The KRG has established specific growth objectives in order to boost its evolving tourism industry, which is emerging as a key sector that is expected to contribute to the rapid economic development of the Kurdistan Region. The results of these goals have, thus far, been strikingly positive. Massive infrastructure improvement, coupled with extensive urban renewal and restoration programs, has helped to both change the landscape of the Region and further develop an already burgeoning industry. The outside world is increasingly acknowledging the appeal of Kurdistan’s diversity of people, landscapes, and traditions. The New York Times recognized the Region as one of its “41 Places to Go in 2011.” National Geographic similarly named the Kurdistan Region as one of the “20 Best Trips of 2011,” citing it as an “oasis of peace and stability in a historically volatile region.” Besides its unique blend of stability and natural beauty, approximately 3,500 historical landmarks located within the three governorates make Kurdistan a key destination for local and foreign tourists.
In 2007, when the General Board of Tourism (GBOT) first began tracking industry figures, 377,397 tourists visited the Kurdistan Region. By 2012, that number had reached 2.2 million. Estimates indicate that that figure will rise to 2.9 million by the end of 2013, representing a 30% increase over the previous year. To continue that growth, the GBOT has targeted additional expansion to 4 million tourists by 2015 and 7 million by 2025. If those figures prove accurate, then the tourism industry will soon be responsible for creating 25,000 jobs and $1.5 billion in revenue. Approximately 1.47 million individuals (66%) that visited the Kurdistan Region in 2012 were residents of other provinces in Iraq, 313,144 (14%) were from the local population of the Region, and 433,711 individuals (20%) were from foreign countries. The majority of those international tourists came from neighboring Middle East states such as Iran and Turkey.
The GBOT is actively seeking to diversify these percentages. As such, it has implemented a marketing strategy focused on three distinct areas. The first market is greater Iraq, which is anticipated to have a more immediate impact. The second consists of the neighbors of the Kurdistan Region, particularly Turkey, Iran, and the Gulf Coast Countries. The third target market is Europe, with specific attention paid to those countries that have already established diplomatic relations in the Region.
To encourage increased tourism rates, the KRG has placed particular emphasis on improving the infrastructure of the sector. Since 2007, the KRG Board of Investment (BOI) has authorized a total of 101 tourism projects worth approximately $3 billion. The Erbil governorate received the lion’s share of that investment attention, with 54 tourism projects worth approximately $1.6 billion authorized for the area. In contrast, the Duhok governorate had 34 projects authorized by the BOI for a total of about $647 million. Despite significant development of the tourism sector in Slemani, there were only a total of 13 BOI-licensed tourism projects (worth a total of approximately $758 million) authorized in the governorate.
Kurdistan attracted $650 million in tourism revenues in 2012; that number is expected to increase to $1 billion in 2013 and $1.5 billion in 2015. To enable this progress, the government has begun issuing interest-free loans to those wishing to develop tourism ventures in locations across the Region, especially areas beyond the major population centers. To that end, a major investment project that is expected to have a significant impact on the continued growth of the sector is the planned resort development that will be located on the shores of Lake Dukkan in the Slemani governorate. The project is a joint-venture between FGH and Dubai’s real estate giant Emaar, and is expected to be completed with a budget of $2 billion.
Erbil: A Cultural Capital Emerges
The Arab Council of Tourism named Erbil the 2014 Arab Tourism Capital. As a result, in the coming year the capital city of Kurdistan will stage 40 different cultural events, including festive celebrations for Newroz (the Kurdish New Year), an international marathon, and multiple international film festivals. In addition, Nawzad Hadi, the Governor of the Erbil, predicts that, by 2014, nearly three million tourists will visit the city. To accommodate these visitors and adequately prepare for its new title, the capital is in the midst of an incredible revival of both its tourism infrastructure and cultural heritage.
The city’s central landmark (in terms of both geographic location and historical importance) is the Erbil Citadel, which is now a UNESCO World Heritage site given that it has been identified as one of the oldest continuously occupied settlements in the world. The Citadel was damaged by years of neglect, the destructive campaigns of Saddam Hussein, and its temporary usage as a refugee center. As such, the entire settlement is in the process of being painstakingly restored to its original form.
Expansion of the Hospitality Industry
According to GBOT reports, in 2007, there were only 106 hotels in the Region, 39 of which were located in Erbil. Today, there are more than 400 hotels active in Kurdistan, with approximately 250 located in the Region’s capital city. In contrast to their counterparts of the past (the majority of which were constructed in the 1970s or 1980s), the Region’s current hotel facilities are structurally modern and operate according to international standards. Sources indicate that an estimated $1 billion of private investment has been set aside to facilitate further development of the hospitality industry.
Moreover, internationally branded entities such as Starwood (which operates the brands Sheraton and Four Points by Sheraton), Marriott, Kempinski, and Hilton will soon manage multiple state-of-the-art facilities that are currently under development in Erbil. In addition, the Hyatt Hotels Corporation recently announced plans to open the “Hyatt Regency Sulaymaniyah”, which will be the first Hyatt-branded hotel in Iraq.
These new hotels will join the likes of luxury facilities like Rotana, Divan, and Tangram, which are already active and successful in the Region. Meanwhile, Millennium and Copthorne will soon manage three new hotels in Slemani, including the well-known Copthorne Baranan and the breathtaking Grand Millennium Sulaimaniyah. As a result of all of this rapid growth, GBOT estimates indicate that there are over 43,000 hotel rooms available in Kurdistan, the majority of which are regularly occupied by the numerous business travelers who frequent the Region.
Statistics demonstrate that hotel occupancy rates increased from an average of 73% in 2011 to 75% in 2012. Notably, occupancy rates have risen in tandem with the increased supply of available hotel facilities. As a result, experts have predicted that occupancy rates will increase to 80% in 2013. With average daily rates of $287 (an 18% increase over the average daily rates in 2011), the hospitality industry remains a lucrative sector for potential investors.