TOURISM: ENGINE TO PROGRESS

UNCLAS SECTION 01 OF 02 RABAT 000289

SIPDIS

SIPDIS
DEPT FOR NEA/MAG AND EB/TRA

E.O. 12958: N/A
TAGS: ELTN EINV ELAB EAIR MO
SUBJECT: TOURISM: ENGINE TO PROGRESS


1. Summary: In 2007, Morocco posted its highest tourist numbers on
record, attracting 7.4 million visitors, a 13 percent increase over

2006. Morocco is on track to achieve its goal of 10 million
visitors by 2010, in line with the target of its Vision 2010 program
for the sector. In addition to attracting foreign visitors and
investment, Vision 2010 aims at creating 600,000 jobs to combat the
country's high rate of unemployment. A recently liberalized air
traffic sector and historically strong Arab investment have helped
boost the tourism sector in Morocco, but bureaucratic problems and a
shortage of qualified service works threaten to hinder future
progress. End Summary.

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TOURISM: AN ECONOMIC PRIORITY
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2. Morocco's proximity to Europe, good weather and rich cultural
heritage have made it an increasingly popular holiday destination
for foreign travelers, especially Europeans. This is particularly
true among the French who share historic ties to the Maghreb. The
number of tourists visiting Morocco climbed to a record high of 7.4
million in 2007, a 13 percent increase from 2006. In 2007, tourism
receipts increased 12 percent to reach USD 5.9 billion. Tourism
is the country's main source of foreign currency receipts and
accounts for eight percent of its GDP. During 2007, the number of
nights that tourists spent in Moroccan hotels increased three
percent to 16.8 million. Many of Morocco's top tourist destinations
profited from this increase including Casablanca (9 percent),Fez (8
percent),Rabat and Marrakech (5 percent),and Tangier (3 percent).
However, these numbers do not include other types of accommodation
such as riads - traditional Moroccan houses - that have become very
popular in Marrakech and Fez, and privately owned apartments.
Therefore, actual tourism figures are even higher than statistics
show.
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VISION 2010 AND PLAN AZUR
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4. These results are in line with the ambitions of the country's
national tourism plan, "Vision 2010," which King Mohammed VI
announced in 2001. Vision 2010's goals include increasing the
number of tourists by 15 percent annually, with a target of 10
million, including 7 million international visitors, in 2010. It
also seeks to add 160,000 hotel beds, create 600,000 jobs in the
sector, and increase foreign exchange earnings from tourism to
approximately USD 11 billion annually, to bring the sector's share
in GDP to 20 percent.


5. In order to achieve these ambitious goals, the GOM also announced
in 2001 the ambitious Plan Azur, which seeks to develop six
state-of-the-art coastal resorts (five on the Atlantic coast and one
on the Mediterranean coast). The locations of the six new resorts
were chosen to balance the country's development, long focused on
the Casablanca - Rabat axis. Plan Azur should boost the country's
beach tourism, while positioning Morocco as a destination that
combines world-class holidays with cultural, fitness and
eco-tourism. A number of leading global developers are
participating in the projects, including firms from the United
States (Colony Capital),Spain, and the Gulf.

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AIR TRAFFIC INCREASES
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6. During 2007, the number of international passengers transiting
Moroccan airports increased 16.6 percent to 12.2 million compared to
10.5 million in 2006. Forty eight percent of the passengers used
Casablanca's Mohamed V Airport hub, while the country's two
principal tourist destinations, Marrakech and Agadir, received 25
percent and 12 percent respectively. The GOM plans to increase the
country's airports capacity to 30 million passengers from its
current level of 13.5 million per year by 2010, according to the
Director General of the Moroccan Airport Office (ONDA),Abdelhanine
Benallou. By then, Mohammed V Airport, which just opened a new
terminal, expects to receive 11 million passengers per year.


