SECTION V Tourism Development Strategy…………………………………………… 32-48 Diagnosis of Present Tourism Situation …………………………………

Republic of Yemen

Mukalla City Development Strategy

Tourism Sector

The World Bank / Cities Alliance

Gianni Brizzi, Consultant

May 2008

Contents

INTRODUCTION

EXECUTIVE SUMMARY ……………………………………………………………… i-ix

SECTION I Description of the Hadramout Region …………………………………… 1-8 Mukalla City ……………………………………………………………... 1 Hadramout Coastal Area ……………………………………………….... 3 Wadi Hadramout ………………………………………………………… 4 Socotra …………………………………………………………………… 5 Socio-economic environment ……………………………………………. 5 Climatic conditions ………………………………………………………. 6 Issues and prospects …………………………………………………….… 6

SECTION II Present situation of tourism sector in the Hadramout Region ……………. 9-19 Tourism demand ………………………………………………………….. 9 Tourism supply …………………………………………………………… 12 Accommodation facilities ………………………………………………… 12 Tourism services ……………………………………………………...... 14 Tourism economy ………………………………………………………… 16 Issues and prospects ……………………………………………………… 17

SECTION III Governance and administration of tourism sector ……………………...... 20-26 Ministry of Tourism ………………………………………………………. 20 Ministry of Vocational Training …………………………………………. 21 Ministry of Culture ……………………………………………………….. 22 Ministry of Interior ……………………………………………………….. 23 General Investment Authority …………………………………………… 23 Private institutions ………………………………………………………... 23 Issues and prospects ……………………………………………………… 24

SECTION IV Strengths, Weaknesses, Opportunities and Threats (SWOT)…………….. 27-31 SWOT analysis …………………………………………………………… 27 Overriding country issues ………………………………………………… 29

SECTION V Tourism development strategy…………………………………………… 32-48 Diagnosis of present tourism situation …………………………………..... 32 Assessment of constraints ……………………………………………….... 33 Identification of priority products and markets …………………………… 34 Development objectives and associated indicatots………………………… 37 Action plans and priority projects …………………………………………. 38 Benefits …………………………………………………………………….. 47 Contents

List of tables

Table 1. Hadramout Region. Selected socio-economic indicators. Year 2002 ………….. 6 Table 2. Mukalla and Hadramout Region - Ranking of tourism destination relative to international market …...……………………………………………... 7 Table 3. Mukalla and Hadramout Region - Impact of international tourism on local Population ...………………………………………………………………….….. 7 Table 4. Arrivals and bed nights in the Hadramout Region from 2000 to 2006 ….…...... 9 Table 5. Arrivals and bed-nights in Mukalla city and coastal area from 2000 to 2006 ...... 9 Table 6. Arrivals and bed-nights in Wadi Hadramout from 2000 to 2006……………….. 9 Table 7. International arrivals in Yemen from 2000 to 2006……………….…………….. 10 Table 8. Arrivals and bed-nights by nationality in Mukalla City and coastal area in 2006……………………………………………………….…………………… 10 Table 9. Hadramout Region: accomodation capacity in 2006……………………………. 12 Table 10. Hotel beds by category in the Hadramout Region in 2006 …….……………….. 12 Table 11. Average construction cost per hotel room and hotel category..………………..... 14 Table 12. Monthly salary range of hotel staff ………………………………………….…. 14 Table 13. Mukalla and Hadramout coastal area - tourist facilities..………….…………….. 15 Table 14. Average tourist expenditure by type of tourist in the Hadramout Region ……… 16 Table 15. Hotel employment in the Hadramout Region in 2006……………………….….. 16

List of boxes

BOX 1. Most significant tourist attractions of Mukalla City ……………………………. 2-3 BOX 2. Mukalla City - Survey of 3 Hotels Operating on International Market …..….…. 13 BOX 3. Tourism Development Plan …………………………………………………….. 21 BOX 4. National Hotel Tourism Institute (NAHOTI) …………………………………... 22

Annex I Images of Mukalla. Pictorial Tour…………………………………………… 49-60

INTRODUCTION

This report contributes to the studies for the formulation of a long-term economic development strategy of the city of Mukalla. With Aden and Hodeida, Mukalla is part of the Port City Development Program sponsored by the Government of Yemen with World Bank support. Cities Alliance provides assistance by funding selected research activities, including the present study.

The selection of tourism as a strategic sector for the economic development of Mukalla stems from the outcome of a competitiveness analysis of the city’s development factors. This analysis indicates that, along with the fishing industry and the service sector, tourism holds the best development promises.

The present report addresses the fundamental questions of what is the scope of these promises, what will it take to materialize them, and how can they best be fulfilled.

In particular, the report addresses the above questions by:

1) presenting Mukalla and its tourism assets, including those of the Hadramout region and Socotra which are intimately linked to the city’s tourism development; 2) reviewing the present situation of tourism in Mukalla and its region within the context of Yemen; 3) describing the governance and administrative systems that oversee the tourism sector; 4) assessing the strengths, weaknesses, opportunities and threats that influence local tourism development; and 5) defining a tourism development strategy inclusive of recommendations on institutional strengthening, public infrastructure investments, marketing and branding, human resource development, and development targets and indicators.

An executive summary precedes the full report.

EXECUTIVE SUMMARY

i. Nestled in precipitous cliffs dropping into the Arabian Sea, isolated from the rest of the country and from the entire world, the city of Mukalla has been for centuries a small seaport bypassed by international trade but for its role of gateway to Wadi Hadramout, a hidden paradise behind vast desert plateaus. Only in the last decade, the city has experienced significant demographic and economic growth as a result of the strengthening of its role of regional capital and public and private investment in infrastructure, services and real estate. ii. In spite of its limited notoriety, Mukalla is a city of considerable beauty that maintains almost intact the architectural flavor of the old city ports that dotted the trade routes along the Arabian and the Red sea. The coastal area around Mukalla is equally impressive. To the West, it boasts a succession of charming bays and natural sites with unspoiled beaches and an uncontaminated environment; to the East, in addition to rare natural sites, it has a number of historical towns and fishing villages set on a sandy coastline. Though physically separate and somewhat distant, Wadi Hadramout and its network of tributary canyons is a unique and well- known tourism destination. This area maintains the charm of a distinct and rare place with villages of great architectural beauty, traditional farming activities, lush tropical vegetation and a largely unspoiled physical environment. iii. Comparable cities and sites in other countries of North Africa and the Middle East as well as on the Indian Ocean would have experienced major tourism development. Yet, Mukalla and the Hadramout Region received only 269,000 tourists in 2006 of which only 47,670 were international visitors including 15,000 from other Gulf countries. The striking modesty of the latter figures emerges when compared, for example, with tourism arrivals to Hammamet in Tunisia, Agadir in Morocco and Sharm-el Sheik in Egypt which, in the same year, received 635,000, 578,700 and 1,2 million international visitors, respectively. iv. If tourism development is a government objective for Mukalla and its region and this objective is shared with the local population, questioning the reasons that until now have prevented or delayed such development is at order. In assessing these reasons, it is essential to acknowledge that Mukalla and the Hadramout Region very much share this situation with Yemen as a whole. Indeed, in 2006, in spite of its considerable tourism assets, Yemen received only 382,332 international tourists, compared with 6.5 million in Tunisia and Morocco and 8.6 million in Egypt. v. Common views point to the lack of adequate accommodation and other tourism facilities, limited land and air transportation, insufficient marketing, and, more specifically for Mukalla and Wadi Hadramout, their isolation and resulting marginalization within Yemen. All of these reasons are relevant but they are more an effect than a cause. The roots of the problem should be rather searched in governance, cultural and political factors that negatively affect the establishment and operations of a vital tourism industry in Yemen, in general, and in the Mukalla Region, in particular.

i vi. Opaque administrative procedures, dysfunctional legal and judicial systems, unwarranted interferences by central and local officials, and crowding out pressures from privileged national and local business groups hamper foreign and new domestic investment and, therefore, prevents the development of adequate accommodation and other tourism facilities. Traditional family values and social behaviors combined with widespread dislike for service activities limit the participation of women and hold back the development of an effective and dedicated workforce in the tourism sector. International and domestic political tensions create real and perceived security problems that discourage international tourism. vii. Is there any way to overcome these entrenched problems and create a positive climate for tourism development in Yemen, Mukalla and the Hadramout Region? The challenge is open. Recent government policies and associated measures, such as the identification and planning of tourism development zones by the General Tourism Authority and the facilitation of tourism investments by the General Investment Authority, move in the right direction and appear promising as shown by the recent tourism development activities of entrepreneurs and business groups from the Gulf countries. Albeit to a lower extent, Mukalla benefits of this trend. The road to certain and sustainable progress is however long and requires rigor, determination, and persistence. viii. The tourism traffic that Mukalla and the Hadramout Region could attract greatly depends on their natural and cultural attractions (Section I of main report), their tourism development status (Section II of main report) and their tourism governance system (Section III of main report). This traffic includes:

. Mukalla City and its vicinities. Traffic for business activities, including potential specialized business tourism for conferences, training courses and corporate events; traffic for educational activities; traffic for vacation tourism; traffic for cultural tourism; and traffic for tourists directed to the island of Socotra; . Hadramout coastal areas. Traffic for beach-based vacation tourism; and traffic related to sightseeing activities and specialized tourism, in particular ecotourism; . Wadi Hadramot. Traffic for business activities, traffic for vacation tourism; and traffic for cultural tourism. ix. Scuba diving, game fishing, eco-tourism, desert excursions, thermal tourism in hot and cold springs, regional adventure tourism to and from Oman and cruise ship tourism represent additional specialized markets of minor importance. x. The types of traffic described above cater to different markets in terms of both origin and income of the related tourists. Also, they entail different lengths of stay and, consequently, different levels of utilization of accommodation and other tourism facilities.

. Mukalla City and its vicinities. Business traffic to Mukalla City is mainly domestic, though with some international visitors drawn by its oil and gas, fishing and service activities. As a result of Mukalla’s small economic base and lack of city life, specialized business tourism is almost inexistent. The growth of business traffic is likely to reflect the growth of Mukalla’s economy; that of corporate tourism is bound to be limited, at

ii least in the near future. Educational traffic is linked to Mukalla’s two universities. Because of the type of educational facilities, this traffic is poor in revenues and mainly confined to non-hotel accommodation facilities. However, it is bound to have some expansion with marginal but increased benefits for the tourism industry. Vacation tourism rests on domestic and international visitors. International visitors are mainly from Saudi Arabia and other CCG countries. Many of them are of Hadrami origin. If appropriately tended, this tourism presents high growth potential. Indeed, Mukalla is an ideal destination because of its vicinity to the originating countries, its social environment with traditional cultural values, its beautiful physical setting and its sandy beaches. Moreover, the city has a substantial amount of prime land ready to be developed with accommodation and other tourism facilities. Tapping on the above potential remains a challenging objective because it will require major improvements in Mukalla’s transportation facilities, urban services and urban environment, particularly in the medina and city center. Also, it will require easing the access to land that, by location, acreage and price, is suitable for tourism development. Presently, such access is constrained by fragmentation of land ownership on the seashore, unclear land titling, and land speculation. Cultural tourism is mainly international and linked to circuit tourism in Wadi Hadramout. As the latter expands, Mukalla should aim to, firstly, increase the number of travelers who will add a visit to the city as part of their trip to Wadi Hadramout and, secondly, extend their length of stay in the city by offering appropriate recreational, shopping and sightseeing opportunities. With the exception of thermal tourism which mainly concerns the domestic market, specialized tourism for scuba divers, adventure travelers, bird watchers and cruise-ship visitors could cater to a mixed international, regional and domestic clientele. In spite of its growth potential, the traffic generated by this type of tourism will remain a niche market. More significant in size could be the traffic generated by East Asian pilgrims of Hadrami origin traveling to Mecca and Medina. These pilgrims can be lured into paying a visit to their ancestral land through improved air travel connectivity and targeted tourism promotion.

. Hadramaout Coastal Area. At present, beach-based tourism is inexistent but for a small vacation village being developed in proximity of the Al Rayan International airport and targeted to domestic clientele. The coastal area has a number of locations suitable for the development of beach resorts that could attract domestic, regional and international visitors. In the near future, because of Hadramout’s socio-economic environment and the investment needs required to establish it as a marketable international destination, it is unlikely that any investors would venture in the development of large-scale projects directly targeted to the European market. Conversely, there is room for the development of projects aimed at the domestic and regional market, including western expatriates living in the Gulf countries. Initially, these projects can best be combined with those for the development of vacation tourism in Mukalla. This leads to the development of resorts within or close to the city that would allow vacationers to enjoy simultaneously the city’s recreational facilities and life opportunities and its beautiful beaches. Such resorts could offer hospitality to international cultural tourists who want to combine their visit to Wadi Hadramout with a beach vacation as well as tourists interested in scuba diving, adventure travel and the coastal ecosystems.

iii . Wadi Hadramout. Business traffic is linked to the administrative and economic activities engendered by the population of the Wadi. It is mainly concentrated in Seyoun, the main administrative and economic center and the location of the international airport. Similarly to Mukalla, this traffic is likely to expand in accordance with the Wadi’s economic growth. At present, vacation tourism mainly consists of Yemeni families or GCC citizens of Hadrami origin spending time in their native homes or visiting local relatives. Given the beautiful landscape of the Wadi and its recreational opportunities, there is considerable potential for fostering the above tourism as well as expanding it to international visitors who, in addition to satisfy their cultural interests in the visit of the Wadi’s traditional villages and architectural wonders, may want to spend a few days of relaxation in its unique physical environment. Achieving this objective requires the development of appropriate accommodation facilities. Possibly, the facilities for international tourists should be clustered in specialized areas that will act as resorts and have sufficient clientele to sustain diversified leisure activities and tourism services. The offer of accommodation facilities would have to include hotel rooms as well as rental apartments and villas to satisfy the demand of long stay vacationers. Cultural tourism is generally part of circuit tourism encompassing multiple Yemeni destinations. Visitors to Wadi Hadramout generally start they visit to Yemen from Sana’a, entry point to the country, travel in the northern regions and then fly in and out of Seyoun for their visit to Wadi Hadramout. A variant to this circuit consists in flying tourists to Mukalla for a one-day visit of the city and then bringing them to Wadi Hadramout by land, or vice versa. Potentially, Wadi Hadramout can become a stand-alone destination with international tourists directly flying in and out of the Seyoun airport. This will go hand by hand with the establishment of Wadi Hadramout as an international vacation destination. xi. Any future development of tourism in Mukalla and the Hadramout Region could be best achieved through a multi pronged opportunistic approach. This calls for operating simultaneously on all the above tourism products and related markets to exploit their synergies while focusing on the products and markets that have greater development potential. A careful sequencing of the development of products and markets will be critical to guarantee success and sustainability to the promotional and investment activities of the public and private sector. For example, the development of beach-based tourism within Mukalla for the domestic and regional market could lead to the subsequent successful development of international beach-based tourism, including in resorts that may be built on the coastal area. Trying the opposite approach could result in failure. By the same token, the development of cultural tourism in Wadi Hadramout could have spill over effects on the development of vacation tourism in the Wadi itself as well as on the development of beach-based tourism in Mukalla and the coastal area. The promotion of one-time visitors from CCG countries could result in repeat visitors for summer vacations, who may invest in the purchase of private accommodation facilities. xii. Based on a SWOT analysis of Mukalla tourism sector (Section IV of main report), it can be argued that the best tourism development strategy for Mukalla and the Hadramout Region rests on the following tenets:

iv 1) because of the present socio-economic conditions of the region and its present political environment, the market with greatest growth potential is vacation tourism in Mukalla targeted to national and GCC clients, in particular of Hadrami origin;

2) because of the present investment climate of Yemen and sources of investment capital, the investors that are more likely to be interested in the development of tourism in Mukalla and the Hadramout Region are from the Gulf countries. These investors include large business groups as well as individual entrepreneurs. Among the individual entrepreneurs loom large those of Hadrami origin;

3) Mukalla offers numerous locations for the development of the accommodation facilities and tourism services required for the development of vacation tourism. Most of these locations are adjacent to attractive beaches that let combine city-based with beach-based vacation tourism. The urban location of hotels and guesthouses would offset the high seasonality of vacation tourism by allowing their marketing also to international businessmen and circuit tourists. The above combination could generate a quantum leap in arrivals and bed-nights and establish Mukalla as a significant tourism destination within Yemen and the Gulf region;

4) building on the above quantum leap and its positive effect on Mukalla’s urban services, recreational facilities and image, over time it will be possible to market the city to a broader international clientele, including western tourists. This would eventually lead to the development of beach resorts in more isolated yet beautiful locations along the Hadramout coastal area; and

5) given its extraordinary physical environment and its unique cultural heritage, Wadi Hadramout could be increasingly promoted as a stand-alone destination and could be marketed not only for cultural but also for vacation tourism. xiii. The tourism development strategy resulting from the above tenets should be completed by actions to ensure that:

6) cultural tourists to Wadi Hadramout also visit Mukalla and its coastal area;

7) cultural tourists visiting Mukalla expand their length of stay as a result of a proper valorization of the city’s cultural patrimony and improvement in the city’s tourism services;

8) tourists interested in scuba diving, sightseeing, bird watching, trekking, travel to and from Oman, travel to Socotra, thermal cares at local cold and hot springs and other specialized activities find appropriate information and assistance to meet their demand of services; and

9) cruise-ships traffic is enhanced through the provision of appropriate docking facilities or transfer boats as well as effective land transportation for the visit of Mukalla and, optionally, the visit of its coastal area (Bir Ali, Sharma) or its closer oasis (Wadi Do’an).

v xiv. Any meaningful strategy requires the definition of objectives to measure its successful implementation. A set of objectives for the city of Mukalla and its vicinities is presented below. These objectives as well as their associated indicators and target values are indicative and meant for discussion. Besides being indicative, target values should be periodically updated, based on actual performance and progress.

