BMI Morocco Tourism Report 2015

8/18/2019 BMI Morocco Tourism Report 2015

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2015www.businessmonitor.com

MOROCCOTOURISM REPORT

INCLUDES 5-YEAR FORECASTS TO 2018

ISSN 1752-4210Published by:Business Monitor International


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Morocco Tourism Report 2015INCLUDES 5-YEAR FORECASTS TO 2018

Part of BMI’s Industry Report & Forecasts Series

Published by: Business Monitor International

Copy deadline: December 2014

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CONTENTS

BMI Industry View ............................................................................................................... 7

SWOT .................................................................................................................................... 9

Political .... .... ......................................................................................................................................... 11

Economic .. ............................................................................................................................................. 13

Industry Forecast .............................................................................................................. 15

Inbound Tourism .................................................................................................................................... 17

Table: Inbound Tourism (Morocco 2011-2018) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Table: Top 6 M arkets by Arrivals, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Outbound Tourism ................................................................................................................................. 18Table: Outbound Tourism (Morocco 2011-2018) . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . 19

Table: Top 10 Destinations by Departures, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Travel and Receipts ................................................................................................................................ 20

Table: Receipts for Transport and Travel (Morocco 2011-2018) ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Table: Breakdown of Methods of Tourist Travel (Morocco 2011-2018) ... .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 22

Hotels .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 22

Table: Hotel Accommodation (Morocco 2011-2018) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Table: Hotels and Restaurants Industry Value (Morocco 2011-2018) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Industry Risk Reward Ratings .......................................................................................... 25

Tourism Risk/Reward Index ........ ........ ........ ........ ......... ........ ........ ........ ......... ........ ........ ........ ........ ......... .. 25Table: MEN A Tourism Risk Reward Index . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . 26

Market Overview ............................................................................................................... 27

Table: Table: M orocco Air Infrastructure Projects . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . 28

Table: Top 10 Global Hotel Group Presence .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . 29

Competitive Landscape .................................................................................................... 31

Kenzi Hotel Group ........... ......... ........ ........ ........ ......... ........ ........ ........ ......... ........ ........ ........ ........ ......... .. 31

Pickalbatros Hotels & Resorts ...... ........ ......... ........ ........ ........ ........ ......... ........ ........ ........ ......... ........ ........ . 31

Accor . .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 31

OetkerHotel Management Company .......................................................................................................... 32

BlueBay Grou p .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .............................................................................. 32

Helnan International Hotels ........ ........ ........ ........ ..................................................................................... 32

Rusticae .. .. ........................................................................................................................................... 32

Hotusa .. .. .. .. ......................................................................................................................................... 32

Global Industry Overview .................................................................................................. 33

Tourism Global Industry Overview .. ........................................................................................................... 33

Global Assumptions .......................................................................................................... 38

Table: Global Assumptions, 2013-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Morocco Tourism Report 2015

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Table: Global And Regional Real GDP Growth, 2013-2016 (% change y-o-y) .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. . 39

Developed States .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 40

Table: Developed States, Real GDP Growth Forecasts, 2013-2016 ... ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Emerging Markets . .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. . 42

Table: Emerging Markets, Real GDP Growth Forecasts, 2013-2016 . .. ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Table: BMI Versus Bloomberg Consensus Real GDP Growth Forecasts, 2014 And 2015 (%) .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. . 44

Demographic Forecast ..................................................................................................... 45

Table: Population Headline Indicators (Morocco 1990-2025) .. ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Table: Key Population Ratios (Morocco 1990-2025) ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Table: Urban/Rural Population & Life Expectancy (Morocco 1990-2025) .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 47

Table: Population By Age Group (Morocco 1990-2025) ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Table: Population By Age Group % (Morocco 1990-2025) .. ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Methodology ...................................................................................................................... 50

Industry Forecast Methodology .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 50

Risk/Reward Index Methodology .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. . 51

Table: Weighting Of Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53




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BMI Industry View

BMI View: The Morocco tourism report examines a range of key indicators for the tourism market in this

popular North Africa destination, including the prospects for growth in terms of inbound arrivals and

outbound departures throughout our current forecast period to 2018. Benefiting from a stable political

environment and increasing levels of foreign investment, we expect to see healthy growth in industry value

and tourism-related expenditure as Morocco continues to attract greater numbers of visitors from a range

of different markets.

