3
0.9
1.4
1.7
Belgium
0.8
0.9
1.6
1.9
Canada
2.0
2.1
2.3
2.4
-0.9
2.4
2.5
3.2
0.4
1.4
1.7
1.5
Finland
-1.4
0.4
1.3
1.2
France
0.2
0.3
0.7
0.9
Germany
0.4
1.5
1.5
1.5
Hong Kong
2.8
3.0
3.7
3.8
-0.3
2.3
2.5
2.6
Eurozone
EU-27
Czech Republic
Denmark
Ireland
Page 41
2013
2014f
2015f
2016f
-1.9
-0.2
0.6
0.8
1.6
0.9
0.8
0.7
-0.8
0.4
1.5
1.8
Norway
0.6
1.7
1.9
2.4
Portugal
-1.4
0.6
1.1
1.2
Singapore
4.1
3.4
3.2
3.3
South Korea
2.8
3.5
4.1
4.6
-1.2
1.3
1.7
1.8
Sweden
1.6
1.9
2.5
2.5
Switzerland
1.9
1.9
1.9
1.4
Taiwan
2.1
3.1
4.1
4.1
United Kingdom
1.7
3.1
2.5
2.4
1.9
2.1
2.6
2.4
Italy
Japan
Netherlands
Spain
Emerging Markets
There have been far more revisions within emerging markets than for developed states, with China standing
out for the magnitude of the forecast change and Latin America for the number of revisions. In the case of
the former, we have upgraded our 2015 Chinese real GDP growth forecast to 6.7% from 6.0%, which has
driven up our emerging market aggregate projection to 4.8% from 4.6%.
Forecast changes for the biggest Latin American economies have pushed down the regional aggregate for
2014 and 2015. We now forecast growth of 1.8% and 2.6% in these years, from 2.1% and 3.0% previously.
We now expect even softer growth in Brazil (0.7% in 2014 and 1.5% in 2015 from 1.1% and 2.1%
previously), and have also downgraded Mexico (2.6% in 2014 from 3.1%).
Having been subject to several downgrades this year in light of the Russia-Ukraine conflict, our forecast for
emerging Europe has fallen again. Despite upward revisions to our 2014 and 2015 real GDP growth
forecasts for Turkey to 2.6% and 3.4% from 2.4% and 3.3% respectively, the regional aggregate has been
adversely affected by a deep cut to our Ukraine projections (-8.1% and -3.4% from -4.1% and 1.1%).
Page 42
2013
2014f
2015f
2016f
4.6
4.3
4.8
4.7
Latin America
2.6
1.8
2.6
3.1
Argentina
2.9
0.4
1.7
3.1
Brazil
2.5
0.7
1.5
2.0
Mexico
1.1
2.6
3.7
3.7
Middle East
2.8
3.9
3.8
3.5
Africa
4.9
4.9
5.4
5.7
South Africa
1.9
1.5
2.1
3.0
Nigeria
5.5
6.5
6.5
6.9
Saudi Arabia
4.0
4.3
3.6
3.2
UAE
5.2
3.9
4.0
3.8
Egypt
2.2
2.2
3.0
3.8
Emerging Asia
6.8
6.6
6.4
5.8
China
7.7
7.3
6.7
5.8
India*
4.7
5.6
6.3
6.6
Indonesia
5.8
5.1
6.0
6.3
Malaysia
4.7
5.8
4.2
4.1
Philippines
7.2
6.3
6.0
5.0
Thailand
2.9
2.0
4.1
4.0
Emerging Europe
2.3
1.6
2.3
3.2
Russia
1.3
0.6
1.3
2.5
Page 43
2013
2014f
2015f
2016f
Turkey
4.0
2.6
3.4
3.8
Hungary
1.1
3.0
2.1
2.1
Romania
3.5
3.2
3.6
3.8
Poland
1.6
2.8
3.1
3.7
BMI Versus Consensus: Our 2014 real GDP growth forecasts for the US (2.1%) and the eurozone (0.8%)
are in line with consensus, although we are relatively more bearish in both cases for 2015. Indeed we
forecast US growth of 2.6% that year (versus 3.0% consensus) and 1.2% for the euro area (versus 1.4%).
We are more bearish on China, Japan and Brazil in 2014 and 2015, but more optimistic on Russia.
Table: BMI Versus Bloomberg Consensus Real GDP Growth Forecasts, 2014 And 2015 (%)
2014
2015
US
Eurozone
Japan
Brazil
China
Russia
Bloomberg Consensus
2.1
0.8
1.1
0.8
7.4
0.3
BMI
2.1
0.8
0.9
0.7
7.3
0.6
Bloomberg Consensus
3.0
1.4
1.2
1.6
7.2
1.2
BMI
2.6
1.2
0.8
1.5
6.7
1.3
Page 44
Demographic Forecast
Demographic analysis is a key pillar of BMI's macroeconomic and industry forecasting model. Not only
is the total population of a country a key variable in consumer demand, but an understanding of
the demographic profile is essential to understanding issues ranging from future population trends to
productivity growth and government spending requirements.