Short-term objectives

Objective indicator target value

 Support business tourism development Increase length of stay 10% Increase daily expenditure 20% Promote spouse travel 2%

 Develop vacation tourism (domestic and regional markets) Increase accommodation supply 1,500 beds Increase tourism services 10 establishments Increase length of stay 20% Increase daily expenditure 30% Reduce seasonality 30% Increase regional clientele 30%

 Develop cultural tourism Increase length of stay 40% Increase daily expenditure 30% Increase share from Wadi Hadrmt 40%

Medium-term objectives

Objective indicator target value

 Develop corporate tourism (>10 % of total business travel) Improve city life 10 establishments Promote business events 5 per annum Establish facilities conv. & trade center

 Develop vacation tourism (European and Asian markets) Increase accommodation supply 6,000 beds Increase tourism services 40 establishments Attract East Asian pilgrims 5,000 bed-nights

 Develop specialized tourism Promote scuba diving 800 bed-nights Promote adventure travel 1,000 bed-nights Promote eco-tourism 1,200 bed-nights Promote cruise-ship tourism 20 boat arrivals p.a. Enhance gateway role to Socotra 3,000 arrivals

 Promote cultural exchange tourism with local universities Promote educational events 1,000 bed-nights

vi xv. The implementation of the above development strategy calls for specific central and local government actions and projects. The implementation of these actions and projects should be coordinated with the tourism development activities undertaken by the private sector, notwithstanding that the latter should be free to pursue different strategies based on its own market assessment and investment capability. A list of priority actions and projects (details in Section V of main report) is presented below.

. Restructuring and revitalizing Mukalla’s old city. With its historical buildings, medina and corniche, the old city is critical to Mukalla’s tourism development. Government should develop plans and projects to restructure and revitalize the old city. The implementation of these plans and projects requires the designation of the old city into a special cultural heritage area. Such designation should be associated with the preparation of detailed land use plans and building regulations. Moreover, it should constitute the basis for the implementation of specific development projects by the public sector either directly or in partnership with private entrepreneurs. These projects include: (i) the creation of an Agency for the Protection and Development of Old Mukalla and Mukalla’s sea-front; (ii) the protection and rehabilitation of the medina; (iii) the protection and valorization of the corniche and its urban fabric; (iv) the recovery of the old port quay; (v) the restoration and adaptive reuse of the Sultan Al Qu’aiti Palace; (vi) the restoration and the adaptive reuse of the present governorate administrative complex; and (vii) the resoration and adaptive reuse of the Sekat Yaacoup building.

. Protecting and developing Mukalla’s sea-front. Mukalla’s tourism appeal and, therefore, tourism development potential, greatly depends on the urban quality of its seafront and its effective use for tourism related activities. The unchecked construction of unqualified housing and other structures in Fowah and Hella would compromise the image of the city as a tourism destination and result in the permanent loss of valuable land. The same applies to the land reclamation areas adjacent to the mouth of Khour Al Mukalla, whose uncontrolled development could have a devastating visual and functional impact on the corniche. Finally, the present port of Mukalla is insufficient to meet the needs of the city and the Hadramout Region. Plans are under way to transfer it to a more suitable location. Transforming the existing port into a marina while reserving part of it for fishing boats would greatly enhance the tourism appeal of the city. Protecting and developing Mukalla’s seafront calls for the following priority projects: (i) creation of the above mentioned Agency for the Protection and Development of Old Mukalla and Mukalla’s sea-front; (ii) restructuring of the Khour Al Mukalla banks; (iii) conversion of the present commercial port into a marina and fishing port; and (iv) controlled development of the land reclamation projects at the mouth of Khour Al Mukalla.

. Developing integrated resorts for international tourism. To-date the development of accommodation and other tourism facilities in Mukalla and the Hadramout Region has taken place through the activities of investors who have operated in isolation and built relatively small individual tourism establishments. This type of development suits well the needs of business tourism but is of limited appeal to vacation tourists. The establishment of integrated tourism resorts combining on a designated sea front site

vii several types of accommodation facilities and tourism services would enhance the image of Mukalla as a tourism destination and increase its appeal to vacationers. Within Mukalla City and its vicinities there are several locations suitable for the development of similar resorts. Because of their urban environment, sites along the beach in Fowah are particularly suited for prevailing city-based combined with beach-based vacation tourism. Because of their vicinity to the city and yet natural environment, sites along the beach of Hella and Al Rouweinat are suited for prevailing beach-based combined with city-based vacation tourism. Finally, because of their relative isolation, sites along the beach in Al Rayan are mainly suited for beach-based vacation tourism. To promote the implementation of an initial integrated resort in Mukalla, the Governorate, in association with the Ministry of Tourism and the General Investment Authority, should take an active stance to ensure the availability of the required land, the strengthening and/or the development of the required trunk infrastructure, and the search of an appropriate developer.

. Promoting Mukalla as a corporate tourism destination. Taking advantage of its physical appeal and attractive beaches, Mukalla qualifies to become a major national destination for specialized business traffic related to conventions, congresses, trade fairs, corporate events and corporate reward travel. Initially, this traffic would mainly rest on Yemeni businesses. In developing corporate tourism, Mukalla will compete with Sana’a and Aden and, therefore, will have to find its own market niche as well as to capture their clients whenever they want to experience new destinations. The facilities required to develop corporate tourism include a convention/trade center and grounds for hosting trade fairs. The publicly owned site already identified by the Chamber of Commerce in Fowah constitutes an ideal location. Within this site, it is possible to: (i) develop an integrated resort with hotels and secondary residences, along the beach front; (ii) create a convention complex with trade offices, next to the parade grounds; and (iii) use the parade grounds for installing temporary structures to host exhibitions that cannot be accommodated solely in the halls of the convention complex.

. Enhancing public and private partnership in the tourism sector. In Yemen, partnership and coordination between government officials and private entrepreneurs in the tourism sector has yet to reach satisfactory levels of efficiency and effectiveness. This is particularly noticeable in Mukalla and the Hadramout Region. It goes for tourism promotion, the organization of cultural events, the protection, conservation and exploitation of cultural assets, the facilitation of tourism investments, and the development of human resources for the tourism industry. No one is in charge of assessing the challenges faced by the local tourism industry and offering adequate solutions that can be shared among all the parties concerned. With the development of tourism, appropriate institutions should be established to promote partnership and to facilitate coordination. Two initiatives could be particularly helpful: (i) the Governorate should establish a High Commission for Tourism Development and Operations to support the development of the tourism sector, assess its operational needs, facilitate the activities of hotels and other tourism establishments, and assist the tourism industry to deal with local social and economic realities; and (ii) the Chamber of Commerce should establish a

viii formal tourism industry chapter and sponsor the creation of local branches by the Yemen Hotel Union and the Yemen Travel and Tourism Association.

. Promoting tourism investments. The potential for vacation tourism in Mukalla by GCC citizens, in particular of Hadrami origins, combines with the availability of ample investment capital in the GCC countries. Central and local government authorities should carry out specific efforts to address the above capital to the creation of tourism accommodation facilities and other establishments in Mukalla and the Hadramout Region. These efforts should include: contacting friendly GCC governments and through them inviting institutional investors to consider funding tourism projects; promoting joint ventures between Yemeni entrepreneurs and these institutional investors; enticing GCC investors of Hadrami origins to invest in their ancestral land. To carry out the above efforts and facilitate the activities of investors, the Hadramout Governorate should devise appropriate institutional measures and undertake appropriate operational activities. Consideration should be given to the following two actions: (i) creation of a Tourism Investment Commission for Mukalla and Mukalla’s beaches; and (ii) launching of a GCC Tourism Investment Campaign.

. Promoting and marketing the tourism destination Mukalla. Tourism promotion is a joint responsibility of government and the tourism industry. At present, the promotional effort is limited both in scope and participation. Addressing the above shortcoming calls for increased cooperation between the Ministry of Tourism, its representatives at local level and the local tourism industry. Such cooperation should focus on the following projects: (i) preparing comprehensive tourism guides for Mukalla and the Hadrami coast; (ii) fostering the branding of Mukalla and its Region through a clear identification of its main tourism products; (iii) targeting promotional efforts to specific promising markets, such as East Asian pilgrims of Hadrami origin; and (iv) carrying out surveys to monitor the performance of the tourism sector and the results of the related branding and promotional activities.

. Exploiting tourism synergies between Mukalla and the Hadramout Region. Given its central administrative, economic and geographic position within the Hadramout Region, Mukalla could greatly benefit from the development of tourism in Wadi Hadramout and Socotra. Moreover, it can benefit from the vicinity of Oman and the city of Salalah, which is progressively growing into an international tourism destination. The following projects could contribute to a more effective exploitation of the synergies among tourism development in Mukalla and the above destinations: (i) development and promotion of stop-over packages to Mukalla and its coastal area for visitors to Wadi Hadramout and Socotra; (ii) preparation of a comprehensive Tourism Guide of Wadi Hadramout; (iii) promotion of tourism packages combining the Hadramout Region with Oman and Salalah, in particular; and (iv) protection and control of the Hadramout Region’s coastal environment. xvi. Assessing the economic benefits of implementing the proposed tourism development strategy is challenging because Mukalla represents a new tourism destination with no previous experience and minimal reference data. Yet, it could be estimated (Section V of the main report)

ix that the implementation of the proposed strategy will generate direct tourism expenditures totaling US$102 million per annum in 2012 (short-term) and US$232 million per annum in 2017 (medium-term). The expenditures related to tourists staying in hotels will amount to 73% and 76% of the above amounts or US$75 and US$176 million, respectively. The remaining expenditures will relate to tourists staying in secondary residences, including rental apartments and chalets. Also, it could be estimated that, that the direct and indirect employment generated by tourism will provide some 9,500 and 21,300 jobs per annum in 2012 anmd 20-17, respectively. Finally it could be estimated that during the periods from 2008 to 2012 (short- term) and from 2012 to 2017 (medium-term), the investment outlays for the development of tourism accommodations and other related facilities, including infrastructure, will exceed US$160 and US$450 million, respectively. While the private sector is expected to finance most of the above outlays, central and local government will have to participate in the financing of trunk infrastructure, possibly for some US$30 and US$90 million, respectively. During the same periods, the number of jobs associated to the above construction activities will be in the range of 2300 and 6000 per annum, respectively.

x SECTION I

MUKALLA CITY AND THE HADRAMOUT REGION

This section provides an overview of the physical, social and economic environment of the city of Mukalla and its region as background information to assess their tourism potential. The analysis pays particular attention to the appeal of natural and cultural assets, their present conditions and their protection and conservation needs.

1.01 With a population of approximately 200,000 inhabitants, Mukalla is the third most important port city in the Republic of Yemen. It is also the administrative capital of Hadramout, the largest of Yemen’s 18 governorates with about 36% of the nation’s total land area (161,749 kmq) but only 5% (about 1 million) of its total population. Due to its central location on the Arabian Sea, Mukalla constitutes a natural gateway to the entire region which, in turn, encompasses two main geographical and economic areas: a sparsely populated coastal strip of some 300 km between the Shabwa and the Al-Mahara governorates; and the fertile and more densely populated Wadi Hadramout and its affluent canyons. In addition, Mukalla constitutes the closest sea and air link to the island of Socotra.

Mukalla City

1.02 Site of an ancient settlement, Mukalla owes its status of an established town to Sultan Qu’aiti who made it capital of his sultanate in 1915. However, it is only in the late 1950’ that, following rumors of oil discoveries in the Hadramout Region, Mukalla emerges from isolation and grows into a regional capital. This transformation has accelerated in recent years with the progressive implementation of the administrative decentralization process. To-day, in addition to being the third port of Yemen - albeit at a distance from Aden and Hodeida -, Mukalla is a major center of administrative, social and economic services, the location of two regional universities and other educational establishments, the doorway to important oil and natural gas exporting terminals, and the hub of an extensive fishing and fish processing industry.

1.03. Physically, the modern city stretches along some 20 kilometers of coastline on both sides of the old city and the mountainous outcrop that surrounds it and that splits the modern city into two distinct sets of neighborhoods. The western neighborhoods gently slide into a long sandy beach from underneath a mountain ridge; the eastern neighborhoods spread into an agricultural plane edging on a broad coastline. Western and eastern neighborhoods are connected with each other and with the old city through two main roads, one inland and the other along the coast. Both roads find their way through and around the outcrop that divides them and shields the old city. Interestingly enough, most of the land along the western and eastern beaches remains untouched by construction activities though it belongs to private owners. Properly assembled this land offers the opportunity of being developed for the establishment of integrated resorts combining hotels, secondary residences and recreational facilities. The most suitable development sites are located along the beaches of Fowah, for high-density resorts with mainly secondary residences, Hella and Al Rouweinat, for high-density resorts with a balanced mixture of hotels and secondary residences, and Al Rayan, for low-density beach resorts.

1 1.04 With 45,000 inhabitants or about 18% of Mukalla’s total population, the old city has a distinctive appeal because of its location nestled against a dramatic mountain, the scenic emergence of its medina located on a small peninsula, and the presence of a number of buildings of historic and architectural value. Among these buildings stand out the Sultan Qa’aiti Palace (Castle Al Thourah), the Old Sultan Palace (Al Shaiba Palace), the Old Archade Building (Sekat Yaakoup), the Al-Rawda and Omar mosques, several palaces in the Hay-al-Salam area, and the Guazi Fort. The medina is the oldest part of old Mukalla. This is reflected in its vernacular architecture, made of simple white buildings, and its compact urban fabric, made of narrows pedestrian streets. The waterfront of the old city is bordered by a corniche that offers attractive sea and city views.

1.05 Rapid population growth, associated with substantial improvements in family incomes, offers the opportunity of bettering the city but also stresses its infrastructure and menaces its urban environment. More than any other part of Mukalla, the old city is subject to both sides of this equation. On the positive side, increased demand for food and beverage, shopping and recreational facilities will generate the financial resources that the public sector needs to improve its physical environment and the private sector needs to restructure and upgrade its commercial and residential buildings. On the negative side, because of unregulated transit and parking activities, vehicular traffic could clog its corniche and encumber its streets. Moreover, because of the lack of appropriate regulations and controls, untamed building construction along the corniche and in the medina could spoil the visual and architectural integrity of the old city and hamper Mukalla’s tourism development.