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.

Key developments and forecasts include:

■ 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.




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■ 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.




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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.

■ Gradually improving business environment encouraging foreign investment.

Weaknesses ■ Key markets still affected by European economic slowdown.

■ Transport infrastructure needs more development, to attract hoteliers and luxury-

seeking tourists, particularly in rural areas.

■

More utilities infrastructure needed with both water and electricity connections inneed 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.

■

Increasing travel connections including range of low-cost airline connections

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.

■ Threat of terrorist attacks could deter potential visitors.

■ Controversial imprisonment of a British tourist in 2014 could impact on arrivals from

this key market going forward.




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Morocco Tourism SWOT Analysis - Continued

■ Border tensions with Algeria restrict tourism to already established destinations.




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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.

■ The decades-long dispute surrounding the Western Sahara territory remains

Morocco's main foreign policy challenge, and has a range of negative effects on the

country's diplomatic relations and broader economy.

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.




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SWOT Analysis - Continued

■ 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.




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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.




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SWOT Analysis - Continued

Threats ■ A more prolonged and pronounced slowdown in eurozone growth could see

Morocco's export industries suffer over a longer time horizon than currently expected.




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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 café 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.




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Bright Future For Moroccan Tourism

Total Arrivals (000) & Total Tourist Receipts (USDbn) (2001-2019)

Total arrivals, '000 (LHS)

International tourism receipts, USDbn (RHS)

2 0 0 2

2 0 0 3

2 0 0 4

2 0 0 5

2 0 0 6

2 0 0 7

2 0 0 8

2 0 0 9

2 0 1 0

2 0 1 1

2 0 1 2

2 0 1 3 e

2 0 1 4 e

2 0 1 5 f

2 0 1 6 f

2 0 1 7 f

2 0 1 8 f

2 0 1 9 f

0

5,000

10,000

15,000

5

10

15

0

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.




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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.

Table: Inbound Tourism (Morocco 2011-2018)

2011 2012 2013 2014f 2015f 2016f 2017f 2018f

Total arrivals, '000 9,342.13 9,375.16 10,046.26 10,548.58 11,076.01 11,629.81 12,560.19 12,723.58

Total arrivals, '000, % y-o-y

0.6 0.4 7.2 5.0 5.0 5.0 8.0 1.3

Arrivals by region,Europe, '000

3,510.96 3,508.76 3,603.30 3,783.46 3,972.63 4,171.27 4,504.97 4,563.57

Arrivals by region,Europe, % y-o-y

-1.2 -0.1 2.7 5.0 5.0 5.0 8.0 1.3

f = BMI forecast. Source: Morocco Tourism, BMI Calculation

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.




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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.

Table: Top 6 Markets by Arrivals, 2011-2018

2011 2012 2013 2014f 2015f 2016f 2017f 2018f

France 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

f = BMI forecast. Source: BMI, Morocco Tourism

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.




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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.

