Tunisia's road back to tourism prominence

Four Seasons Hotel Tunis. Photo credit: Four Seasons Hotels & Resorts

2015 was a challenging year for Tunisia, with terror attacks that left dozens dead and devastated the country's tourism economy. At the time, STR reported “significant declines in RevPAR” following the March 2015 museum attack, which worsened after the Sousse attack that June, in which 38 tourists were killed at the beach resort, resulting in a 51.7-percent RevPAR drop for Q3 2015. 

That was then, and in 2018, luxury hotel brands are gaining a foothold in the country, and bringing hopes of rate recovery. While the country’s oil market is still volatile, investors are looking to new hotel supply to drive growth, particularly in the resorts sector.

And there is good reason for optimism: The latest results from Hotstats for hotels in the Middle East & Africa recorded a 2.3-percent increase in room occupancy in November to 71.6 percent, the second-highest occupancy recorded in the region for the year.

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“November is typically a strong month of performance for hotels in the Middle East & Africa and this month was almost entirely fueled by North Africa and particularly ‘winter sun’ resorts, including Tunisia and Egypt,” Pablo Alonso, CEO of HotStats, said.

New Supply

The latest hotel to be announced was the 189-guestroom Movenpick Hotel du Lac Tunis, slated to open in the spring with a spa, sauna, hydro baths and gym as well as a 750-seat ballroom.  

The property will join the Four Seasons Hotel Tunis, which opened at the end of last year, marking the brand’s debut in the country. Anantara is also due to open in mid-2018, near the desert oasis of Tozeur. The Six Senses Gammarth is also on the horizon.

“I am surprised by the big push into the luxury space,” Rami Moukarzel, VP development & acquisitions MENA, Louvre Hotels Group, said. “The market for us reads better in the midscale three- to four-star space, with some resort destinations capable of driving a five-star positioning. In the luxury set, the biggest challenge is driving the returns versus the investment. We have penetrated the market with two Royal Tulip resorts, both resorts set to open in 2018, [and] we are confident in the growth of the luxury offering. However, as a whole, the market needs to be careful in developing ultra-luxury destinations while rate pressures remain. 

“The average rates are still low; however, with the Four Seasons, upcoming Ritz Carlton, our Royal Tulip hotels and other five-star brands entering the market I am confident an uplift in both experiences and price points will be achieved. Having said that, the core strengths of the Tunisian market is affordable, value-for-money propositions whether beach resorts or city center urban hotels. In Tunis at the moment, rates are an average of $120 while the luxury space will strive to double that.” 

Visitor Increase

The tour operators are also coming back. Last month, TUI announced its return to the country, but cautiously, with only three hotels available for the groups. The group expected 20,000 customers for this summer, against its previous peak of 80,000. Last year, Thomas Cook offered stays at six hotels in the Hammamet region for February, with a further two added for the summer season.

The return of Tunisia as a popular destination is not guaranteed, with the Foreign Office in the UK issuing fresh warnings at the start of 2018 after a series of violent protests over living standards.

The FCO advised against all travel in regions including Chaambi Mountains National Park and advised against all but essential travel in areas including within 30 kilometers of the border with Algeria. The regions bordering the Mediterranean were unaffected.

“I see the market picking up,” Moukarzel said. “I see corporate segments growing in Tunis, and with our strong presence, we are confident of catering to this, despite the large supply increases. Stability, in terms of security and economics, will drive further growth bringing back the MICE segments, regional travel and returning European travelers (corporate and leisure).  

“I see the resort market picking up. There are some amazing offerings. [Tunisia] is very close to Europe, and it is an more affordable option with strong connectivity to countries such as France, Spain and Germany. In places such as Hammamet, Sousse, there is growth.   

“Tunis will see growth in RevPAR, but it will take some time for it to reach comparable figures to its peaks. Local tourism and business will grow, but this is geared towards more affordable offerings to that of the luxury segments while the welcomed increase in GCC demand will fuel the luxury space growth. I think it will take five years to see a 25-percent increase in rate.” 

Katherine Doggrell is an editor at Hotel Analyst, the U.K.-based news analysis service for hotel investors.