7. Morocco has liberalized its air transport sector to encourage
greater numbers of tourists. Key aspects of the liberalization
include landing rights for new airlines, the creation of the
Moroccan low-cost carriers Atlas Blue and Jet4You, and the creation
of new routes (including routes offering priority access to tour
operators). The 2006 Open Skies agreement between Morocco and the
European Union helped increase the number of tourists by lowering
airfares, boosting Internet sales, and attracting new European
low-cost carriers such as Easyjet and Ryanair.

RABAT 00000289 002 OF 002



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TOURISM CREATES JOBS
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8. Morocco's tourism sector creates 10 percent of the country's new
jobs each year, according to the Minister of Employment and
Vocational Training, Jamal Aghmani. The sector is expected to have
created 600,000 new jobs by 2010. Morocco has developed a tourism
sector strategy that seeks to train 72,000 people by 2010.
Enrolment in the country's various Tourism Training Centers rose 52
percent between 2001 and 2006, from 2,660 students to 4,033.

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ARAB INVESTMENTS
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9. According to the Tourism and Craft Industry Minister, Mohamed
Boussaid, Arab investment in the Moroccan tourism sector reached USD
3 billion during the past decade, comprising 28 percent of all
investments in the country. In addition, several large-scale
investment projects are expected by Arab operators in the near
future. One of the most important Arab investors in Morocco,
Dubai Holding, has recently signed agreements to develop real-estate
projects worth USD 12 billion in major Moroccan cities over the next
five years. The company is currently working on a USD 2 billion
community development project in Rabat on the Bouregreg River
featuring a yacht harbor, five-star hotels, apartments, shopping
malls and a convention center. Its USD 600 million Dubai Towers -
Casablanca will feature a hotel and an office tower; and the USD 500
million Marina de Casablanca will include offices, retail and
entertainment facilities, marina hotels and apartments.

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OBSTACLES TO FUTURE DEVELOPMENT
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10. Morocco's tourism industry faces several important hurdles
including outdated regulations, over taxation and a shortage of
qualified personnel. According to Jiwad Ziyat, Director of
Development and Investment at the Ministry of Tourism and Crafts
(MTC),Morocco faces particular challenges from the process of land
acquisition for tourism development due to the issue of unclear
ownership. He said that MTC plans to create a tourism development
agency that owns tracts of land with all required environmental
protection regulations completed. In addition, the MTC hopes to
update zoning regulations to allow investors to begin development
faster.


11. Ziyat also said that taxation and financing present problems
for investors. He said despite the fact the GOM had passed a law
granting a five-year tax exemption on profits for new investors, the
value-added tax (VAT) remained high. The Moroccan VAT on tourism is
10 percent, while in Spain and in many other countries it is 5
percent. Ziyat said Morocco should give tax breaks to "all
investors - foreign and domestic - to reduce the tax burden." He
added that tax reform is needed because, "there are numerous taxes,
which combined, are a huge drain on businesses."


12. Professionals from the tourism sector have complained that
Moroccan Tourism Training Centers have frequently sent them people
who are "unsuitable" for the hospitality industry. In addition,
hotels and resorts often pay insufficient wages to attract and keep
qualified workers. This is compounded by seasonal employment that
many people find too unstable on which to base a career. These
conditions lead many of the best people in the tourism sector to
seek higher paying, more stable jobs overseas, especially in Dubai
and Spain.


13. (SBU) Comment: The tourism sector holds great promise for the
Moroccan economy and it has historically produced strong results.
Vision 2010 is ahead of schedule and the number of tourists visiting
Morocco will only need to grow by slightly over 10 percent annually
to reach 10 million visitors in 2010. An economic slowdown in
Europe, a terrorist incident in Morocco, or even poor service could
disrupt this plan. However, Morocco has a strong track record in
the field of tourism, a sound strategy to grow the industry and
numerous willing investors to help it keep its economic plans on
track. In January and February 2008, Moroccan tourism statistics
showed a slight decrease over 2007's exceptional results, but it is
too early to tell if this will develop into a trend. End Comment.



Riley