Table: Outbound Tourism (Morocco 2011-2018)

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f

Outbound, total departures, '000 415.24 358.59 387.70 419.07 452.10 489.95 533.03 577.02

Outbound, total departures, % y-o-y -0.6 -13.6 8.1 8.1 7.9 8.4 8.8 8.3

Average Tourist departure per 1000 of thepopulation

12.95 11.03 11.75 12.51 13.31 14.25 15.32 16.40

Departures by region, Africa, '000 94.89 102.63 105.24 109.91 118.36 128.12 139.10 148.24Departures by region, Africa, % y-o-y 4.6 8.2 2.6 4.4 7.7 8.2 8.6 6.6

Departures by region, North America, '000 26.00 21.59 21.46 21.33 21.20 21.06 20.92 20.76

Departures by region, North America, % y-o-y 5.3 -16.9 -0.6 -0.6 -0.6 -0.7 -0.7 -0.7

Departures by region, Latin America, '000 1.55 1.60 1.74 1.89 2.10 2.20 2.36 2.54

Departures by region, Latin America, % y-o-y 13.27 2.64 8.84 9.10 10.77 4.62 7.56 7.54

Departures by region, Asia Pacific, '000 0.21 0.23 0.24 0.27 0.29 0.31 0.33 0.36

Departures by region, Asia Pacific, % y-o-y 111.9 7.5 6.1 9.0 8.6 7.6 7.1 7.5

Departures by region, Europe, '000 158.39 124.21 140.78 158.35 173.75 191.90 213.87 237.62

Departures by region, Europe, % y-o-y -24.8 -21.6 13.3 12.5 9.7 10.4 11.4 11.1

Departures by region, Middle East, '000 134.20 108.34 118.23 127.33 136.40 146.36 156.46 167.50

Departures by region, Middle East, % y-o-y 48.5 -19.3 9.1 7.7 7.1 7.3 6.9 7.1

e/f = BMI estimate/forecast. Source: National Sources, BMI Calculation

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




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from Morocco in 2015, increasing to 112,000 by 2018. The USA is currently in 6 th 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.

Table: Top 10 Destinations by Departures, 2011-2018

2011 2012 2013 2014f 2015f 2016f 2017f 2018f

Saudi Arabia 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

f = BMI forecast. Source: BMI, Morocco Tourism

Travel and Receipts

Tourism represents a sizeable portion of the Moroccan GDP and bolsters the economy. The projected

growth in tourism will bring in a great deal of money, further encouraging the continued economic

developments. We are forecasting tourism receipts to reach USD10.2bn over 2015, representing growth of

around 6.2%. This number will continue to grow through to 2018, when we expect receipts to bring in

around USD12.3bn.

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




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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.

Table: Receipts for Transport and Travel (Morocco 2011-2018)

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f

International tourism receipts, USDbn 9.10 8.49 8.89 9.59 10.18 10.73 11.67 12.31

International tourism receipts, USDbn, % y-o-y 11.3 -6.7 4.7 7.9 6.2 5.4 8.7 5.5

International tourism receipts, transport services, USDbn 1.78 1.79 1.57 1.71 1.83 1.94 2.12 2.25

International tourism receipts, transport services, USDbn, %y-o-y

20.8 0.8 -12.4 8.8 6.9 6.0 9.6 6.0

International tourism receipts, transport services, MADbn 14.41 15.50 13.20 14.31 15.45 16.46 18.04 19.12

International tourism receipts, transport services, MADbn, %y-o-y

16.0 7.5 -14.8 8.4 8.0 6.6 9.6 6.0

International tourism receipts, transport services, EURbn 1.28 1.41 1.19 1.28 1.46 1.62 1.77 1.88

International tourism receipts, transport services, EURbn, %

y-o-y 15.2 10.3 -15.7 7.2 14.6 10.4 9.6 6.0

International tourism receipts, travel items, USDbn 7.32 6.70 7.32 7.88 8.35 8.79 9.54 10.06

International tourism receipts, travel items, USDbn, % y-o-y 9.2 -8.5 9.2 7.7 6.0 5.3 8.5 5.4

International tourism receipts, travel items, MADbn 59.27 57.84 61.42 65.87 70.56 74.70 81.07 85.43

International tourism receipts, travel items, MADbn, % y-o-y 4.97 -2.40 6.18 7.25 7.11 5.87 8.53 5.37

International tourism, receipts for travel items, EURbn 5.27 5.27 5.54 5.88 6.68 7.33 7.95 8.38

International tourism, receipts for travel items, EURbn, %change y-o-y

4.2 0.1 5.1 6.0 13.7 9.7 8.5 5.4

e/f = BMI estimate/forecast. Source: World Bank, UN, BMI Calculation

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.