The accompanying charts detail the population pyramid for 2015, the change in the structure of
the population between 2015 and 2050 and the total population between 1990 and 2050. The tables show
indicators from all of these charts, in addition to key metrics such as population ratios, the urban/rural split
and life expectancy.
Population
(1990-2050)
60
40
20
2050f
2045f
2040f
2035f
2030f
2025f
2020f
2015f
2010
2005
2000
1990
Morocco - Population, mn
Page 45
1990
2000
2005
2010
2015f
2020f
2025f
24,674
28,710
30,125
31,642
33,955
35,936
37,722
na
1.2
0.9
1.2
1.4
1.1
0.9
12,312
14,254
14,867
15,554
16,821
17,910
18,772
12,362
14,455
15,258
16,087
17,133
18,025
18,949
1.00
0.99
0.97
0.97
0.98
0.99
0.99
1990
2000
2005
2010
2015f
2020f
2025f
13,836
17,591
19,349
21,155
22,744
23,720
24,606
56.1
61.3
64.2
66.9
67.0
66.0
65.2
10,838
11,118
10,776
10,487
11,210
12,215
13,116
78.3
63.2
55.7
49.6
49.3
51.5
53.3
Page 46
1990
2000
2005
2010
2015f
2020f
2025f
9,986
9,776
9,275
8,899
9,482
10,006
10,231
72.2
55.6
47.9
42.1
41.7
42.2
41.6
851
1,342
1,500
1,588
1,727
2,209
2,884
6.2
7.6
7.8
7.5
7.6
9.3
11.7
1990
Urban population, '000
Urban population, % of total
Rural population, '000
2000
2020f
2025f
23,564.9
48.4
53.3
2005
55.0
2010
56.7
2015f
58.5
60.4
62.5
14,157.7
51.6
46.7
45.0
43.3
41.5
39.6
37.5
63.1
66.5
67.4
68.5
69.5
70.4
71.2
66.3
69.9
70.8
72.0
73.2
74.3
75.2
64.8
68.2
69.2
70.2
71.4
72.3
73.2
1990
2000
2005
2010
2015f
2020f
2025f
3,456
3,118
2,919
2,983
3,680
3,432
3,194
3,451
3,316
3,061
2,874
2,949
3,645
3,407
3,078
3,341
3,294
3,040
2,852
2,928
3,629
2,731
3,309
3,219
3,212
2,960
2,774
2,874
2,405
2,792
3,055
3,047
3,065
2,817
2,676
2,114
2,379
2,567
2,878
2,913
2,933
2,726
1,743
2,126
2,262
2,446
2,801
2,838
2,878
1,359
1,963
2,073
2,190
2,407
2,761
2,806
842
1,665
1,921
2,020
2,156
2,373
2,729
707
1,292
1,625
1,875
1,981
2,118
2,336
Page 47
1990
2000
2005
2010
2015f
2020f
2025f
692
792
1,253
1,578
1,825
1,931
2,068
657
654
759
1,198
1,513
1,753
1,859
583
615
611
706
1,120
1,418
1,649
402
544
550
546
634
1,008
1,283
226
427
450
456
457
533
854
124
239
311
329
337
342
403
68
94
140
184
199
208
215
25
29
39
60
80
89
96
10
16
23
26
1990
2000
2005
2010
2015f
2020f
2025f
14.01
10.86
9.69
9.43
10.84
9.55
8.47
13.99
11.55
10.16
9.09
8.69
10.15
9.03
12.48
11.64
10.94
9.61
8.40
8.15
9.62
11.07
11.53
10.69
10.15
8.72
7.72
7.62
9.75
9.73
10.14
9.63
9.03
7.84
7.10
8.57
8.29
8.52
9.10
8.58
8.16
7.23
7.07
7.41
7.51
7.73
8.25
7.90
7.63
5.51
6.84
6.88
6.92
7.09
7.69
7.44
3.41
5.80
6.38
6.38
6.35
6.61
7.24
2.87
4.50
5.40
5.93
5.83
5.90
6.19
2.81
2.76
4.16
4.99
5.38
5.37
5.48
2.67
2.28
2.52
3.79
4.46
4.88
4.93
2.36
2.14
2.03
2.23
3.30
3.95
4.37
1.63
1.90
1.83
1.73
1.87
2.81
3.40
0.92
1.49
1.50
1.44
1.35
1.48
2.26
0.50
0.83
1.03
1.04
1.00
0.95
1.07
0.28
0.33
0.47
0.58
0.59
0.58
0.57
Page 48
1990
2000
2005
2010
2015f
2020f
2025f
0.10
0.10
0.13
0.19
0.24
0.25
0.26
0.02
0.02
0.03
0.03
0.05
0.07
0.07
0.00
0.00
0.00
0.00
0.00
0.01
0.01
0.00
0.00
0.00
0.00
0.00
0.00
Page 49
Methodology
Industry Forecast Methodology
BMI's industry forecasts are generated using the best-practice techniques of time-series modelling and
causal/econometric modelling. The precise model we use varies from industry to industry. In each case this
is determined, as per standard practice, by the prevailing features of the industry being examined.
