Africa, Middle East Take Softer Covid-19 Hit Than Rest of the World but Still Face Slow Recovery
Corporate travel in the Middle East and Africa on the whole fared better than the rest of the global regions, and the region could see better recovery than other parts of the world—though that distinction might be cold comfort as significant recovery is likely still several years away.
For the full year of 2020, business travel spending in the region declined 39 percent year over year, a lower drop than any of the other global regions, according to the Global Business Travel Association’s annual BTI Outlook. Excluding the first quarter, when the pandemic was still not quite a global event, business travel spending in the region was down 52 percent, the same rate as the Asia/Pacific region and lower than the rest.
One reason is that prior to Covid-19, there tended to be less discretionary travel to the region, meaning a higher percentage was essential travel that was more likely to endure amid the pandemic according to the GBTA. Additionally, while the region was home to some Covid-19 hotspots—Iran was among the earliest—the region generally had a caseload lower proportionally than North America and Europe.
“South Africa was probably the country that was affected the worst, but our numbers are probably not even in the top 20 around the world,” said Claude Vankeirsbilck, COO for American Express Global Business Travel’s operations in South Africa and Nigeria and its partner in the region, Tourvest Travel Services.
Despite lower infection rates, however, many parts in the region have faced severe travel restrictions, particularly Saudi Arabia, Kuwait and much of Africa.
“The fear was of Africa having very low and substandard health services, so African countries were very concerned that…health services were to be overwhelmed by the pandemic patients,” Ethiopian Airlines CEO Tewolde GebreMariam said in a recent CAPA Live virtual event. “So, because of this fear, they took extreme measures of blocking and closing borders, and they did it for too long as compared to the rest of the world.”
Combined 2020 international and domestic passenger numbers were down 67 percent year over year on African carriers and by 70 percent on Middle Eastern carriers, according to the International Civil Aviation Organization.
Per diems, as measured by BTN’s Corporate Travel Index, were a mixed bag in the region. Tel Aviv remained the region’s most expensive city measured by the index, though average daily business travel costs declined to $409.70, compared with $442.12 in last year’s index, and its total global ranking dropped to eighth from sixth. Per diems also declined year over year in Abu Dhabi, Cape Town, Istanbul, Johannesburg, Lagos, Muscat and Riyadh. They increased year over year in Cairo, Doha, Dubai, Kuwait City and Nairobi. In Kuwait City, in fact, the per diem jumped from $366.58 to $406.85, putting the Kuwaiti capital just a few dollars shy of Tel Aviv and into the top 10 globally.
In terms of business travel, the oil and gas industry has been “a bit of a savior” for several markets in the region, such as Saudi Arabia, the United Arab Emirates, Kenya and Nigeria, said Ciarán Kelly, managing director for the UAE and regional leader for the Middle East and Africa for FCM Travel Solutions. The energy industry is less dominant in South Africa, but travel from pharmaceutical, construction and government sectors has remained stronger than other sectors, Vankeirsbilck said.
The region has seen a “massive increase” in apartment stays for business travel, particularly in regions with strict travel restrictions that necessitated longer stays, as well as private aviation use—with some companies going as far as to buy their own private aircraft during the pandemic, Kelly said. Domestic travel in markets like South Africa, Nigeria and Saudi Arabia has been dominant. Additionally, smaller companies have been traveling more than large companies.
“The SMEs are a bit more hungry and a bit more of risk-takers,” Kelly said. “They need to travel to survive, because they don’t have as much cash flow.”
Clients wanting pre-trip approval in the region also has increased significantly, he said. About 78 percent of FCM clients in the region are asking for an approval process, compared with about 40 percent prior to the pandemic.
Travel trends in the Middle East and Africa were showing some signs of promise in the fall. The UAE in particular “had a good run” from September to January, Kelly said. South Africa also saw business picking up then as it lifted many of its lockdown restrictions.
“We started seeing some green shoots in terms of business travel in the region,” Vankeirsbilck said. “We saw domestic travel pick up in October and November and a larger part of December. It was nowhere near pre-Covid levels, but it was promising.”
While nearly all the markets in the index saw hotel rates decline from the first quarter of 2020 into the second quarter, many saw significant quarter-over-quarter increases in the third quarter, according to CTI data. Rates in Istanbul and Kuwait City were up about a quarter, in Muscat by about a third, in Dubai by more than 50 percent and more than double the previous quarter in Johannesburg.
In more recent months, however, growing cases in Europe and elsewhere have caused many areas in the region to reinstate shutdowns and restrictions, so much of that growth has been lost. South Africa in particular has taken a hit as the namesake of more transmissible Covid-19 variant that first was identified there.
As such, monitoring those changes and assuring duty-of-care for traveling employees remains at the forefront of any travel to the region, said Glen Ransom, the security director for International SOS based in Dubai.
“Clients really want to have access to timely information and analysis of travel disruptions and notifications when situations change, so they can take the appropriate steps of the employees on the ground,” Ransom said. “The key point is the assurance that they’ll be able to get a person home or handle it if someone has a health issue.”
Preparing for Recovery
As separate regions, the Middle East and Africa are in vastly different places in terms of Covid-19 vaccine rollout. In Africa, things are going “a little bit slower” than the rest of the world, as the World Health Organization and vaccine suppliers are being encouraged to ramp up vaccination efforts across the continent, Vankeirsbilck said.
The Middle East, meanwhile, boasts some of the highest Covid-19 vaccination rates in the world, led by Israel, but the UAE, Kuwait, Oman, Bahrain and Qatar all also have reported high rates, Kelly said. As of late February, about 40 percent of the UAE’s population had been vaccinated, and suppliers such as hotels and airlines are hosting “vaccine camps” to get large portions of their workforce vaccinated, he said.
It remains to be seen how vaccines will ultimately tie into travel requirements in the region, but policies already are popping up, including airlines allowing travelers to forgo testing requirements if vaccinated and Saudi Arabia requiring its citizens to be vaccinated in order to travel abroad, according to Kelly.
Once travel is able to rebound, pricing in South Africa at least is likely to have discounts at first to stimulate demand but ultimately bounce back fairly quickly to pre-Covid-19 levels, Vankeirsbilck said. Several key Middle Eastern markets are primed for a strong demand bounce back when Covid-19 is under control as well.
The GBTA’s BTI projects the Middle East and Africa will have an annual recovery rate of about 4.3 percent through 2024, which is higher than all other regions, though the Covid-19 variants could stifle that rate.
Not only are some major events on tap in the region—the postponed Expo 2020 in Dubai later this year and the World Cup in Qatar next year, for example—but the region has seen the loosening of some roadblocks to business growth. Qatar and Saudi Arabia have come to an agreement regarding the diplomatic crisis that freed Qatar from a blockade imposed by many of its neighbors, Oman is opening up to more visa-free travel from several nations and Israel last year normalized relations with Bahrain and the UAE, which should open up for more business investment, Kelly said.
Even so, travel managers will need to be on elevated alert in terms of duty of care across much of the region even if Covid-19 becomes more controlled, as the lingering economic and societal effects from long-term shutdowns could lead to increased unrest, according to Ransom.
“Particularly [in areas] that had significant socio-economic or political unrest before the pandemic, such as Lebanon, Iraq and Algeria, the restrictions are exacerbating those,” he said. “If we look in the longer term at reduced travel and reduced needs for oil, that also will affect those grievances, leading to increased crime.”