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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.

Table: Breakdown of Methods of Tourist Travel (Morocco 2011-2018)

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f

International passengers ondomestic airlines, mn

7.5 6.6 6.7 7.2 7.7 8.2 8.9 9.5

International passengers ondomestic airlines, % y-o-y

5.0 -12.5 2.3 6.9 6.8 7.3 7.8 7.4

Total airline takeoffs, '000 69.94 61.16 61.95 65.50 69.24 73.53 78.41 83.39

Total airline takeoffs, % y-o-y -7.1 -12.6 1.3 5.7 5.7 6.2 6.6 6.4

Domestic railway usage, millionpassenger km

4,819.00 4,819.00 5,139.67 5,458.87 5,763.24 6,048.02 6,316.16 6,571.35

Domestic railway usage, % y-o-y 9.6 0.0 6.7 6.2 5.6 4.9 4.4 4.0

e/f = BMI estimate/forecast. Source: World Bank, UN, BMI Calculation

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




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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.

Table: Hotel Accommodation (Morocco 2011-2018)

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f

Total overnight stays, '000 16,868.8 17,484.1 18,624.1 19,477.3 20,373.2 21,313.9 22,894.3 23,171.8

Total overnight stays, '000, % y-o-y

-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 ataround 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.

Table: Hotels and Restaurants Industry Value (Morocco 2011-2018)

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f

Hotel and restaurant industry

value, MADbn 18.85 19.75 21.47 22.02 23.41 25.07 26.91 28.86

Hotel and restaurant industryvalue, MADbn, % y-o-y

-3.1 4.7 8.7 2.6 6.3 7.1 7.3 7.3

Hotel and restaurant industryvalue, USDbn

2.3 2.3 2.6 2.6 2.8 3.0 3.2 3.4

Hotel and restaurant industryvalue, USDbn, % y-o-y

0.9 -1.8 11.9 2.9 5.3 6.5 7.3 7.3

Hotel and restaurant industryvalue, EURbn

1.7 1.8 1.9 2.0 2.2 2.5 2.6 2.8

Hotel and restaurant industryvalue, EURbn, % y-o-y

-3.7 7.4 7.6 1.4 12.9 10.9 7.3 7.3




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Hotels and Restaurants Industry Value (Morocco 2011-2018) - Continued

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f

Hotel and restaurant industryvalue, % of GDP 2.3 2.4 2.5 2.5 2.5 2.5 2.5 2.5

Hotel and restaurant industryvalue, USD per capita

72.64 70.29 77.47 78.60 81.62 85.84 91.03 96.58

Hotel and restaurant industryvalue, USD per capita, % y-o-y

-0.4 -3.2 10.2 1.5 3.8 5.2 6.1 6.1

Hotel and restaurant industryvalue per worker, USD

8,729.97 8,497.17 8,918.99 9,004.60 9,037.97 9,119.88 9,249.53 9,373.29

Hotel and restaurant industryvalue per worker, USD, % y-o-y

-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.




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Industry Risk Reward Ratings

Tourism Risk/Reward Index

Rewards

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.