Box 1 Most significant tourist attractions of Mukalla City

Physical cultural assets Governorate Compound. Includes several buildings of pleasant traditional aspect and the Old Sultan Palace (Al Shaiba Palace). In spite of its historical and architectural value, the Al Shaiba Palace is in ruins and requires urgent conservation works. Sultan Palace (Castle Al Thourah). Significant building of large size surrounded by gardens on the sea front. Hosts a museum and the offices of the Tourism Delegation. Yet, building is in poor conditions because of lack of appropriate maintenance. View of Palace is hampered by recent construction of public building with out of context architectural design. Urban setting of Palace is menaced by development on nearby land reclamation project. Old Arcade Building (Sekat Yaakoup). Remarkable building and precious architectural landmark. Designed to host administrative and commercial functions. Well preserved but poorly used and risking rapid degradation. Old Port. Only one quay remains. Needs restoration works. Can be integrated on a seafront promenade. Al Rawda Mosque. Oldest mosque in Mukalla. Surroundings need to be protected from inappropriate construction. Omar Mosque. Prominent religious building and important architectural presence. Surroundings need to be protected from establishment of inappropriate economic activities Gauzi Fort. Fascinating military structure standing on a rock to guard the northern entrance to the city. Surroundings should remain clear from construction. Medina. Picturesque residential core of the old city. Its view from a distance defines the traditional image of Mukalla. Buildings and infrastructure need major rehabilitation works. Urban functions need revitalization through controlled introduction of commercial and recreational activities.

Box 1 (continues) Most significant tourist attractions of Mukalla City

Intangible cultural assets Market. The square in front of the Old Arcade Building as well as the area in front of the corniche host colorful street markets. The tourist appeal of these markets could be enhanced by better regulating vehicular traffic and parking during market hours. Fishing port. The arrival of fishing boats and their unloading constitutes a feat for the eyes of any sensitive tourist.

Natural assets Corniche. Though with modest buildings and disturbed by the presence of a massive seawall, has strong personality. Transforming the Governorate administrative compound at its western edge into a commercial, cultural and recreational facility and creating a pedestrian area that encompasses this compound and Castle Al Thourah would greatly add to the corniche’s tourism appeal. Khour Al Mukalla Beautiful body of water recently created by opening to the sea and organizing the banks of the terminal tract of wadi Al Mukalla. Urban fabric along the banks is obsolete and calls for restructuring. Western beaches. Easily accessible. Long and deep and with high quality sand. Beautiful promenade in front of Fowah beach. Attractive sea views, at the outskirts of the city towards the bay of Burum. Eastern beaches. Vary according to proximity to city center. Rocky and unsuitable for extensive recreational activities as well as compromised by unruly construction activities in Rabwet Khalaf, large and natural in Al- Rouweinat, Falak and Jawlat Al Rayan.

Hadramout Coastal Area

1.06 Except for the city of Mukalla, the Hadramout coastal area is scarcely populated and unaffected by major agricultural or industrial economic activities. Small villages dot the coastline and signal the presence of a traditional and laid down population of fisherman and their families.

1.07 The only center of some relevance is Al Shihr, the historic Al-Asaa. This ancient city is some 60 km east of Mukalla. Now small and neglected, Al Shihr was the ancient regional capital and a major port and commercial center on the incense route. For a brief period of time starting in 1523, Al Shihr was occupied by the Portuguese who transformed it into a military post. The city still holds some vestiges of its significant past, notably the Bin Ayash fortress and two beautiful entrance doors (Al-Aidarus and Al-Khur) that adorned its original walls. Also, near Al Shihr is the summer sultan palace of Albuvasia which has a nice water basin.

1.08 The coastal area west of Mukalla is enclosed in-between mountains, has numerous bays with pristine beaches, and offers views of remarkable beauty, starting from the very boundaries of the municipality of Mukalla. Close to the village of Balhaf, a stretch of coast and associated seabed is a natural sanctuary for birds and marine flora and fauna. International experts funded by a grant of the Global Environmental Facility (GEF) studied this area. They recommended its scrupulous protection and conservation as a nature sanctuary on the ground of its precious biodiversity. In its vicinity, there is also a small volcano whose crater is filled with water. From the ridge of the crater, accessible from an impervious trail, the view of the lake and the ocean expanse on its background is breathtaking. Unfortunately, the pristine beauty and ecological value of the entire coastal area are jeopardized by the growth of Mukalla and the creation of a

3 natural gas liquefaction plant and export terminal in Balhaf. The first engenders the development of recreational activities on the coastal area adjacent to the city. Because of the lack of appropriate controls, this may result in unfettered construction and vehicular congestion with disturbing visual and environmental effects. The Balhaf plant and terminal not only constitute a disruptive presence in the natural coastal environment but could also induce unwarranted activities that would negatively affect the protection, conservation and management of the sanctuary.

1.09 The coastal area east of Mukalla is mainly flat and with an insignificant landscape. The only exception is the peninsula of Sharma that is characterized by cliffs carving nice bays and coves with attractive beaches. These beaches are rare and important natural sites because they are used by marine turtles for their reproductive activities. They also have been studied by international experts with a grant of the Global Environmental Facility (GEF) and have been recommended for scrupulous protection and conservation. Eventually, they can be visited by small groups of eco-tourists who could camp in their vicinity and, at night, observe the turtles depose their eggs and rush to the sea.

1.10 The coastal area east of Mukalla is also endowed with sources of thermal water. The most important sources are located in the agricultural village of Al-Harshiyat, 5 km north of Mukalla, in Tabala, 7 Km north of Al Shihr, in Al Hami, some 20 km on the coast east of Al Shihr, and Thawban and Suwiaber, two small villages 5 km west of Al Dees. Most of these sources are poorly managed and, in their present conditions, unsuitable for tourist exploitation, including by national visitors.

Wadi Hadramout

1.11 With its scenic landscape, its colorful villages and outstanding mud architecture, Wadi Hadramout represents a site of distinct beauty and cultural interest with respect not only to Yemen but also to the Arabic peninsula and the entire world. Because of size and geography, the Wadi and its effluent canyons offer an incredible variety of physical environments and panoramic views. Because of their complex history, they also offer a great cultural variety that shows in different types of settlements, buildings, costumes and ceremonies.

1.12 The city of Shibam is internationally known as the Manhattan of the desert. With Sana’a and Zabid, it is one of Yemen’s three world heritage sites. The city of Seyoun is dominated by the imposing Sultan Al-Kathiri Palace and endowed with several beautiful historic buildings and traditional neighborhoods. Finally, the city of Tarim boosts a collection of spectacular private palaces built in oriental architectural style with the riches of prominent migrants to East Asia.

1.13 However, are not the cities and their buildings but the myriad of villages, religious sites and isolated castles that make Wadi Hadramout and its effluent canyons such a unique place. Al-Hajarayn, Al-Mashhad, A’inaat, Ribat, Sif are just a few of these villages. Their homes have colorful decorations, attractive window patterns and gorgeous wooden doors. The contour of villages combines with blue skies, green palms and red cliffs to create a lasting impression of peace and beauty.

1.14 In spite of recent economic growth and modernization pressures, many parts of Wadi Hadramout and its effluent canyons remain genuine and relatively unspoiled. However, major

4 environmental degradation is taking place in proximity of Seyoun and Tarim and in the villages on the main crossroads. This degradation is mainly due to the construction of homes and commercial buildings that use strident construction materials and do not respect traditional architectural patterns, to the unruly expansion of villages into palm grows and agricultural land, and to changes in traditional farming and, therefore, the resulting agricultural landscape.

Socotra

1.15 Though distinct by history, population and remoteness, the island of Socotra is part of the Hadramout Governorate. The city of Mukalla is its closest administrative center and its main gateway for sea and air transportation. Far away in the Arabian Sea between the Horn of Africa and Yemen, the island of Socotra has been shielded throughout the centuries from human contamination and constitutes one of the planet’s rare places that preserve autochthonous species of flora and fauna. Its mountains and valleys, its bays and beautiful beaches make it paradise for visitors interested in unusual and pristine tourism destinations.

1.16 To protect the island’s physical environment and unique biological patrimony, the United Nations Development Program (UNDP) with funding from the Global Environmental Facility (GEF) has helped Government to prepare a land use plan that provides for: (i) limited areas for the establishment of settlements to be used by local residents and tourists; (ii) protected areas open to the visit of tourists; and (iii) sanctuary areas.

Socio-economic environment of Hadramout Region

1.17 Physical isolation, rooted religious traditions and simple living conditions contribute to a very conservative social environment. Urbanization and modern economic activities are relatively recent phenomena and have yet to influence the thinking and behavior of local people that remain rooted on those of old time villagers, farmers and fishermen.

1.18 In spite of its strong sense of hospitality and peaceful set of mind, the population of the Hadramout Region is unprepared to confront the behavior of western mass tourism, in particular beach-based tourism. Its traditional culture and religiosity is in stark contrast with the behavior of common international beach tourists who often wear succinct dresses and bathing suits, could be loud and uncontrolled in their recreational activities, make frequent use alcoholic drinks, and are unconcerned with a free interaction among sexes. This could generate hostility toward tourists, the tourism industry and tourism development.

1.19 Agricultural, including food processing and fishing, and commercial activities dominate the economy of the region and employ the majority of the region’s workforce. Industrial activities include metal, chemical, construction material, wood, paper and packaging, and tourism establishments which are located for over 45% in Mukalla. Socio-economic indicators (2002) point to considerable deficits in terms of education, activity rates, access to basic services and poverty levels.

Table 1. Hadramout Region. Selected socio-economic indicators. Year 2002

Indicator Value - Population growth rate 4.3 - Average size of family 7 - Percentage of poor families 43 - Percentage of families with access to drinking water 81 - Percentage of families with access to electricity 69 - Percentage of families with access to sanitary services 54 - Illiteracy rate 40 - Percentage of people with high school and above education 4.2 - Percentage of people with skilled technical and scientific jobs 10.3 - Activity rate 22.6 - Women’s participation to labor force 18.5 - Unemployment rate 12.2

1.20 Consonant with the Region’s rich immaterial cultural heritage, traditional handicraft includes a variety of attractive products. Jewelry, garments, woven baskets and hats, carpets, wooden and metal doors, architectural decorative elements, furniture are among the products with greater aesthetic appeal and are sought after by the local population as well as visitors from other parts of Yemen. International tourists appreciate many of these products as well and are ready to spend heftily for their purchase.

Climatic conditions of Hadramout Region

1.21 The Region’s climate is equatorial and hot. In summer time temperatures could exceed 40 degrees Celsius, in winter they are moderate and pleasant at 20-24 degrees Celsius in Mukalla and the coastal areas and 17-20 degrees Celsius in Wadi Hadramout. Summer is also characterized by high humidity levels, particularly on the coast. Rain is limited to sudden sporadic precipitations during the summer period. The sea temperature is pleasant throughout the year, though in winter it may be too cold for swimming. In summer, a cold sea current (al baldah) mitigates air and water temperatures and makes the coast attractive to domestic tourism.

1.22 In summer, the high temperatures and levels of humidity experiences by the Hadramout Region are constraining factors, in particular for international tourism. However, the “balda” mitigates the seasonality factor in the coastal areas, and the preference by many European tourists for customary summer vacations mitigates it in Wadi Hadramout..

Issues and prospects

1.23 Physical, social and economic conditions constitute basic tourism development factors. Assessing the tourism development potential of Mukalla and the Hadramout Region requires understanding these conditions and the measures required to exploit their positive aspects.

1.24 Understanding the tourism potential of the Hadramout Region. Ranking the appeal of tourism destinations in the absence of appropriate surveys is judgmental. However, it can be useful to promote discussion, stimulate ideas and carry out specific analyses.

Table 2. Mukalla and Hadramout Region - Ranking of tourism destination relative to international market

International appeal 1/ Proximity EU countries 2/ Proximity Gulf countries Mukalla city Moderate Low High Eastern HadramoutCoast Moderate/Low Low High Western Hadramout Coast Moderate/High Low High Wadi Hadramout High Medium High Socotra High Medium Medium 1/ and 2/. Ranking compares appeal and proximity of assets with that of other destinations in the Middle East and North Africa. Proximity ranking of Wadi Hadramout and Socotra are enhanced by the uniqueness of their tourism assets that qualify them as worldwide-reaching destinations for the cultural and ecological tourism markets.

1.25 The above ranking argues that the international appeal of Mukalla for vacation tourism is moderate and, as such, Mukalla cannot operate as a major destination, at least in the near future. By the same token, considering international competition, the eastern and western coastal areas of the Hadramout Region present moderate and low appeal for international beach tourism. However, for the Gulf vacation and beach tourism market, the moderate appeal of Mukalla and the Hadramout coastal area is largely offset by proximity factors. Conversely, because of the uniqueness of its cultural and natural assets, Wadi Hadramout and Socotra qualify as major tourism destinations. The negative impact of their distance from the European market is minimized by their being in competition with destinations that also have faraway locations.

1.26 Tourism development in Mukalla and the Hadramout Region is not only affected by the competitiveness of its assets but also by the readiness of the local population to accept the presence of tourist activities. Such acceptance varies according to the impact on the local population of the different types of tourism and associated tourists.

Table 3. Mukalla and Hadramout Region - Impact of international tourism on local population

Assets/type of tourism/level of impact Impact by EU tourists Impact by Gulf tourists Mukalla city - Business/vacation/cultural Low/high/low Low/moderate/low Eastern HadramoutCoast - Beach/excursion High/low Moderate/low Western Hadramout Coast - Beach/excursion High/low Moderate/low Wadi Hadramout - Cultural/vacation Low/moderate Low/low

1.27 The potential impact of the different types of tourism and tourists on the local population argues that business, excursion and cultural tourism is inconsequential and therefore should be considered for preferential development, and vacation and beach tourism by visitors from Gulf countries is easier to manage than that by European visitors.

1.28 Protection and conservation of tourism assets. Independently from the above considerations, it could be unquestionably affirmed that Mukalla, the Hadramout coast, and Wadi Hadramout qualify for increased tourism traffic based on the appeal of their natural and cultural assets. It can be equally affirmed that the exploitation of these assets is predicated on their protection and conservation.

1.29 The issue of protecting and conserving the Region’s tourism assets encompasses: (i) controlling construction activities in the old center of Mukalla and revitalizing its social and economic environment; (ii) preventing unwarranted development along the coastal areas while exploiting their tourism potential; and (iii) ensuring that the inevitable and desirable social and

7 economic development of Wadi Hadramout is consonant with the preservation of the Wadi’s unique natural and cultural patrimony.

1.30 Prepared in 2002 by the Dar Al Handasah consulting firm, the Master Plan of Mukalla provides useful recommendations for protecting and developing the old city, its corniche and its medina. These recommendations include interventions on the urban fabric and its historic buildings, infrastructure improvements, traffic management measures and beautification programs. They should be consigned into detailed land use plans and building regulations and specific investment projects (Section V, para 5.27).

1.31 The protection and tourism development of coastal areas encompasses the sea front of modern Mukalla and the coastline that extends west and east of the city. Unchecked and unqualified construction along Mukalla’s sea front would spoil its tourism appeal and result in the permanent loss of valuable tourism land to lesser uses. Plans are under way to transfer the present commercial port of Mukalla to a more suitable location. This could improve the tourism appeal of the city by transforming the port into a marina and redeveloping the adjacent industrial areas into a tourism zone close to the old city and with beautiful views of the medina. Again, the master plan prepared by Dar Al Handasah addresses all the above challenges and formulates land use proposals and operational recommendations. However, these measures and recommendations need to be transformed into detailed land use legislation and development programs (Section V, para 5.28).

1.32 By the same token, the tourism appeal and, therefore, the tourism development potential of the Hadramout coastal areas depend on the location and appearance of the related tourism and recreational facilities. It also will depend on the protection of the unique ecosystems that exist in its present bird and marine sanctuaries. Protecting the coastal areas will entail strengthening the Governorate of Hadramout’s capability to control land use and construction activities along the coastline (Section V, para 5.34).