Common to our analysis of every industry is the use of vector autoregressions. Vector autoregressions allow
us to forecast a variable using more than the variable's own history as explanatory information. For
example, when forecasting oil prices, we can include information about oil consumption, supply and
capacity.
When forecasting some of our industry sub-component variables, however, using a variable's own history is
often the most desirable method of analysis. Such single-variable analysis is called univariate modelling.
We use the most common and versatile form of univariate models: the autoregressive moving average
model (ARMA).
In some cases, ARMA techniques are inappropriate because there is insufficient historic data or data quality
is poor. In such cases, we use either traditional decomposition methods or smoothing methods as a basis for
analysis and forecasting.
BMI mainly uses OLS estimators. In order to avoid relying on subjective views and encourage the use of
objective views, we use a 'general-to-specific' method. We mainly use a linear model, but simple non-linear
models, such as the log-linear model, are used when necessary. During periods of 'industry shock', such as
poor weather conditions that affect agricultural output, dummy variables are used to determine the level of
impact.
Effective forecasting depends on appropriately selected regression models. BMI selects the best model
according to various different criteria and tests, including but not exclusive to:
Hypothesis testing to ensure coefficients are significant (normally t-test and/or P-value);
All results are assessed to alleviate issues related to auto-correlation and multi-collinearity.
Page 50
Human intervention plays a necessary and desirable role in all our industry forecasting. Experience,
expertise and knowledge of industry data and trends ensure that analysts spot structural breaks, anomalous
data, turning points and seasonal features, while a purely mechanical forecasting process would not.
Sector-Specific Methodology
A number of principal criteria drive our forecasts for each tourism sector variable.
Figures for the tourism sector data are based, where possible, on industry associations/operators,
government/ministry sources and official data. Where these are unavailable, tourism forecasts are based on
a range of variables:
Government policy, industry trends and expenditure levels stated in international and national press.
Industry trends and expenditure levels stated in tourism companies' official financial reports or releases.
Likely expenditure and growth patterns owing to international developments and demographic patterns.
Rewards: Evaluation of sector's size and growth potential in each state, and also broader industry/state
characteristics that may inhibit its development. This is further broken down into two sub categories:
Industry Rewards. This is an industry-specific category that takes into account current industry size and
growth forecasts, and the openness of a market to new entrants and foreign investors, to provide an
overall score for potential returns for investors.
Country Rewards. This is a country-specific category, and the score factors in favourable political and
economic conditions for the industry.
Risks: Evaluation of industry-specific dangers and those emanating from the state's political/economic
profile that call into question the likelihood of anticipated returns being realised over the assessed time
period. This is further broken down into two sub categories:
Page 51
Industry Risks. This is an industry-specific category whose score covers potential operational risks to
investors, regulatory issues inhibiting the industry, and the relative maturity of a market.
Country Risks. This is a country-specific category in which political and economic instability,
unfavourable legislation and a poor overall business environment are evaluated to provide an overall
score.
We take a weighted average, combining industry and country risks, or industry and country rewards. These
two results in turn provide an overall Risk/Reward score, which is used to create our regional ranking
system for the risks and rewards of involvement in a specific industry in a particular country.
For each category and subcategory, a country is scored out of 100 (100 being the best), with the overall
Risk/Reward score a weighted average of the total score. Importantly, as most of the countries and
territories evaluated are considered by BMI to be 'emerging markets', our indices are revised on a quarterly
basis. This ensures that they draw on the latest information and data across our broad range of sources, and
the expertise of our analysts.
BMI's approach in assessing the risk/reward balance for industry investors globally is fourfold:
First, we identify factors (in terms of current industry/country trends and forecast industry/country
growth) that represent opportunities to would-be investors.
Second, we identify country and industry-specific traits that pose or could pose operational risks to
would-be investors.
Third, we attempt, where possible, to identify objective indicators that may serve as proxies for issues/
trends to avoid subjectivity.
Finally, we use BMI's proprietary Country Risk Index (CRR) in a nuanced manner to ensure that only the
aspects most relevant to the industry are incorporated. Overall, the system offers an industry-leading,
comparative insight into the opportunities/risks for companies across the globe.
In constructing these indices, the following indicators have been used. Almost all indicators are objectively
based. Given the number of indicators/datasets used, it would be inappropriate to give all subcomponents
equal weight. Consequently, the following weighting has been adopted:
Page 52
Weighting, %
Rewards
70, of which
Industry Rewards
60, of which
20
20
Arrivals growth, %
20
20
Hotel occupancy, %
20
Country Rewards
40, of which
Physical infrastructure
50
Labour costs
50
Risks
30, of which
Industry Risks
45, of which
50
50
Country Risks
55, of which
Legal framework
20
Corruption
20
Bureaucracy
20
Market openness
20
Security risk
20
Source: BMI
Page 53