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Table: MENA Tourism Risk Reward Index

Rewards Risks

Limits ofpotentialreturns

TourismMarket

Country Structure

Risks torealisation of

potential returns Market risksCountry

RiskTourism

Index Rank

UAE 66.31 68.33 63.28 62.73 78.15 50.10 65.23 1

Israel 60.00 50.00 75.00 61.06 61.85 60.41 60.32 2

Qatar 52.15 48.33 57.88 64.91 73.73 57.69 55.98 3

Bahrain 50.55 51.67 48.86 66.76 68.00 65.75 55.41 4

Saudi Arabia 48.12 55.00 37.79 60.04 72.51 49.83 51.69 5

Jordan 47.22 51.67 40.54 60.08 60.91 59.39 51.07 6

Oman 39.37 43.33 33.43 60.51 75.63 48.14 45.71 7

Morocco 41.07 51.67 25.16 54.84 58.16 52.12 45.20 8

Iran 44.30 50.00 35.74 39.99 58.75 24.65 43.00 9

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

Source: BMI




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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 Aéroports (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-Salé 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




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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.

Table: Table: Morocco Air Infrastructure Projects

Project Name Sector Value(USDmn) Size Unit Status Select Status Notes

New Airport Construction,Marrakech Airports 520 10

mn passengers/ yr At planning stage July 2014

Source: BMI Key Projects Database

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 high-

speed 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.




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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.

Table: Top 10 Global Hotel Group Presence

Hotel Group Presence in Morocco Brands Present in Morocco

Accor

Accor has around 40 hotels in morocco;These amount to over 4,900 rooms andover 2,500 employees in owned, leasedand managed properties.

Sofitel, Pullman, Mcgallery, Novotel,Mercure, ibis, ibis Budget.

Best WesternThe group have two hotels, one in Agadirand one in Casablanca.

Best Western

Choice International No Presence

Carlson RezidorThe group opened its first hotel inMorocco in Marrakech in late 2014.

Radisson Blu

Hilton

The HIlton group have one hotel in Rabat,and two more hotels in under developmentin Tangier: The Hilton Tanger City CentreHotel & Residences and Hilton Garden InnTanger City Centre are scheduled to openby 2015.

Hilton, Hilton Garden Inn

Hyatt

Hyatt has one hotel open and others underdevelopment. These include the HyattRegency Casablanca, and the Park HyattMarrakech

Hyatt Regency, Park Hyatt

Intercontinental Hotel Group No Presence

Marriott No Presence

Starwood

One hotel in Marrakech with a second dueto open in 2017 and two hotels inCasablanca.

La Meriden, Sheraton, W (from 2017)

Wyndham One hotel in Fes. 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.




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Many other large hotel groups are expanding into Morocco. Spain-based Meliá Hotels International has

entered into an agreement with Société de Développement 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 AtlasMountains 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.




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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.

Kenzi Hotel Group

Kenzi Hotel Group is a leading Moroccan hotel group, catering primarily to the high-end luxury travel

market in Morocco. The group has currently has eight hotels. These properties can be found in a range of locations including Casablanca, Marrakech, Agadir, Ouarzazate and Errachidia. Most of the properties offer

additional facilities including business centres, spas and swimming pools. Recently, Kenzi either partly or

fully refurbished all of its properties and has collaborated with international spa brands such as O-Spa by

Clarins.

Pickalbatros Hotels & Resorts

Pickalbatros Hotels & Resorts is relatively well established in the Moroccan tourism industry. The group

established its first hotel in Hurghada, Egypt, more than 20 years ago and has since expanded rapidly.

Pickalbatros now has 12 hotels in Hurghada, Sharm El Sheikh and Port Said in Egypt. The group also has

three properties in Marrakech, Agadir and Fes in Morocco. Brands operated by Pickalbatros include Beach

Albatros, Albatros Garden Beach, Royal Albatros, Aqua Blu, Aqua Vista, Albatros Palace Resort and

Jungle Park Resort. The group is also active in the wider tourism industry, with an aqua park in Sharm El

Sheikh, the Museum of Ancient Egyptian Heritage and The Higher Institute for Hotel & Tourism

Management.

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.




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OetkerHotel Management Company

Oetker Hotel Management Company is based in Germany and has been active in the hotel market for

well over 100 years. The company is concentrated entirely on the ultra high-end luxury tourism market.