1.33 The protection of Wadi Hadramout is particularly challenging because it encompasses a rich set of physical and immaterial cultural assets and extends on a vast territory characterized by different social and economic situations. A study carried out by the Government with World Bank support in 2001 provides for a full inventory of the cultural assets of the Wadi and formulates recommendations for their protection, conservation and tourist exploitation.

1.34 Making the Hadramout Region work as an integrated tourism system. The tourism potential of the Hadramout Region rests on ensuring that the tourism assets and tourism facilities of its various destinations work as an integrated system. Only this will allow to exploit the synergies that exist among these assets and facilities and improve their utilization and economic return. The exploitation of the cultural assets of Wadi Hadramout should be combined with that of the natural assets of the coastal area to offer cultural tourists the opportunity to extend their stay in the Region by spending a short beach vacation. By the same token, vacation tourists in Mukalla should be offered the opportunity to visit Wadi Hadramout and enjoy its cultural and natural attractions. Business tourists in Mukalla and Seyoun should be invited to extend their stay and visit the natural attractions and cultural sites located in proximity of these cities as well as in other parts of the Region (Section V, paras 5.17, 5.21, 5,22, 5.34).

8 SECTION II

PRESENT SITUATION OF TOURISM SECTOR

This section reviews the scope, evolution and characteristics of tourism demand and supply in Mukalla and the Hadramout Region. Moreover, it assesses the contribution of tourism to the local and national economy.

Tourism Demand

2.01 Readily available statistical information on tourism in the Hadramout Region is scant and of questionable reliability. Tables 4, 5 and 6 provide data on tourist arrivals and bed-nights from 2000 to 2006 for the entire Hadramout Region and for the two main geographical areas in which this is divided, notably Mukalla with its coastal area and Wadi Hadramout. Table 7 provides data on arrivals in Yemen for general reference. Finally, table 8 provides a detailed breakdown by nationality of arrivals and bed-nights in Mukalla and its coastal area, in 2006.

Table 4. Arrivals and bed nights in the Hadramout Region from 2000 to 2006

Year 2000 2001 2002 2003 2004 2005 2006 Arrivals - Yemeni 77,971 106,393 119,968 142,155 154,971 210,149 221,931 - Foreign 16,688 13,801 8,526 12,298 19,214 46,215 47,670 - TOTAL 94,659 120,194 128,494 154,453 174,185 256,364 269,601 Bed nights - TOTAL 197,303 243,793 262,472 251,814 336,053 522,932 800,722 Average length of stay 2.08 2.03 2.04 1.63 1.93 2.04 2.97 Source: Ministry of Tourism – Mukalla and Seyoun Delegations

Table 5. Arrivals and bed-nights in Mukalla city and coastal area from 2000 to 2006

Year 2000 2001 2002 2003 2004 2005 2006 Arrivals - Yemeni 45,594 54,296 56,646 92,787 92,325 152,103 164,682 - international 5,617 3,901 2,297 7,320 7,967 22,000 22,146 - TOTAL 51,211 58,197 58,943 100,107 100,292 174,103 186,885 Bed nights - Yemeni 97,028 110,026 118,358 128,422 170,333 315,410 588,244 - international 13,439 9,773 5,012 14,560 17,934 43,000 47,046 - TOTAL 110,467 119,799 123,370 142,982 188,267 358,410 635,290 Length of stay – Yemeni 2.13 2.03 2.09 1.38 1.84 2.07 3.57 - international 2.39 2.50 2.18 1.99 2.25 1.95 2.12 - average 2.16 2.06 2.09 1.42 1.87 2.06 3.40 Source: Ministry of Tourism - Mukalla Delegation

Table 6. Arrivals and bed-nights in Wadi Hadramout from 2000 to 2006

Year 2000 2001 2002 2003 2004 2005 2006 Arrivals - Yemeni 32,377 52,097 63,322 49,368 62,646 58,046 57,249 - Arab 366 631 1,580 1,176 2,640 3,087 5,597 - international 10,705 9,269 4,649 3,802 8,607 21,128 19,870 - TOTAL 43,448 61,997 69,551 54,346 73,893 82,261 82,716 Bed nights - TOTAL 86,836 123,994 139,102 108,832 147,786 164,522 165,432 Average length of stay 2.00 2.00 2.00 2.00 2.00 2.00 2.00 Source: Ministry of Tourism - Seyoun Delegation

Table 7. International arrivals in Yemen from 2000 to 2006

Year 2000 2001 2002 2003 2004 2005 2006 Arrivals 72,836 75,146 98,020 154,667 273,732 336,070 382,332 Source: Ministry of Tourism - Central Statistical Office

Table 8. Arrivals and bed-nights by nationality in Mukalla City and coastal area in 2006

Country Arrivals Bed Nights Length of stay Egypt 227 654 2,87 Sudan 35 72 2.05 Syria 89 178 2.00 Iraq 91 182 2.00 Jordan 287 774 2.69 Saudi Arabia 5,785 18,188 3.14 Somalia 462 924 2.00 Quait 39 78 2.00 Other Arabs 2,928 3,856 1.31 Subtotal 9,943 24,906 2.50 France 1,744 2,488 1.42 United Kingdom 317 624 1.97 Germany 2,971 5,942 2.00 Italy 2,432 4,864 2.00 Switzerland 79 158 2.00 Nederland 77 154 2.00 Denmark 73 130 1.78 Sweden 19 38 2.00 Belgium 584 868 1.48 Other Europeans 1,458 2,916 2.00 Subtotal 9,784 18,182 1.86 USA 389 698 1.79 Africa 72 144 2.00 Asia 1,891 2,982 1.57 Australia 67 134 2.00 Total Foreigners 22,146 47,046 2.12 Yemeni 164,682 588,244 3.57 Grand Total 186,828 635,290 3.40 Source: Ministry of Tourism - Mukalla Delegation

2.02 The data presented in the tables above allow for the following observations:

. in 2006, hotel arrivals and bed-nights in the Hadramout Region amounted to 269,601 and 800,722, respectively. With 47,670 units, foreign arrivals accounted for 21.5% of total arrivals in the Region and 12 % in Yemen as a whole. The paucity of the latter percentage confirms that, in spite of its considerable potential, the Region is still a marginal player in the national tourism sector; . consonant with the rest of the country, since 2000, arrivals and bed-nights in the Hadramout Region experienced a steady increase with the exception of an unexpected decline in bed-nights in 2003 and an upsurge in 2006 which may be due to faulty data; . the average length of stay was very short and hovered at around 2 days, again with the exception of 2003 and 2006;

10 . in 2006, over 80% of tourism arrivals were generated by Yemeni visitors. The primary motivation of these arrivals likely rested on business activities and, to a minor extent, on visits to family members and on seasonal vacations; . arrivals and bed-nights in Mukalla and the coastal area represented 69% and 79% of the respective totals in the Hadramout Region. Since accommodation capacity on the coastal area outside Mukalla is minimal, this indicates that, with its population weight and its administrative, business and recreational activities, Mukalla originates the bulk of the Region’s tourism traffic; . the tourist primacy of Mukalla rests on national visitors and has strengthened in the latest years with the growth of domestic business traffic; . after declining from 2001 to 2003 in the aftermath of the September 11, 2001 events, international arrivals to the Hadramout Region have experienced a positive trend. This applies to both the city of Mukalla and Wadi Hadramout . It encompasses Arab and non- Arab visitors; . in 2006, international arrivals to Wadi Hadramout exceeded by 14% those to Mukalla and the coastal area. While in Mukalla, Arab and non-Arab visitors were almost equivalent, in Wadi Hadramout non-Arab visitors exceeded by far those from Arab countries. All of this is consonant with the attraction that Wadi Hadramout exercises on European cultural tourists; . in Mukalla, Saudi arrivals represented over 70% of total Arab arrivals. With an average of 3.14 days, Saudis also boasted the longer length of stay. Many of them are Saudis of Hadrami origin, who visited relatives or spent vacation in their ancestral homeland.

2.03 In summary, the above observations allow to conclude that tourism growth in the Hadramout Region is presently led by domestic traffic. International tourism is also growing but at a lower pace. In Mukalla, international tourism is characterized by a robust share of Arab nationals, particularly from the Gulf countries. Among the latter, Saudis, likely including many visitors of Yemeni ancestry, dominate the scene. In Wadi Hadramout, European and other western tourists represent the large majority. Independently from their nationality and destination, visitors to the Hadramout Region have very short stays averaging 3 days in 2006. The average length of stay of international visitors is approximately 30 % shorter that that of domestic visitors.

2.04 There are no precise data on the distribution of visitors by travel motivation except for the indications provided by representatives of the tourism industry. As already mentioned, most Yemeni visitors travel to Mukalla and Wadi Hadramout to carry out business activities. A smaller but growing part of them travels to visit relatives or spend seasonal vacations. Similarly, Arab visitors travel to Mukalla and Wadi Hadramout for business, family and vacation purposes. For Arab visitors, however, vacation represents the main motivation. International non-Arab visitors travel to Wadi Hadramout and eventually Mukalla mainly for cultural tourism. However, some of them, including expatriates residing in Yemen or the Gulf countries, visit the Hadramout Region to spend a brief beach vacation, to enjoy its precious marine and terrestrial ecosystems, and to adventure in desolated valleys and coastal areas.

2.05 Part of the Hadramout Governorate, in 2006, Socotra totaled 1,627 tourist arrivals of which over 1,000 by vacationers attracted by its unspoiled environment and unique biodiversity. The limited amount of tourist arrivals in Socotra reflects its present isolation and inadequate accommodation capacity.

2.06 Occasionally, cruise ships are either mooring outside the Mukalla harbor or, when of small size, docking at its main quay. The tourism traffic generated by these ships is however minimal and has almost come to a halt in recent years. Inadequate port facilities, lack of land services and poor land transportation hamper the development of this type of tourism.

Tourism Supply

- Accommodation Facilities

2.07 In 2006, the hotel accommodation capacity of the Hadramout Region totaled some 5,495 beds, including 176 beds in Socotra. This represents approximately 11 % of the total bed capacity of the country. In addition, the Region has some 659 beds in rental apartments and chalets, though this number may be underestimated because many rental activities go undeclared. About 60% of the accommodation capacity is located in Mukalla and its vicinities.

Table 9. Hadramout Region: accomodation capacity in 2006

Hotels Rental apartments Rooms beds Number beds Hadramout coastal area 1,750 3,711 117 544 - Mukalla city 1,502 3,086 117 544 - Other locations 296 625 - - Wadi Hadramout - 1,608 - 115 - Seyoun - 1,067 - 79 - Shibam - 157 - - - Other locations - 384 - 36 Socotra 88 176 - - TOTAL - 5,495 - 659 Source: Ministry of Tourism - Mukalla and Seyoun Delegations

2.08 The hotel capacity by category is characterized by a high concentration of beds in small one star and unclassified establishments that, combined, represent over 60% of all available beds. In the entire region there are 1 five stars hotel in Mukalla, 4 four stars hotels, of which 3 in Mukalla and 1 in Wadi Hadramout (Shibam), and 13 three stars hotels, of which 5 in Mukalla and 8 in Wadi Hadramout (Seyoun). Only three stars hotels and above are suitable for international tourism. It should be also noted that the rating system of Yemen is generous and does not abide to international standards.

Table 10. Hotel beds by category in the Hadramout Region in 2006

Category 5* 4* 3* 2* 1* NC Total Hadramout coastal area 196 334 519 - 2,004 658 3,711 - Mukalla city 196 334 443 - 1,455 658 3,086 - Other locations - - 76 - 549 - 625 Wadi Hadramout - 108 659 258 330 253 1,608 - Seyoun - - 659 216 94 98 1,067 - Shibam - 108 - - 49 - 157 - Other locations - - - 42 187 155 384 Source: Ministry of Tourism - Mukalla and Seyoun Delegations

Box 2

Mukalla City - Survey of 3 Hotels Operating on the International Market

Holiday Inn Al Bustan Reboon City

Date of establishment 1999 2005 2002 Category 5* 4* 3* Owner Modran Company 1/ Plaza Group 2/ Yaslam Saeed Pagaber 3/ Location Seaside Urban Urban Capacity 112 64 50 Rooms 106 48 46 Suites 6 16 4 Beds 240 148 104 Services Desk reception Y Y Y Lobby with waiting room Y Y Y Public toilets (man + women bathrooms) 2+2 3+3 2 Restaurant 60 seats 100 seats 60 seats Bar books/souvenirs/food books/souvenirs N Shops Y Y N Business center Y N N Internet and fax facilities Y Y Y Other Barber shop, mosque - - Garden Extensive grounds N Small garden Pool Y N N Commercialization Direct sales 45% 80% 40% Third parties 35% 20% 60% Corporate accounts 20% - - Staff 4/ 85 45 30 Management 9 7 5 Reception 6 3 3 Bell boys 3 2 2 Kitchen 7 8 4 Waiters 14 9 4 Housekeeping 11 8 5 Laundry 6 3 2 Maintenance 11 3 1 Security 12 2 3 Gardeners 4 - 1 Others 2 - - Operations Occupancy rates (2006-2007 to date) 34%-36% 26%-48% 64%-74% Revenues from sale of room (%) 60% 5/ 65% 80% 5/ Revenues from restaurant/banquets (%) 40% 5/ 35% 20% 5/ Clientele by origin 5/ Europe/Asia/America 50% 20% 20% GCC 25% 20% 20% GCC Yemeni 20% 50% 50% Yemeni 5% 10% 10% Clientele by motivation 5/ Business 50% 70% 60% Tourism 6/ 50% 30% 40% 1/ 1/ 1/ Modran Company owned by Bin Laden family and sheik Nasser Lota 2/ 2/ Plaza Group is headquartered in Abu Dhabi 3/ 3/ Saudi investor whose family migrated to Saudi Arabia from Wadi Doan4 5// 4/ data provided by managers 6// 5/ estimates from managers’ indications 6/ includes hotel guest of Yemeni nationality or Yemeni origin visiting relatives in Mukalla

2.09 Accommodation capacity in Mukalla has increased steadily since the year 2000. However, its expansion rate has lagged behind that of tourism arrivals and bed-nights. This has resulted in a general improvement of hotel occupancy rates that average over 70% annually and produce profitable results for most of the industry. However, occupancy rates vary greatly according to hotel categories and their clientele. Indeed, the top segment of the hotel industry is still operating at rather low occupancy rates (35-40%). BOX 2 on the next page reports the result of a survey carried out on three major hotels catering to international travel.

2.10 Consonant with their small size, most hotels are owned by local Yemeni investors and operated as family business. Conversely, large hotels are often owned by foreign companies or foreign individual investors. Most of these companies and investor are from neighboring Gulf countries. Often, individual investors are Saudi citizens of Hadrami origin who either decide to return to their native country and open a local economic activity or wish to diversify their assets and acquire real estate in the Hadramout Region. By the same token, most hotels are operated by local managers with locally recruited staff. Very few hotel managers have professional training or adequate experience in the sector. Hotel employees are generally formed on the job.

2.11 Hotel construction cost in the Hadramout Region vary greatly according to hotel category and the need to recur to non-locally based construction enterprises and imported construction materials, equipment and furnishing. Based on the indications provided by the tourism industry, the cost per room averages as follows:

Table 11. Average construction cost per hotel room and hotel category (US$)

Hotel Category 5 stars 4 stars 3 stars 2 stars others Construction cost 140,000 100,000 70,000 30,000 20,000

2.12 In spite of a large labor supply, qualified hotel staff in the Hadramout Region is a rare commodity. Assessing its remuneration is difficult because only large hotels have regular staff specialized by job. The survey of 3 hotels presented in Box 2 provides the following information:

Table 12. Monthly salary range of hotel staff

Salary range Salary range Job YR US$ Job YR US$ Supervisor 30,000-80,000 150-410 Housekeeper 18,000-20,000 90-100 Receptionist 20,000-30,000 100-150 Laundry staff 12,000-15,000 60-80 Cook 25,000-40,000 130-200 Security staff 15,000-18,000 80-90 Waiter 15,000-20,000 80-100 Gardener 12,000-15,000 60-80 Exchange rate: YR 195 = US$ 1

Tourism Services

2.13 Restaurants, travel agencies, currency exchange and banking facilities, car rental and other transportation services, shopping facilities, internet centers, and centers for recreational and cultural activities constitute a critical support to the development of tourism.

