GOT SUPPORT FOR TUNISIAN TOURISM: ALL TALK NO

UNCLAS TUNIS 001030

SIPDIS

NEA/MAG (SWILLIAMS, VSTEWART, MNARDI);
LONDON AND PARIS FOR NEA WATCHER

E.O. 12958: N/A
TAGS: ECON ETRD PGOV TS
SUBJECT: GOT SUPPORT FOR TUNISIAN TOURISM: ALL TALK NO
ACTION

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Summary
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1. (SBU) Summary: Tunisia's tourism sector, which accounts
for 11 percent of GDP, grew 8.6 percent in the first quarter
of 2008 and in 2007 generated more than 3.05 billion TD
(roughly $2.5 billion) in revenue. Though overall figures
look strong, they are consistent with the package-deal
low-end tourists Tunisia is attracting. The Minister of
Tourism publicly announced his intention to shift Tunisia's
image to that of a high-end destination, with a greater
diversity of attractions and longer-staying foreign visitors.
However, industry leaders claim that GOT intentions are not
supported by actions, and doubt any real support is
forthcoming. End Summary.

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Knock, Knock: Who's There?
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2. (SBU) The number of tourists from Europe grew two percent
in 2007, but the countries of origin are changing; a
reflection of Tunisia's enduring reputation as a cheap
vacation spot. According to the Tunisian National Board of
Tourism, the number of French, Russian, Polish and
Scandinavian tourists is on the rise, while the number of
German, Italian, English and Spanish tourists is declining.
Visits to a popular beach town by PolOff revealed an
increased number of signs and posters in Polish and Cyrillic,
indicative of this changing demographic. The number of
tourists from neighboring countries, namely Algeria and
Libya, also grew 4 percent in 2007. Tunisia welcomed roughly
6.8 million foreign tourists in 2007, up from 6.6 million the
year before. Roughly 80 to 90 percent of them purchased
beach package deals to resorts located along Tunisia's almost
one thousand miles of coastline.

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If You Sell it, They will Come
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3. (SBU) The GOT aims to shift away from servicing the cheap
package-deal market to become a high-end niche destination,
or so it says. The Tunisian Minister of Tourism, Khalil
Lajimi, publicly allocated 5 million TD (approximately US
$4.3 million) for a fall 2008 advertising campaign targeting
German, Italian, British, and Spanish tourists. Moncef
Guitouni, General Manager of the Ramada Hotel, pointed out
that despite this announcement, Tunisia has not done well
marketing itself. This phenomenon is aptly explained by the
business model employed by MHomed Driss, owner of 10 three
to five star 1,000 bed beach resorts in popular beach towns.
He relies on European tour operators to bring him clients.
Only a small fraction of reservations for his hotel chain are
made online.


4. (SBU) Michael Smith, Director of Fidelity Investments in
Tunisia, assesses that there is no reason why Tunisia's
tourism sector is not a shining gem in North Africa. Experts
explain that aside from the lack of marketing efforts,
Tunisia is not attracting high-end tourists because of its
sub-standard hotel infrastructure and underdeveloped services
sector. Tunisian hotels with GOT four and five star rankings
are by and large comparable to three star facilities in the
U.S. and Europe.

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Targeting Niche Groups
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5. (SBU) In addition to attracting wealthier tourists and
enticing them to stay longer, the GOT wants to expand the
diversity of tourist destinations and activities. The GOT
claims to be offering incentives such as lowered taxes to
foreign investors willing to develop resorts in desert zones
away from the coast. Tunisia,s spa and thlassotherapy
(seawater treatment) business is second only to that of
Frances in the Mediterranean region. More than 41
healthcare spas in Tunisia generate more than 86 million USD
in revenues. The GOT is eager to attract more of this niche
tourist group because they spend between 200 and 500 percent
more during their trips than their package-deal counterparts.
Golf tourism is increasingly competitive in the region, and
developers across Tunisia are building more golf courses in
support of attracting higher-end tourists. Tunisia had nine
full golf courses at the end of 2006, up from three in 2001.



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Sizing up the Competition
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6. (SBU) Despite annual growth in revenue, Tunisia struggles
to generate the same amount of income from tourism as that of
its two major competitors in North Africa: Egypt and Morocco.
Tunisia hosted the same number of international tourists as
Morocco in 2006, about 6.5 million. However, Tunisia
generated less than half of Morocco's $6.4 billion in tourist
revenue. In comparison, Egypt attracted more than 9 million
tourists in 2006 and about $7.6 billion in revenue. In Egypt,
tourism revenue accounts for 20 percent of foreign currency
revenue; in Tunisia it accounts for roughly eight percent.
Guitouni believes that Morocco and Egypt market to tourists
by emphasizing the history, culture and unique attractions in
their countries. He said Tunisia must adopt the same
approach to continue competing for tourists planning to
travel in North Africa.

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Run the Numbers
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7. (SBU) In 2007, the Tunisian tourism sector directly
supported approximately 95,000 jobs and more than 325,000
indirectly. The industry generated 3.05 billion TD (roughly
$2.5 billion) in foreign currency receipts, a 6.2 percent
increase over the previous year. Tourism receipts accounted
for 10.8 percent of all current receipts. Investment in the
sector declined slightly to 300 million TD (US $ 245 million)
from 330 million TD (US $ 270 million) the year before. As
was the case in previous years, most of the investment
dollars are spent on refurbishing old hotels and building new
ones.

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Comment
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8. (SBU) Tunisia,s steady growth in tourism is largely
happenstance. Two trends appear to hinder Tunisia's move
away from package deals toward the high-end market. The
first is the widely held marketing philosophy by hotel owners
of &if I build it, they will come8. The second is lack of
GOT follow-through in ensuring that new developments and
upgrades to existing infrastructure meet the expectations of
the high-end consumer demographic.


9. (SBU) Fundamentally, the industry needs to boost its
service-provider delivery and credentials if it intends to
attract the type of clients that stay for long periods of
time, travel to various regions within the country and spend
hard currency. At present, tourists who have booked
themselves into "five-star" hotels more often than not, find
themselves in relatively modest accommodations. End Comment.
DESJARDINS