Oetker has nine hotels in its portfolio currently. There are four hotels in France, one in Germany, one in the

West Indies, one in the Seychelles, one in the UK and one in Morocco. Each hotel is operated under a stand-

alone brand. The group will add a new spa hotel and resort to its portfolio early in 2015.

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.

Helnan International Hotels is a multinational hotel group originally established in Denmark in 1982. The group now has a diverse

portfolio of four and five-star hotels (owned, managed or under development) catering primarily to the high

end luxury travel market. Helnan now owns and operates properties in Denmark, Sweden, Austria,

Germany, Egypt and Morocco. Future development plans include a range of locations across Europe, North

America, the Middle East and North Africa.

RusticaeRusticae 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.




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Global Industry Overview

Tourism Global Industry Overview

A robust hotel project pipeline underlines our positive outlook for the global accommodation sector. We

forecast the number of hotels around the world to increase by just under 5% annually through to 2018, and

project the value of the hotel industry to grow from USD14,637bn in 2015 to USD17,700bn in 2018.

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 hotelprojects 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




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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 Mövenpick Hotels & Resorts, Thailand-

based 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.




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UAE Hotel Infrastructure Sees Significant Investment

Middle East Hotel Projects Breakdown (USDmn)


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.




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Tapering Project Pipeline As Market Reaches Saturation

Middle East Projects Breakdown (USDmn)


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 pre-

construction stages.




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Hotels Investment To Continue In Asia

Asia Projects Breakdown (USDmn)

Source: BMI's Key Projects Database

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.




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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.

Table: Global Assumptions, 2013-2018

2013 2014f 2015f 2016f 2017f 2018f 2019f

Real GDP Growth (%)

USA 1.9 2.1 2.6 2.4 2.4 2.4 2.4

Eurozone -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

Consumer Inflation (avg)

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

Interest Rates(Eop)

Fed Funds Rate 0.00 0.00 0.75 2.00 3.00 3.50 4.25

ECB Refinancing Rate 0.25 0.05 0.05 0.05 0.50 1.00 1.50

Japan Overnight Call Rate 0.10 0.10 0.10 0.10 0.10 0.10 0.10




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Global Assumptions, 2013-2018 - Continued

2013 2014f 2015f 2016f 2017f 2018f 2019f

Exchange Rates (avg)

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

Oil Prices (avg)

OPEC Basket (USD/bbl) 105.87 106.90 105.50 100.50 97.50 97.50 97.00

Brent Crude (USD/bbl) 108.70 105.52 100.50 98.00 96.00 95.00 97.00

e=estimate; f = forecast; eop = end of period. Source: BMI

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

Sub - Saharan Africa 4.9 4.9 5.4 5.7

Middle East & North Africa 2.5 2.8 4.9 4.0

Table: Developed Market Exchange Rates

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




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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.

Table: Developed States, Real GDP Growth Forecasts, 2013-2016

2013 2014f 2015f 2016f

Developed States Aggregate Growth 1.2 1.7 2.1 2.1

G7 1.3 1.7 2.0 1.9

Eurozone -0.4 0.8 1.2 1.4

EU-27 0.1 1.3 1.6 1.7

Selected Developed States

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

Czech Republic -0.9 2.4 2.5 3.2

Denmark 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

Ireland -0.3 2.3 2.5 2.6




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Developed States, Real GDP Growth Forecasts, 2013-2016 - Continued

2013 2014f 2015f 2016f

Italy -1.9 -0.2 0.6 0.8

Japan 1.6 0.9 0.8 0.7

Netherlands -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

Spain -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

United States of America 1.9 2.1 2.6 2.4

e/f = estimate/forecast. Source: BMI

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%).




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Table: Emerging Markets, Real GDP Growth Forecasts, 2013-2016

2013 2014f 2015f 2016f

Emerging Markets Aggregate Growth 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

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