14 2.14 The offer of these services in the Hadramout Region is scant and mainly addressed to local residents. Indeed, in the entire region there is not a single restaurant that will fully meet international standards but for the dining facilities of few hotels. This extends to the city of Mukalla where only a handful of restaurants are suitable for international customers.

2.15 Travel agencies are numerous both in Mukalla and Seyoun. However, most agencies limit their activity to the organization of outbound travel, generally linked to pilgrimage. The staff of these agencies rarely knows any foreign language. As a consequence, international tourists in Mukalla and the Hadramout Region totally depend on the services of travel agents and tour operators that are based in Sana’a. Though some of these agents and operators have branch offices in Mukalla and Seyoun, this situation limits the tour and transportation options available to tourists. Moreover, it results in reduced competition and, therefore, increased prices.

2.16 Car rental agencies are either inexistent or unreliable because of the type of vehicles and assistance services that they provide. Public transport is limited both in destinations and frequency and unsuited for tourist use. This extends to the use of taxis.

2.17 Although colorful and with attractive handicraft products, shopping facilities are limited to traditional markets and street shops. Cities do not have any facilities that are specifically addressed to international tourists. This situation penalizes not only western visitors but also visitors from the Gulf countries who are unable to find international products of common convenience. It also results in loss of income to the local economy. Shopping malls are being developed in Mukalla and it is hoped that their establishment will alleviate some of the present deficiencies and enhance tourist expenditures.

2.18 Recreational facilities such as cinemas, amusement parks, theaters, piano bars, night clubs, ice-cream parlors are rare or inexistent. Moreover, they are generally inadequate to serve international clients, including from the Gulf countries. The lack of recreational facilities hampers the development of social activities at evening time by local residents and visitors as well. In addition, it deprives Mukalla and other tourism destinations of any night-life.

2.19 Finally, in spite of their cultural riches, Mukalla and the Hadramaout Region have limited and poor cultural facilities being these theaters, meeting halls, museums, cultural centers, and art galleries. The museum of Mukalla in the Sultan Palace as well as the library of Tarim and other facilities are inadequate in terms of display and maintenance.

Table 13. Mukalla and Hadramout coastal area - tourist facilities

Facility / Year 2000 2001 2002 2003 2004 2005 meeting halls 1 1 2 2 3 2 Restaurants - - - - 1 1 Travel agencies 12 15 18 21 26 28 Diving centers 1 1 1 1 1 1 sea life centers - - - - 1 1 Source: Ministry of Tourism - Mukalla Delegation

15 Tourism Economy

2.20 Yemen does not hold periodical tourist expenditure surveys. Therefore, there are no official data on the average daily expenditure by type and nationality of tourists. Selected interviews with representatives of the tourism administration and the tourism industry lead to estimate that the average tourist expenditure in 2006 amounted to the figures presented in table 14. These figures apply nationally as well as in the Hadramout Region.

Table 14. Average tourist expenditure by type of tourist in the Hadramout Region (US$)

Type of expenditure Total Type of tourist Accommodation Food &beverage Shopping Transport expenditure - National 35 15 5 5 60 - Yemeni (GCC) 60 20 10 10 100 - International 80 40 20 20 160

2.21 Conversely, the tourist offices of Mukalla and Seyoun collect data on tourism employment in registered hotels. These data indicate that, in 2006, hotel tourism employment totaled 1,164 units (table 16). Foreign labor accounted for only 20 employees working in five and four stars hotels owned by foreign investors. The employment figures reported above may be underestimated by 10 to 15 percent because of undeclared workers. Indeed, the survey of 3 hotels presented in Box 2 registered larger employment data for the surveyed hotels than those indicated by the tourism authorities for the same hotels. In addition to hotel employees, the tourism sector is said to occupy some additional 150 workers for the operations of rental apartments and chalets.

Table 15. Hotel employment in the Hadramout Region in 2006

Area/type of hotel 5 stars 4 stars 3 stars 2 stars 1 star Non class. Total - Mukalla and coastal area 85 152 116 - 353 103 809 -Wadi Hadramout - 30 137 88 64 36 355 Total Hadramout Region 85 182 253 88 417 139 1,164 Source: Ministry of Tourism - Mukalla and Seyoun Delegations

2.22 Based on the existing tourism statistics and the above assumptions on tourism expenditures, it can be estimated that, in 2006, the tourism sector contributes for about US$28 million to the GDP of the Hadramout Region. To the GDP contribution described above should be added that entailed by the construction of hotels and tourism facilities. If we consider that the Hadramout Region has added some 300 rooms per year from 2000 to 2006 (table 11) and assume an average cost per room of $40,000 (table 12), we can add to the above contribution at least $12 million for a grand total of $ 40 million.

2.23 Considering that every hotel job generates an additional 1.2 jobs in tourism related and other support activities, the tourist sector can be estimated to sustain at least 2,800 jobs in the Region. To these jobs should be added those entailed by the construction of new hotels and tourism facilities that can be estimated in 1,200. Finally, considering the average size of the Yemeni family, it can be argued that, in the Hadramout Region, tourism supports the lives of some 28,000 persons, of which some 18,000 in Mukalla.

16 Issues and Prospects

2.24 The analysis of the present situation of tourism demand and supply in the Hadramout Region allows to identify a number of issues that have a bearing on its future tourism development.

2.25 Lack of product diversification. The present concentration of visitors in Mukalla and Seyoun combined with their limited length of stay indicates that business traffic dominates the regional tourism industry. Business traffic is limited to short visits by national and international civil servants and businessmen and hardly includes any traffic linked to trade fairs, conventions, congresses and corporate activities such as company meetings and reward travel.

2.26 Diversifying tourism demand to the advantage of vacation, cultural and other types of tourism would require the identification of competitive products and their marketing to tourists and to the tourism industry, nationally and internationally. Moreover, it will require substantive adjustments in the supply (type and operations) of tourism accommodation facilities and services.

2.27 The achievement of the above adjustments would have to meet numerous challenges. Central and local government will need to: (i) ensure the availability of land for hotel construction; (ii) foster the development of a well trained and effective work force; (ii) improve transport infrastructure and municipal services; (iii) facilitate air access by Yemenia as well as any interested international airline (open sky policy); and (iv) ensure security. The tourism industry will need to: (i) manage seasonality issues resulting from the Region’s climatic conditions and the vacation schedule of international tourists; (ii) offset existing perceptions on the Region’s security situation; and (iii) overcome the Region’s lack of name recognition.

2.28 Considering the above challenges and the importance of international clientele for tourism development, the average hotel investment would have to be larger in size and higher in standards, the average hotel investors would have to be more experienced and ready to take risk, and the operation of hotels would have to be ensured by qualified management companies and professional staff. The combination of investment capital from the Gulf countries with hotel management from Europe and India offers unique opportunities given the Region’s location and political links with the Gulf area, the cost effectiveness offered by a mixture of European and Indian personnel, and the prevailing origin, Gulf and European countries, of the international clientele.

2.29 Lack of spatial and product synergies. In addition to business traffic, the present tourism demand comprises vacation tourism by Yemeni and GCC visitors and cultural tourism by European visitors. Vacation tourism is concentrated in Mukalla and draws on the local city life and the city’s beaches. Some vacation tourism takes place also in Wadi Hadramout, mainly feeding on GCC visitors of Hadrami origin. Cultural tourism is concentrated in Wadi Hadramout, though some tours include brief stays in Mukalla to visit the city and its vicinities.

2.30 At present, there is very little synergy between the accommodation capacity located in Mukalla and that located in Wadi Hadramout. By the same token, there is little synergy between vacation and cultural tourism. Increased cooperation among tourism establishments and better promotion of tourism products could foster cultural tourism in Wadi Hadramout by Yemeni and

17 GCC tourists vacationing in Mukalla and beach vacation tourism in Mukalla by European tourists visiting Wadi Hadramout (Section v, para 5.16). This could help reduce the negative effects of the high seasonality of certain types of clientele. To achieve this objective, new accommodation facilities geared to each of these market segments would have to be established. Cultural tourism by Yemeni and GCC vacationers will require the construction of family oriented hotels with suitable amenities and recreational facilities. Beach vacation tourism by European will require the construction of resort hotels with direct access to protected beaches. Hotels chains with facilities in both Mukalla and Wadi Hadramout could facilitate the achievement of the envisaged spatial and product synergies.

2.31 Lack of appropriate branding. Most GCC vacationers visit the Hadramout Region because of family connections; most European vacationers visit it as part of a tour that generates in Sana’a and combines a main stay in Northern Yemen with a short trip to Southern Yemen. This is the result of poor name recognition and the absence of a defined image that will promote the Hadramout Region on the international market. While resting on additional accommodation capacity and appropriate tourism services, the successful development of vacation and cultural tourism would require that the Hadramout Region be branded more effectively in terms of tourism assets and products. The most promising branding consists on proposing: (i) Mukalla and its beaches as a leading new tourism destination for Arab families who are interested in a socially conservative yet culturally rich environment (Section V, paras 5.15 and 5.16); and (ii) Wadi Hadramout as a stand-alone destination for international tourists who want to spend an extended vacation period in an unique physical and cultural setting (Section V, para 5.22).

2.32 Lack of adequate accommodation facilities. The offer of accommodation facilities in the Hadramout Region is inadequate not only in capacity but also type of facilities and location of these facilities. Consonant with the prevailing business demand, most facilities are located in an urban setting, are made of small units, and belong to the lower end of the accommodation supply, notably two stars, one star and unclassified hotels. Though growing, the offer of accommodation capacity in rental apartments and chalets is limited. By the same token, the number of secondary residences in condos and villas is small and mainly confined to homeowners who were originally from the region and still have family connections with it.

2.33 Lack of tourism services. The offer of tourism services is even more limited and inadequate than that of accommodation facilities. This is indicative of the narrowness of the present tourism demand that mainly relies on short visits by businessman with scarce spending capacity and by international circuit tourists who confine their stay in few circuit hotels.

2.34 Tourism development prospects. Notwithstanding the above issues, the Hadramout Region has potential for further and substantial tourism development. Such potential rests on expanding its existing business, vacation and cultural tourism clientele as well as developing and marketing new tourism products. Seasonal family vacation tourism by national and GCC visitors holds the greatest development promises in Mukalla. International cultural tourism holds the greatest promises in Wadi Hadramout. Other tourism products are also amenable to development. Some of them, such as scuba diving or eco-tourism, do not require major public and private investment for the creation of appropriate development conditions and facilities. These products could be immediately promoted. Others, such as business tourism linked to trade fairs, conventions and corporate activities, would require the construction of expensive facilities as well as major improvements in the quality of tourism services. As a result, they should be

18 targeted for medium term development. Section V (paras 5.12 to 5.23) identifies the products and markets that deserve priority consideration and a possible strategy for their development.

19 SECTION III

GOVERNANCE AND ADMINISTRATION OF TOURISM SECTOR

This section reviews the governance and administration systems of the tourism sector. As a result of the review, it identifies issues that need to be addressed to further the development of tourism and to harness its social and economic benefits.

3.01 The governance and administration systems of the tourism sector in Yemen mainly rest on public sector institutions. These institutions are highly centralized, though with territorial representations. The private sector participates in the governance of the sector through the chambers of commerce and specialized associations. These mainly operate at national level.

3.02 Ministry of Tourism. The Ministry of Tourism is responsible for overseeing the sector, promoting its development, and monitoring the related industry and its activities. Although highly centralized and with most staff working in Sana’a, the Ministry is present at territorial level through branch offices that operate under the administrative responsibility of the local governors. The Hadramout Region has two offices, namely in Mukalla and Seyoun. The Ministry carries out its responsibilities with the assistance of the High Tourism Council and the Yemen Tourism Promotion Board.

3.03 The High Tourism Council is responsible for defining the strategies and policies that govern tourism development, nationally. Members of the Council are the representatives of the main ministries concerned with the tourism sector, such as the ministries of Planning and International Cooperation, Interior, Culture, Transport and Vocational Training. After a slow start-up with only one meeting per year and limited follow-up of its deliberations, since 2008 the Council is meeting quarterly on the basis of defined agendas established by its Secretariat.

3.04 The Yemen Tourism Promotion Board (YTPB) was established in 1998. It comprises 17 members of whom 4 are from government and 12 from the private sector. It is presided by the Minister of Tourism. The Board manages a Tourism Promotion Fund appositely set up to promote Yemen on the international tourism market and to invite the international tourism industry to operate in the country. The Fund is financed from a fee of US$ 7 collected from tourists exiting the country by air or ship It is responsible for the publication of brochures, the organization of publicity on media, and the participation of government and private sector representatives to tourism fairs and other events.

3.05 Until the end of 2007, the Ministry also had a General Tourism Authority (GTA) responsible for planning tourism development and handling tourist development permits. In 2008, the functions of this authority have been transferred back to the Ministry’s staff. GTA prepared a tourism development plan that identifies 17 locations for beach resorts and 12 locations for health spa resorts. It is expected that the plan will contribute not only to foster tourism development in the selected locations but also to protect them from construction activities that may jeopardize their tourism vocation.

Box3 Tourism Development Plan List of beach resorts: Ras Kateeb Hodeida MP Shaima Daubat MP+CFB Fardos Aden Aden Gazolet Al Mahara MP Ras Al Ara Laj MP+CFB Midi Hajja MP Al Mukalla Abyan MP+CFB Dueima Island Hajja MP Bir Ali Shabwa MP+CFB Allaha Hodeida MP Al Daloma Mukalla Mork Island Hodeida MP Foah Mukalla Moka Hodeida MP Rayan Mukalla Al Molk Taiz MP Al Sher

MP= mater plan ready ; MP+CFB= master plan ready with call for bids for design

List of health spa resorts: Hadramout: Assak, Swiber, Al-Hami. Sana’a: Aljaref. Damar: Ali Aanis. Laj: Alhwimi. Hodeida: Assakhna. Shabwa: Aljwiri, Bamaabed. Ibb: Zurah

3.06 In addition to the Ministry of Tourism, several other government ministries and agencies have important roles in fostering tourism development at national and local level.

3.07 Ministry of Vocational Training. The Ministry of Vocational Training is responsible for educating the personnel operating in the tourism industry. Presently, the Ministry has two hotel and tourism training schools in Sana’a and Aden, respectively. Both training schools have a practice hotel. However, none of them is truly operational and delivering its expected services. Current Government plans call for the establishment of 4 additional schools. These plans could be hardly implemented without solving the institutional, financial and managerial problems that hamper the operations of the existing establishments.

3.08 The training school in Aden is operated as one of the many vocational training centers of the Ministry’s local branch. Relatively old and small, the school is plagued by lack of funding and long standing managerial and operational problems. Only a comprehensive restructuring of the school that will review its institutional nature and operational arrangements will transform it into an effective institution.

3.09 The training school in Sana’a (National Hotel and Tourism Institute – NAHOTI) is new and much larger. It has been sponsored by the European Union who has provided funding for its construction and early operations. Though it operates under the tutelage of the Ministry, the school has an independent Board of Directors and enjoys of a certain degree of financial and operational autonomy. Also, the presence within the Board of representatives of the tourism industry provides for a more effective linkage with the latter. Under current arrangements, it is however likely that funding, management and operational problems will hamper its operations as well. New arrangements are being considered that will: (i) enlarge its Board of Directors to become more representative of the tourism industry; (ii) convey the institute a greater share of the revenues accruing to the Skill Development Fund from the salaries of hotel employees; (iii) assure the institute more qualified teachers by adjusting their present compensation system; (iv) establish a partnership agreement between the institute and a renowned international hotel

21 training school; and (v) spin off the management and operations of its practice hotel to a private hotel company.

Box 4 National Hotel and Tourism Institute (NAHOTI)

Board of Directors Minister of Vocational Training Chairman Minister of Tourism President of Yemen Hotel Union Vice-Chairman President of Yemen Travel and Tourism Association Dean of NAHOTI General Director of Ministry of Vocational Training Representative of Ministry of Planning

Educational services - 2 years curriculum diplomas tourism studies (travel agents and guides hospitality studies (front office, housekeeping, food & beverage, food production) - 2 weeks to 2 months refreshment courses specialized training according to industry needs

Educational capacity for 2 years curriculum diplomas 220 students 110 new entries per annum 100 graduates per annum

Practice hotel 20 rooms + 2 suites restaurant, conference room, swimming pool

Budget in 2006 YR 21 million: YR 15 million from Ministry of Vocational Training YR 9 million from Local Council

3.10 Ministry of Culture. The Ministry of Culture plays a critical role in ensuring the development of cultural tourism in Yemen. Such role encompasses: (i) the protection and conservation of monuments, cultural sites and historic cities and their opening to tourism use; the establishment and management of museums and cultural centers; (ii) the promotion and organization of cultural events and activities; and (iii) the dissemination of information on the country’s cultural assets, both physical, such as archeological ruins, buildings of architectural value and original handicraft products, and intangible, such as traditional music, dances, and ceremonies. Because of the lack of appropriate financial and human resources, to date, the Ministry has been unable to play any significant role in the tourism exploitation of the national cultural patrimony, particularly at local level.

3.11 Within the Ministry of Culture, the General Authority for the Protection of Historic Cities of Yemen (GOPHCY) is responsible for ensuring that the centers of historic and architectural value are protected and properly conserved for the benefit of future generations. GOPHCY was created on UNESCO request upon the inclusion of Sana’a in the list of the World Heritage Sites.

22 Although broad in its mandate, GOPHCY’s activities are entirely focused on the protection of Sana’a and the other two Yemeni World Heritage Sites of Shibam and Zabid. In the immediate future, it is unlikely that GOPHCY could master the human and financial resources required to protect any other historic site.

3.11 Ministry of Interior. The Ministry of Interior is responsible for the security of foreign tourists visiting the country. Since travel to some parts of Yemen is unsafe, the Ministry’s Operations Department issues periodical and special letters and circulars to the industry to inform and instruct it about security conditions and travel restrictions. Whenever tourists travel in areas designated as unsafe, tour operators need to inform the Operations Department of the Ministry which will arrange for the protection of tourists through its local police services.

3.12 General Investment Authority. The General Investment Authority (GIA) is responsible for implementing and managing the Government’s investment promotion policies as established in the investment law no. 22 of 2002. Such policies extend to tourism investments for the creation of accommodation facilities and other tourism services, such as restaurants and recreational centers. Financial incentives include tax holidays (zone A, Sana’a, Aden, Hodeida, Taiz and Mukalla, = 7 years; zone B, rest of the country, = 9 years) and exemption of custom duties for investment imports (equipment, furniture and fittings). Recently, GIA has been strengthened in power, mandate, and management to operate as a one-stop shop in ensuring the delivery of the authorizations and permits that investors require at national and local level. To facilitate land acquisition by investors, GIA is planning to establish a land office that will work in close cooperation with the concerned national and local authorities. Foreign tourist investors may contact GIA directly or may be sent to GIA by the Ministry of Tourism or other central and local authority. To authorize tourism investments, GIA needs prior clearance from GTA.

3.13 The private institutions that participate to the governance of the tourism sector include the Camber of Commerce, national organization and local branches, the Yemen Hotel Union, the Yemen Travel and Tourism Association and the Yemen Automobile Club.

3.14 Due to its mandate and functions, the Camber of Commerce follows the activities of its members operating in the tourism sectors. Since no other institution has local representations in the Hadramout Region, the local branch of the Chamber of Commerce of Mukalla is the main venue for the tourism industry to meet, confront ideas, discuss operational problems and develop common intervention policies. To facilitate these tasks, the Chamber of Commerce is considering establishing a special hotel and tourism group.

3.15 Located in Sana’a, the Yemen Hotel Union (YHU) operates nationwide and represents the interests of hotels of three stars and above vis a vis Government. The Union is funded by annual fees paid by its associates. These are: YR 250 per room per year for three stars hotels; YR 400 per room per year for four stars hotels; and YR 500 per room per year for five stars hotels. The Yemen Hotel Union is represented in the Board of NAHOTI.

3.16 Also located in Sana’a, the Yemen Travel and Tourism Association (YTTA) operates nationwide and represents over 100 tour operators and travel agencies. The Association is funded by annual membership fees. Similarly to the Yemen Hotel Union, it is represented in the Board of NAHOTI.

23 3.17 The Yemen Automobile Club (YAC) is a privately sponsored and owned organization that assists auto owners to obtain entry permit to Yemen from Saudi Arabia and Oman. YAC charges a fee varying from SR 50 to SR 80 (US$ 14 to US$ 22) depending on the size and type of vehicle. This charge is shared between the YAC and the automobile federation of the country of origin of the vehicle. To collect fees, YAC has offices on the entry points at the Saudi and Omani borders.

Issues and Prospects

3.18 The governance and administration of the tourism sector in Yemen has yet to be geared to fully exploit of the country’s tourism potential. Achieving this result requires overcoming issues of broad general nature as well as institutional and operational shortcomings.

3.19 Inadequate inter-agency coordination. Lack of effective coordination extends to both the activities of the central government agencies concerned with tourism development and the relations between their central and local offices. The Ministry of Tourism, Ministry of Culture, Ministry of Vocational Training, Ministry of Planning, Ministry of Energy, Ministry of Local Government, Ministry of Finance, Ministry of Interior, the General Investment Authority and the Customs Authority should improve their understanding of the needs of the tourism sector and develop appropriate venues to cooperate on issues related to the promotion of tourist investment and the facilitation of tourist operations. The role of central and local government in the above areas is still undefined and prone to overlapping and confusion. Solving this issue would require that the central government be ready to relinquish some of its responsibilities to the advantage of local government and to provide the same with the means to acquire enhanced human and financial resources.

3.20 Inadequate statistical information. Tourism development relies on the availability of proper statistical information for public and private users to address policy making, develop marketing strategies, and assess investment programs and projects. Present tourism data in Yemen are limited and of questionable reliability. The Ministry of Tourism should undertake appropriate steps to improve and expand data collection on the motivation of tourism arrivals, the length of stay of tourists, and tourist expenditures through the cross-processing of data obtained from different sources (border posts, tourist establishments, banking institutions) and the implementation of periodic surveys. In collecting and processing data, the Ministry of Tourism should clarify the responsibilities of its branch offices and allocate to them the required human and financial resources.

3.21 Inadequate tourism information. Tourists to the Hadramout Region can hardly find information material that can assist them in the selection of accommodation facilities, the identification of available tourism services and the organization of their visit to the regional natural attractions and cultural assets. With the assistance of the local tourism industry, the Ministry of Tourism should prepare appropriate documentation material, the cost of which could be partially or totally covered by commercial ads (Section V, paras 5.33 and 5.34). This material should be made available to tourists at the tourist offices of Mukalla and Seyoun, at special booths in the Rayan and Seyoun airports, and at the reception of major hotels. The tourist offices should be housed in facilities that convey sense of efficiency and ensure easy access to visitors.

24 3.22 Inadequate hotel rating system. The present rating does not conform to international standards and misleads international tourists. Though hotel rates are generally inferior to those practiced in similar hotels in competing tourism destinations, hotel clients experience disappointment and develop negative feelings towards the Yemeni hotel industry. It is imperative that the Ministry of Tourism urgently revise the present rating system and implement it throughout the country with the assistance of a national commission and its local tourist offices.

3.23 Unsustainable hotel and tourism training system. To become truly effective, the present hotel and tourism training system requires comprehensive restructuring. The hotel and tourism industry needs to be more directly involved in the management and financing of the schools and in the operation of their practice hotels. Rather than establishing new centers, the Ministry of Vocational Training, in association with the Ministry of Tourism, should ask the tourism industry to help strengthen the existing centers and have these centers organize training courses with local universities and on the job training with local hotels in selected provincial capitals.

3.24 Lack of representation by the local tourism industry. As tourism activities develop, the tourism industry of the Hadramout Region needs to find appropriate venues to discuss its problems, support its interests, improve its services and enhance its financial performance. To this end, the Hadramout Chamber of Commerce should formalize the creation of a hotel and tourism section grouping its members operating in these sectors Section V, para 5.31). In addition, the Yemen Hotel Union and the Yemen Tourism and Travel Association should promote the establishment of branches in Mukalla and Seyoun. Only an effective local organization of the hotel and tourism industry could ensure that this cooperates with local government to protect and exploit existing tourism assets, organize appealing cultural and recreational activities, develop appropriate tourism products, and market these activities and products domestically and internationally.

3.25 Need to protect natural and cultural tourism assets. The continued existence of many natural and cultural assets of the Hadramout Region for the fruition of the local population as well as external visitors is jeopardized by neglect and rapid degradation. This is the result of: (i) a generalized disregard for their social, scientific, aesthetic and economic value; (ii) the government inability to mobilize human and financial resources for their protection and conservation; and (iii) the scantiness of associations and donors interested in their exploitation. The above shortcomings should be addressed through targeted educational campaigns, increased public funding, and civic commitment (Section v, para 5.27, 5.28, 5.34).

3.26 Need for better tourism development planning. Prior to its suppression, the General Tourism Development Authority has identified tourism development sites for the development of beach as well as spa resorts (para 3.05). To be effective, the preparation of the physical master plans for these resorts should be set in the context of broader tourism development plans encompassing the entire region to which they belong. The latter plans should address the market, financial and operational aspects related to tourism development in the region, identify the tourism products that will sustain such development, specify the actions that central and local government should undertake to support the activities of the private sector, and define the agreements that will regulate the relations between the government agencies involved in the development process and between these agencies and private investors. Possibly, these agreements should be formalized in “Contract Programs” clearly defined in terms of objectives, actions, schedules, and investment requirements.

3.27 Need for improved assistance to tourism investment. Properly applied, the Investment Law provides adequate financial incentives for the development of tourism accommodation facilities and services. By the same token, the General Investment Authority (GIA) provides the assistance that investors need to finalize their investment projects and overcome the bureaucratic hurdle of obtaining the required development and operational permits. In the Hadramout Region, there is also the need to assist investors locating and acquiring land for the construction of tourism facilities. Local government is best suited to provide this assistance (Section IV, paras 4.06 and 5.31).

26 SECTION IV

STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS

This section explores the Strengths, Weaknesses, Opportunities and Treats (SWOT analysis) that affect positively and negatively tourism development in Mukalla city and the Hadramout Region. Because of its subjective nature, the analysis does not aim at providing definite judgments but rather at fostering discussion and promoting further thinking.

Strengths

Endowment factors City of Mukalla . Natural setting and flavor of old Arabian port . Proximity to city of scenic bays and uncontaminated sandy beaches . Historic medina and historic buildings of architectural appeal . Sea front and artificial canal (Khour-al Mukalla) with tourism potential Coastal area . Pristine and unspoiled physical environment . Natural attractions . Proximity to inland oasis and scenic sites . Possibility of scuba diving, game fishing, bird watching, trekking Wadi Hadramout . Outstanding scenery . Traditional villages of great visual beauty . Architectural cultural patrimony (palaces, castle, religious buildings) . Living culture (traditional farming, handicraft and construction activities) . Pilgrimage sites (tomb of Profet Hud)

Political and institutional factors . Central and local government commitment to tourism development . Close relations among civil society, business community and local government

Contextual factors . Availability of cheap labor . Availability of food supplies (fish, vegetables, fruits) . Due to its physical isolation, facility in securing area from external threats

Weaknesses

Endowment factors City of Mukalla . Limited availability of accommodation and other tourism facilities . Limited city life and lack of night entertainment . Lack of adequate urban services . Lack of adequate recreational and cultural facilities Coastal Area . Lack of accommodation and other tourism facilities Wadi Hadramout . Limited availability of accommodation and other tourism facilities . Lack of recreational, entertainment and cultural facilities

Political and institutional factors . Weak governance system resulting in opaque administrative procedures, uncertain legal proceedings and unwarranted public interferences in private sector initiatives . Centralization of Yemen government system concerning tourism development . Lack of effective coordination between national and local government institutions . Administrative fragmentation and lack of interagency coordination . Inadequate administrative capacity at local level . Lack of local institutions for protecting and exploiting natural and cultural assets . Lack of local institutions for promoting national and international tourism

Contextual factors . Conservative society averse to activities and behaviors foreign to its traditional values . Urban congestion in Mukalla city (housing density, vehicular traffic, parking) . Poor maintenance and physical degradation of buildings and infrastructure . Inadequate public transportation, including taxis in urbanized areas . Lack of qualified personnel for accommodation facilities and tourism services . Lack of information material on tourism attractions . Limited name recognition on international market

Opportunities . Central and local government commitment to tourism development . Proximity to GCC countries and their vacation market . Investment appeal for GCC investors, particularly of Hadrami origins . Market and investment attractiveness as a new tourism destination . Growth potential of Mukalla city . Availability of unspoiled beaches for establishment of integrated resorts . Availability of cheap labor

Threats . Negative impact on environment of uncontrolled urbanization . Progressive loss of cultural identity because of rapid economic development . Progressive spoiling of natural sites because of unchecked economic activities . Progressive spoiling of historical villages and urban areas because of urban growth . Progressive loss of cultural assets because of neglect and lack of financial resources . Lack of security resulting from domestic and international political events . Hostility to tourists by members of specific local communities

4.01 Tapping opportunities and confronting threats call for the definition of a comprehensive tourism development strategy and a plan of actions for its implementation. Strategy and actions are discussed in Section V. Below are reviewed a few overriding country issues whose solution is a precondition for qualified and sustainable tourism development in Yemen as well as in Mukalla and the Hadramout Region.

Overriding Country Issues

4.02 Cultural and political. It is a common view that the poor performance of the tourism sector in Yemen stems from the lack of adequate tourism facilities, limited land and air transportation, insufficient marketing, and, more specifically for Mukalla and Wadi Hadramout, their isolation and resulting marginalization within Yemen. All of these reasons are relevant but they are more an effect than a cause. The roots of the problem should be rather searched in cultural and political factors that negatively affect the governance and operations of the tourism sector.

4.03 Opaque administrative procedures, dysfunctional legal and judicial systems, unwarranted interferences by central and local officials, and crowding out pressures from privileged national and local business groups hamper foreign and domestic investment for the construction of accommodation facilities and the establishment of tourism services. Traditional family values and social behaviors combined with widespread dislike for service activities limit the participation of women and hold back the development of an effective and dedicated workforce in the tourism sector. International and domestic political tensions create real and perceived security problems that discourage international tourism.

4.04 Is there any way to overcome these entrenched problems and create a positive climate for tourism development in Yemen, Mukalla and the Hadramout Region? The challenge is open. Recent government policies and measures to increase the accountability of the national civil services, involve the local population in the national development effort through an enhanced role of local administrations, promote greater cooperation between the public and the private sector and improve security in urban and rural areas move in the right direction and bode well. The road to certain and sustainable progress is however long and requires rigor, determination, and persistence. Only the solution of the above problems will allow to overcome the institutional and operational shortcomings in the governance and administration of the tourism sector that are presented below.

29 4.05 Investment security. In a global economy where not only developing but also industrialized countries compete for foreign tourism investments, investors have choices and weight carefully cost with risk factors. The appeal of saving financial resources on land acquisition, construction costs and operating expenditures could be totally offset by risk considerations. Yemen is perceived as a high-risk country.

4.06 In spite of the availability of many undeveloped sites suitable for tourism development, acceding to land with secure tenure is a challenging undertaking. In the Hadramout Region, this problem is aggravated by the land distribution policies followed by Government upon unification in the early 1990’. Land was assigned to individual citizens under development agreements that are often unclear or disrespected and that, therefore, question the legitimacy of its ownership. Moreover, the land assignment process has resulted in ownership fragmentation and speculative activities that hamper land development. Assisting investors to acquire land with a clear and secure title requires the development of a transparent government policy concerning the ownership of the land that was assigned and not developed as well as a general clarification of the role of central and local government in addressing land issues.

4.07 Partnerships between foreign investors and local entrepreneurs are essential to tourism development since they combine foreign capital with local know-out. Yet, the establishment of these partnerships requires that local entrepreneurs are familiar with the workings of financial transactions, the nature of project financing and the risks of investment operations. Moreover, it requires that the judges who handle possible litigations among partners are competent and transparent. Unfortunately, a number of questionable experiences have tarnished Yemen’s reputation in both areas. The General Investment Authorities should advise foreign investors about the risks of local partnerships and the judicial system should ensure that the law is applied scrupulously and fairly.

4.08 Travel security. In the post September 11, 2001 situation, international tourism is particularly sensitive to events in the Middle East and Muslim world. Because of its geographical location, Yemen is subject to continuous scrutiny. Concerns about possible domestic unrest triggered by regional events combine with those linked to a long history of tourists’ kidnappings by local tribesmen.

4.09 For Government, handling the issue of travel security for tourists requires dealing with real as well as perceived issues. The first issues call for ensuring that selected tourist areas are completely secured through effective cooperation between the police forces, the local authorities and the local communities. Because of its defined boundaries, relative isolation, and homogeneous society, the Hadramout Region is particularly suited to promote such a cooperation and, therefore, to become a tourist safe heaven. The perceived issues call for improving the image of country as a friendly place for tourists. The Government should ensure that the Police have an irreproachable and courteous behavior at check points and in the cities. In general, the provision of personal armed escorts to tourists should be avoided and, in any case, the military personnel involved in these escorts should be prevented from asking for direct money compensation.

4.10 Local interests. Because of Yemen’s traditional society and present stage of economic development, prominent families and community leaders play, either directly or indirectly, an influential role in local administrative decisions and business activities. This could hamper the

30 activities of tourism investors and managers of tourism facilities who are often unfamiliar with such practices and are generally hostile to external advice, not to say interference, on their operational decisions. Occasionally, local interests may attempt to scare away external competitors even though they are unable to perform the same functions because of lack of financial resources or managerial expertise.

4.11 Local Government with the assistance of the local Chambers of Commerce and the local business communities should protect tourism investors and managers of tourism facilities from undue interferences while educating them on the workings of local society. In particular, they should ensure that no local concern limits their freedom to invest and operate.

31 SECTION V

TOURISM DEVELOPMENT STRATEGY

This section develops a process and provides elements for the definition of a comprehensive tourism development strategy for Mukalla. Moreover, it indicates the actions required for implementing the strategy over the short and medium term. Tourism development in Wadi Hadramout and Socotra is treated to the extent that it contributes to Mukalla.

5.01 Establishing a tourism development strategy for Mukalla and the Hadramout Region calls for: (i) a general diagnosis of the present tourism situation; (ii) a measured assessment of the constraints to tourism development and their mitigation measures; (iii) the identification of the tourism products and markets that are most likely to succeed; (iv) the definition of time bound tourism development objectives and associated indicators; and (v) the establishment of action plans and priority projects to achieve the chosen objectives and associated benefits.

DIAGNOSIS OF PRESENT TOURISM SITUATION

5.02 The purpose of this diagnosis is to assess the nature and level of present tourism activities against the physical, social and economic endowment (Section I) and the tourism situation (Section II and IV) of Mukalla and the Hadramout Region.

5.03 Mukalla. The present tourism demand consists of business with some vacation and cultural tourism. Business tourism is linked to the city’s population weight, its administrative role as regional capital and its economic activities. So far, lack of adequate facilities and city life, combined with Mukalla’s small economic base, have prevented the development of business traffic related to trade fairs, conventions and corporate events. Isolation, socio-economic backwardness and lack of entrepreneurship have limited vacation tourism. This mainly rests on Yemeni vacationers from other regions and GCC vacationers, particularly of Hadrami origins. The above factors, combined with the absence of major monuments and a significant urban context, have also limited cultural tourism. Existing cultural tourism mainly rests on visitors to Wadi Hadramout who include in their trip a short stay in Mukalla. Because of its infant tourism industry, Mukalla has been also unable to exploit its potential for specialized tourism activities such as scuba diving, surfing, eco tourism, and cruise ship tourism. Indeed, these types of tourism could be practiced in the vicinity of Mukalla as well as in many other locations along the coastal area.

5.04 Coastal area. Present tourism activities are limited to daily excursions for sightseeing and eco-tourism purposes by visitors to Mukalla. The entire area lacks of facilities that could ease the access to, and fruition of, its beaches and natural assets. Therefore, these beaches and assets remain largely unexploited.

5.05 Wadi Hadramout. The present tourism demand consists of business and cultural traffic with some vacation tourism. Similarly to Mukalla business traffic is mainly domestic and stems from the Wadis’ population, administrative and economic activities. Seyoun is the center of these activities. Demand for cultural tourism is international and mainly constituted by European visitors. Lack of appropriate accommodation facilities and limited air access have prevented a

32 full exploitation of its potential for this tourism as well as its expansion into vacation tourism. Present vacation tourism is mainly from Yemeni and GCC nationals. Also this is well below potential. Increased international traffic in Wadi Hadramout could have important spin off effects on Mukalla’s tourism industry.

5.06 Socotra. At present, tourism in Socotra comprises limited domestic business traffic and international eco-tourism. Its potential for additional eco-tourism as well as beach tourism is considerable. However, tourism activities will have to reckon with the need of safeguarding the island’s environment according to the preservation policies that the Government of Yemen itself has established with UNDP and GEF assistance. Tourism development in Socotra has a positive impact on Mukalla that is its closer connection to the mainland.

ASSESSMENT OF CONSTRAINTS

5.07 The analysis of the Social, Economic, Institutional, Financial, and Operational (SEIFO) factors that constrain tourism development nationally and in the Region (Section II, III and IV) indicates that developing tourism will be a challenging endeavor and requires the solution of numerous issues.

5.08 Socio-economic issues. These issues mainly relate to the traditional fabric of the Hadrami society that prevents the development of modern recreational activities and discourages international tourism, particularly beach tourism. Moreover, the conservative posture and intense religiosity of this society limits women participation to the workforce employed in hotels and, therefore, hampers their operations and competitiveness. Finally, extensive poverty affects negatively the quality of the environment in urban and rural areas and the offer of urban services. Mitigation measures could include: (i) shielding the local population from the less accepted tourism activities, such as beach tourism, by locating them in relatively secluded and protected areas; (ii) carrying out well designed information campaigns on the socio-economic benefits of tourism to lessen the local population’s resistance to the tourism industry; and (iii) clustering tourism facilities in few highly specialized locations to ease the delivery of appropriate urban services.

5.09 Institutional issues. These issues center on the lack of human and financial resources to manage the tourism sector, facilitate tourism investments, and promote tourism development. The role of central and local government institutions in addressing the above challenges is unclear and need streamlining. This extends to their role in assisting investors to acquire the land needed for hotel construction. In many instances, rather than cooperating with private investors and entrepreneurs, public officials interfere in their decision-making and their business activities. All of this has a negative impact on tourism development and the operations of tourism facilities. The above issues can be mitigated through institutional measures, such as: (i) the creation of specialized commissions that could foster coordination among government institutions and oversee their activities; and (ii) the establishment of specialized public agencies to implement priority tourism activities and projects, including in partnership with private entrepreneurs.

5.10 Financial issues. These issues center on: (i) the government’s inability to mobilize resources for improving infrastructure, providing urban services and protecting the environment; and (ii) the investors’ inability to mobilize funding to upgrade or develop accommodation

33 facilities and tourism services. The lack of public resources for infrastructure investment should be tackled through policies that would foster: (i) greater selectivity and control of government expenditures; (ii) the concentration of tourism development on a limited number of priority sites where public and private investment could be focused; and (iii) private sector participation to infrastructure development (investment partnerships and betterment taxation).

5.11 Operational issues. These issues include the lack of adequate utility services; the lack of local construction capabilities, and the lack of qualified hotel management and labor. Initially, the lack of utility services could be mitigated through greater reliance by hotel establishments on private back-up systems for the provision of these services. The lack of local construction capabilities could be mitigated through the promotion of transparent and productive partnerships between the local industry and national and international firms. The lack of qualified management and labor could be addressed through active cooperation between the local tourism industry and the National Hotel and Tourism Institute –NAHOTI (para 3.09). An additional operational constraint is seasonality. This can be mitigated by attentive pricing policies, cooperation between hotel establishments, and well designed and targeted promotional activities.

IDENTIFICATION OF PRIORITY PRODUCTS AND MARKETS

5.12 The potential of a tourism destination varies according to the tourism products that it can offer and its ability to deliver them to the relevant markets. The potential may expand over time as the destination’s ability to develop and deliver products changes with its growth and the evolution of its socio-economic context. In Mukalla and the Hadramout Region, the combined analysis of endowments and constraints suggest the following product and market selection.

. Mukalla city and its vicinities.

5.13 Business tourism. At present, business tourism dominates Mukalla’s tourism demand and is by far the largest contributor to its tourism industry. The growth prospects of business tourism are consonant with those of the city’s and its region’s economy. However, the growth rate may be higher because of the present low level of business traffic. Business tourism should remain an important and critical component of Mukalla’s future tourism development. As the economy of the city and the region develops, the present mainly domestic business traffic will increasingly couple with international business traffic. This will promote a general upgrading of the existing hotel accommodation facilities and tourism services. The tourism authorities should ensure proper classification and operations of the hotels catering to this tourism and improve the urban services required by businessmen. The tourism industry should improve quality of accommodation facilities and hotel services.

5.14 Expanding the scope of business tourism to include specialized business tourism for trade fairs, conventions, conferences and corporate events such as company retreats, workshops, training courses, product promotions, and reward travel is worth pursuing but as a medium-term objective. Indeed, the achievement of this objective would require time and substantive public and private investment. It is contingent upon the development of Mukalla into a more appealing tourism destination (recreational opportunities, city life, night life) and the establishment of appropriate facilities (hotel conference rooms, convention center, fair grounds). The Chamber of Commerce is actively sponsoring the creation of a convention and trade center in Fowah,

34 adjacent to the present parade grounds. The mobilization of funding and the implementation of such large project will however require several years to materialize.

5.15 Vacation tourism. Vacation tourism in Mukalla is at an infant stage and the city is not yet considered a vacation destination in the international as well as in the national market. Yet, Mukalla has potential for vacation tourism and vacation tourism holds the best promises for the development of the city’s tourism sector. This potential primarily rests on offering seasonal family vacations that combines city life with beach and other recreational activities. The market for this type of vacation tourism is primarily national and regional. Within the latter, GCC citizens of Hadrami origins will constitute a privileged target segment. Mukalla will compete with Lebanon, Egypt, Jordan and Oman. Its lack of hospitality traditions and name recognition could be compensated by its proximity to the market, social environment based on traditional cultural values, and lower vacation costs associated to a pleasant physical environment and first rate beaches. Finally, East Asian pilgrims of Hadrami origin traveling to Mecca and Medina constitute a promising component of Mukalla’s vacation tourism. These pilgrims can be lured into paying a visit to their ancestral land through improved air connectivity and targeted tourism promotion. To this end, East Asian airlines should be allowed to have Mukalla and Seyoun as intermediate destinations for their flights to Saudi Arabia.

5.16 As tourism development modernizes the socio-economic environment of the city and stimulates improvements in the offer of tourism services, Mukalla will be also able to attract international beach tourists from European and emerging Asian countries. In particular, it could offer cultural tourists visiting Wadi Hadramout the possibility of extending their stay and relaxing on the shores of the Arabian Sea through the purchase of vacation packages combining cultural and beach tourism. The development of international beach tourism would be facilitated by the construction of resorts on protected beaches at the outskirts of Mukalla. Expatriates living in Yemen and the GCC countries constitute a privileged clientele for beach tourism and should be specifically targeted.

5.17 Cultural tourism. Mukalla’s potential for cultural tourism is modest considering the limited significance of its assets with respect to other national and international destinations. Cultural tourism in Mukalla is and it is likely to remain a byproduct of cultural tourism in Wadi Hadramout. However, capitalizing on the fascination of its secluded location on the Arab sea and its flavor of ancient city port, Mukalla should aim at increasing the number of travelers who will visit it on their way to Wadi Hadramout. Moreover, it should aim at extending their length of stay by offering the opportunity to visit the natural attractions and nature sanctuaries located along the eastern and western coastal areas.

5.18 Specialized products. Mukalla offers multiple opportunities for specialized tourism activities that can be carried out in its immediate vicinities or using the city as a departing point. These activities include: game fishing, scuba diving, surfing, bird watching, sightseeing, mountain hiking and desert excursions. While it is difficult to imagine that it could became a major destination for any of these products, Mukalla could certainly promote them as part of its overall tourism development process. Their promotion will contribute to strengthening the image of Mukalla as an international tourism destination. As for vacation tourism, expatriates living in Yemen and the GCC countries constitute a privileged clientele for many specialized products and should be specifically targeted. As part of its specialized products, Mukalla could also foster cruise ship tourism. This would be facilitated by the relocation of the present

35 commercial harbor, its transformation into a marina and fishing port, and its equipment with landing facilities for cruise ship passengers. Also, it is contingent upon the creation of appropriate recreational and shopping opportunities and the establishment of specialized agencies to guide tourists in their visit of the city, its vicinities and the coastal areas.

5.19 Among the specialized tourism products are also the activities related to festivals and special events. The Al Baldah Festival in Mukalla and the Shehir Festival in the homonymous city already attract a conspicuous local attendance and are increasingly establishing themselves as national events. In addition to these festivals, Mukalla has the potential to promote cultural and recreational activities related to specialized handicraft productions, popular customs and traditional cuisine. Handicrafts include carpet waving, woodwork and metalwork; popular customs include dances and clothing; cuisine rests on the products of the sea.

. Hadramout coastal area

5.20 In the short term, the coastal area is likely to remain the destination of daily trips carried out by tourists lodging in Mukalla and its neighboring beaches. Resorts and vacation villages for international tourists could be eventually developed. However, their development is hampered by lack of infrastructure as well as the infant status of beach tourism development in Yemen that favors the prior promotion of other tourism destinations, particularly in the vicinity of Aden.

5.21 It should be also noted that the development of accommodation facilities for international tourists along the coast may be ultimately prevented by the progressive deterioration of its present pristine physical environment. Indeed, it is possible that, by the time that demand materializes and capital becomes available for large qualified investment projects, unchecked construction activities, triggered by the economic development of Mukalla and Shihr as well as the establishment of the Balhaf LNG terminal, would have spoiled all the most interesting sites. In the positive, investors may decide to forget about developing accommodation facilities on the Hadramout coastal areas and look for untouched sites on the most remote and less spoiled coastal area of the Al Mahara Governorate.

. Wadi Hadramout

5.21 Business tourism. Business tourism in Wadi Hadramout is linked to the administrative and economic activities engendered by its population. It is mainly concentrated in Seyoun, the main administrative and economic center and the location of the international airport. Similarly to Mukalla, this traffic is likely to expand in accordance with the Wadi’s economic growth. It has minimal impact on tourism development in Mukalla.

5.22 Vacation tourism. Presently, vacation tourism is limited but has development potential. Such potential extends not only to its present domestic and GCC clientele but also to European cultural tourists who can be induced to extend their visit to enjoy the Wadi’s peaceful environment and beautiful landscape. Developing vacation tourism would require enhancing the offer of cultural, recreational and sport facilities. Clustering accommodation facilities in specialized tourism areas could facilitate the latter objective. The development of domestic and GCC vacation tourism could have a positive impact on tourism development in Mukalla which can became a trip destination for these vacationers. Conversely, the development of European

36 vacation tourism could conflict with the objective of combining cultural tourism in Wadi Hadramout with beach tourism in Mukalla.

5.23 Cultural tourism. Cultural tourism in Wadi Hadramout is not only the mainstay of international tourism for the entire region but also one of activities that qualifies Yemen as an international tourism destination. Visitors to Wadi Hadramout are mostly European. Generally they visit Wadi Hadramout as part of a broader visit to Yemen that starts from Sana’a, entry point to the country. Given its unique cultural assets and beautiful physical environment, Wadi Hadramout has the potential to become a stand-alone destination with tourists flying directly in and out of the Seyoun airport. This goes hand by hand with the establishment of Wadi Hadramout as an international vacation destination. If properly managed, the expansion of cultural tourism could have a positive impact on tourism development in Mukalla by offering tourists the opportunity of either a trip to Mukalla or a beach vacation on its beaches.

5.24 Specialized products. Similarly to Mukalla, Wadi Hadramout offer the opportunity for specialized tourism activities such as gliding, trekking and desert excursions. Golfing could be an additional opportunity provided that the design and location of golf courses will not add any strain to the Wadi’s scarce water resources. These products could be promoted as part of the Wadi’s overall tourism development process. Their promotion has minimal impact on tourism development in Mukalla.

DEVELOPMENT OBJECTIVES AND ASSOCIATED INDICATORS

5.25 The proposed development objectives are built on the previous assessments and realistic assumptions of possible public and private sector tourism promotion and investment activities. They are limited to short-term (5 Years) and medium-term (10 Years) horizons. They acknowledge that the ability of government and the tourism industry to deliver a product is greater if: (i) that product already exists (e.g., business tourism and cultural tourism); and (ii) its development minimizes the recourse to scarcely available resources (e.g., infrastructure, investment capital, managerial expertise, qualified labor). Objectives and indicators relate only to the city of Mukalla and its vicinities. Target values are indicative and should be periodically updated based on actual performance and progress.

Short-term objectives

Objective indicator target value

 Support business tourism development Increase length of stay 10% Increase daily expenditure 20% Promote spouse travel 2%

 Develop cultural tourism Increase length of stay 40% Increase daily expenditure 30% Increase share from Wadi Hadrmt 40%

Medium-term objectives

Objective indicator target value

 Develop corporate tourism (>10 % of total business travel) Improve city life 10 establishments Promote business events 5 per annum Establish facilities conv. & trade center

 Develop vacation tourism (European and Asian markets) Increase accommodation supply 6,000 beds Increase tourism services 40 establishments Attract East Asian pilgrims 5,000 bed-nights

 Promote cultural exchange tourism with local universities Promote educational events 1,000 bed-nights ______

ACTION PLANS AND PRIORITY PROJECTS

5.26 The achievement of the above objectives calls for specific central and local government initiatives to create an environment conducive to tourism development and to support the activities of the tourism industry. The implementation of these initiatives should be coordinated with those that the latter undertakes to create, market and run its tourism facilities. Government plans should be continuously updated and adjusted based on the industry’s actual response, which, in turn, is based on its own market assessments and investment capabilities. A list of priority plans and projects that can have significant positive impact on tourism development is presented below.

5.27 Restructuring and revitalizing Mukalla’s old city. With its historical buildings, medina and corniche, the old city is critical to Mukalla’s tourism development. It defines the city’s cultural and physical identity and constitutes a valuable hub of traditional activities. Government should develop plans and projects to restructure and revitalize the old city. Only this would ensure that its urban environment, architectural character and historic buildings are protected, conserved and properly managed in the social and economic interest of the city, its inhabitants and its visitors. The implementation of these plans and projects requires the designation of the old city into a special cultural heritage area. Such designation should be associated with the

38 preparation of detailed land use plans and building regulations. Moreover, it should constitute the basis for the implementation of specific development projects by the public sector either directly or in partnership with private entrepreneurs. ______

Restructuring and revitalizing Mukalla’s old city Projects:

1. Agency for the Protection and Development of Old Mukalla and Mukalla seafront Objective: Seek improved protection and development of Old Mukalla through the services of specialized agency. For efficiency reasons, agency could be also entrusted with protection and development of Mukalla’s beaches. Sponsorship: Governorate Membership: Hadramout Governor (chairman); representatives of local and central government agencies –culture, tourism, public works, social affairs, economic development--; representatives of business community; representatives of tourism industry; representatives of civil society Financing: Governorate; business community; tourism industry Recommended horizon and implementation timeframe: short term Expected benefits: enhanced tourism appeal of Mukalla; increased profitability of local economic activities; increased tax revenues

2. Protection and rehabilitation of the medina Objectives: prevent unauthorized construction activities; improve infrastructure (street paving, drainage, water supply, sewerage, power, telecom); develop pedestrian areas and pedestrian paths; organize traffic and parking; promote housing rehabilitation; promote development of tourism services, shopping facilities and handicraft activities; promote restoration and adaptive reuse of selected buildings of historical and architectural value Responsible agency: Governorate with technical assistance by Ministry of Public Works and specialized inputs by Ministry of Tourism and Ministry of Culture Partnerships: Chamber of Commerce; private investors Estimated cost: US$5 million, of which US$3 million from public sources and US$2 million from private investors Financing: central and local government; international financial institutions; international donors; private investors Recommended horizon and implementation timeframe: short term; 5 years Expected benefits: enhanced population welfare; increased economic activities; improved tax yield

3. Protection and valorization of the corniche and its urban fabric Objectives: regulate construction activities; improve infrastructure (street paving, drainage, water supply, sewerage, power, telecom); develop pedestrian areas; develop parking facilities; promote housing rehabilitation; promote creation of tourism services and shopping facilities; promote restoration and adaptive reuse of selected buildings Responsible agency: Governorate with technical assistance by Ministry of Public Works and specialized inputs by Ministry of Tourism and Ministry of Culture Partnerships: Chamber of Commerce; private investors Estimated cost: US$4 million, of which US$2 million from public sources and US$2 million from private investors Financing: central and local government; international financial institutions; international donors; private investors Recommended horizon and implementation timeframe: short term; 5 years Expected benefits: enhanced population welfare; increased economic activities; improved tax yield

4. Recovery of the old port quay Objectives: protect and conserve historical port facility; recover dismissed quay for public use; integrate quay area into seafront promenade; equip promenade with benches and connect it to medina’s pedestrian areas and paths Responsible agency: Governorate with technical assistance by Ministry of Public Works and specialized inputs by Ministry of Tourism and Ministry of Culture Partnerships: Chamber of Commerce; private investors Estimated cost: US$800,000, of which US$600,000 from public sources and US$200,000 from private donors Financing: central and local government; international financial institutions; international donors; private investors Recommended horizon and implementation timeframe: medium-term, 1 years implementation time Expected benefits: enhanced tourism appeal of old city; increased number of visitors to medina

5. Restoration and adaptive reuse of the Sultan Quaiti Palace Objectives: protect, conserve and exploit palace; restore and restructure existing structure to host a renewed and expanded museum, improve the offices of the Ministry of Tourism (regional delegation), and establish a visitor information center with appropriate public facilities Responsible agency: Ministry of Tourism and Ministry of Culture Partnerships: Governorate; Chamber of Commerce; private investors Estimated cost: US$1.8 million, of which US$1.6 from public sources and US$200,000 from private donors Financing: central government; international financial institutions; international donors; private investors Recommended horizon and implementation timeframe: short term; 2 years Expected benefits: enhanced tourism appeal of Mukalla; facilitation of tourist activities; increased tourism receipts

6. Restoration and adaptive reuse of the present governorate administrative compound Objectives: restore, preserve and reuse adaptively compound buildings for establishment of a cultural, commercial and recreational center; close road between compound and the Sultan Al Quaiti Palace and create an integrated pedestrian area Responsible agency: Governorate in cooperation with Ministry of Tourism and Ministry of Culture Partnerships: Governorate; Ministry of Tourism; Ministry of Culture; Chamber of Commerce; private investors Estimated cost: US$4 million, of which US$600,000 from public sources and US$3.4 million from private investors Financing: central and local government; private investors; banking system Expected horizon and implementation timeframe: medium term; 2 years Expected benefits: enhanced tourism appeal of Mukalla; facilitation of tourist activities; increased tourism receipts

7. Restoration and adaptive reuse of Sekat Yaacoup Objectives: restore and restructure building for establishment of qualified commercial facilities; create pedestrian area and improve plaza in front of building Responsible agency: Governorate with assistance by Ministry of Public Works and Ministry of Culture Partnerships: Governorate; private investors Estimated cost: US$1 million, of which US$200,000 from public sources and US$800,000 from private investors Financing: central and local government; private investors; banking system Expected horizon and implementation timeframe: medium term; 1 year Expected benefits: enhanced tourism appeal of Mukalla; facilitation of tourist activities; increased tourism receipts ______

5.28 Protecting and developing Mukalla’s seafront. Mukalla’s tourism appeal and, therefore, tourism potential, greatly depends on the urban quality of its seafront and its effective use for tourism related activities. The unchecked construction of unqualified housing and other structures in Fowah and Hella would compromise the image of the city as a tourism destination and result in the permanent loss of valuable land. The same applies to the land reclamation areas adjacent to the mouth of Khour Al Mukalla, in particular the Al Amoudy area east of the Khour’s mouth, whose uncontrolled development could have a devastating visual impact and severe congestion effects on the corniche. Both banks of the Khour itself are characterized by the presence of vacant lots or obsolete buildings that could be replaced with bigger and better structures to the benefit of local owners and the city economy. Finally, the present port of Mukalla is insufficient to meet the needs of the city and the Hadramout Region. Plans are under way to transfer it to a more suitable location. Transforming the existing port into a marina while reserving part of it for fishing boats would greatly enhance the tourism appeal of the city. Moreover, it will offer the opportunity to redevelop the adjacent industrial areas into a tourism zone close to the old city and with beautiful views of the medina.

40 ______

Protecting and developing Mukalla’s seafront Projects:

8. Agency for the Protection and Development of Old Mukalla and Mukalla seafront Objective: Seek improved protection and development of Mukalla beaches through the services of specialized agency. To spare resources and reduce costs, function can be entrusted to agency responsible for the protection and development of Mukalla’s old city. See para 5.27, project 1, above.

9. Khour Al Mukalla urban restructuring project Objectives: exploit fully the tourism potential of Khour Al Mukalla and make it a city landmark; promote the establishment of tourism facilities (restaurants, café bars, shops, boat rental center) along the banks of the Khour; facilitate the replacement of present obsolete buildings with qualified structures hosting high value activities; establish proper parking facilities; create bus stops and taxi stands; Responsible agency: Governorate with assistance by Ministry of Public Works Partnerships: Governorate and private investors Estimated cost: public investment could be limited to US$200,000 for beautification works; private investment could exceed US$ 10 million Financing: local government; private investors; banking system Expected horizon and implementation timeframe: medium term; 10 years Expected benefits: enhanced tourism appeal of Mukalla; facilitation of tourist activities; increased tourism receipts; increased real estate values; increased tax yield

10. Mukalla marina and fishing port development project Objectives: reconvert present commercial harbor in marina combined with fishing port; establish docking and landing facilities for cruise ships; redevelop industrial areas around harbor into tourism and shopping complexes; provide for adequate parking facilities Responsible agency: Governorate with assistance of Ministry of Maritime Affairs and Ministry of Public Works Partnerships: central and local government and private investors Estimated cost: public and private investment could exceed US$5 million each Financing: central government; international financial institutions; private investors; Expected horizon and implementation timeframe: medium term; 3 years Expected benefits: enhanced tourism appeal of Mukalla; increased pleasure boat and cruise ship traffic; improved efficiency of local fishing activities; increased tourism receipts; increased real estate values; increased tax yield

11. Al Ahmoudi land reclamation project Objectives: ensure that development is consonant with the area’s tourism vocation (land use, building types, urban services); ensure that development meets environmental and aesthetic standards compatible with corniche and medina (height, volume and appearance of buildings); ensure that development seeks long-term rather that immediate profitability objectives Responsible agency: Governorate with assistance of Agency for the Protection and Development of Old Mukalla and Mukalla Beaches Partnerships: project entirely developed and financed by private sector Estimated cost: none for government; private investment for implementation of development likely exceed US$300 million Financing: private sector; equity funds; banking system Expected horizon and implementation timeframe: medium and long-term; 10-15 years Expected benefits: increased tourism receipts; increased real estate values; increased tax yield; positive impact on restructuring and revitalization of corniche and Khour Al Mukalla ______

5.29 Developing integrated resorts for international tourism. To-date the development of accommodation and other tourism facilities in Mukalla has taken place through the activities of investors who have operated in isolation and built individual hotel establishments. Most of these establishments are small in size and never exceed 120 rooms. This type of development suits

41 well the needs of business tourism but is of limited appeal to vacation tourists. The establishment of integrated tourism resorts combining on a designated sea front site several types of accommodation facilities (hotels, apartment buildings, chalets) and tourism services (restaurants, café-bars, shops) would enhance the image of Mukalla as a tourism destination and increase its appeal to vacationers. It will be the decision of the interested developers to define the size of the resort, its targeted clientele, its physical appearance and its financial profitability. Central and local government should solely facilitate the activities of these developers. Within Mukalla City and its vicinities there are several locations suitable for the development of similar resorts. Because of their urban environment, sites along the beach in Fowah are particularly suited for prevailing city-based combined with beach-based vacation tourism. Because of their vicinity to the city and yet natural environment, sites along the beach of Hella and Al Rouweinat are suited for prevailing beach-based combined with city-based vacation tourism. Finally, because of their relative isolation, sites along the beach in Al Rayan are mainly suited for beach-based vacation tourism. To promote the implementation of integrated resorts in Mukalla, the Governorate, in association with the Ministry of Tourism and the General Investment Authority, should take an active stance to ensure the availability of the required land, the strengthening and/or the development of the required trunk infrastructure, and the search of an appropriate developer. ______

Developing integrated resorts for international tourism Projects:

12. Integrated resorts Concept: cluster tourism accommodation facilities into planned and environmentally sound developments; provide diversified yet complementary accommodation facilities (hotel rooms, secondary residences, rental apartments and chalets); provide appropriate services and tourism amenities Objectives: use beachfront land for high value added tourism purposes; increase appeal of tourism establishments; facilitate tourism activities; reduce land development costs; facilitate government provision of trunk infrastructure and urban services Responsible agency: Governorate with assistance of Agency for the Protection and Development of Old Mukalla and Mukalla Beaches Partnerships: on-site infrastructure, buildings and services entirely developed by private investors; possible government contribution to development of required trunk infrastructure Financing: private investors; equity funds; banking system; central and local government and international financial institutions for trunk infrastructure Expected horizon and implementation timeframe: short and medium-term; 4 to 8 years for each integrated resort Expected benefits: enhanced tourism appeal of Mukalla; facilitation of tourist activities; increased tourism receipts; increased real estate values; increased tax yield ______

5.30 Promoting Mukalla as a corporate tourism destination. Taking advantage of its physical appeal and attractive beaches, Mukalla qualifies to become a major national destination for specialized business traffic related to conventions, congresses, trade fairs, corporate events and corporate reward travel. Initially, this traffic would mainly rest on Yemeni businesses. With time, it could expand to serve business located in nearby countries both in the Gulf and in the Horn of Africa. In developing corporate tourism, Mukalla will compete with Sana’a and Aden, which are cities with higher potential for this type of tourism. Ultimately, Mukalla will have to find its own market niche by developing appropriate facilities and networking with Sana’a and Aden to capture their clients whenever they want to experience new destinations. The facilities required to develop corporate tourism include a convention/trade center and grounds for hosting trade fairs. The publicly owned site already identified by the Chamber of Commerce in Fowah

42 constitutes an ideal location. Within this site, it is possible to: (i) develop an integrated resort with hotels and secondary residences, along the beach front; (ii) create a convention complex with trade offices, next to the parade grounds; and (iii) use the parade grounds for installing temporary structures to host exhibitions that cannot be accommodated solely in the halls of the convention complex. While the beach front resort constitutes a separate project to be promoted by private investors, its implementation would be complementary to that of the convention/trade center since it would support its activities through a most needed offer of accommodation and tourism facilities. ______

Promoting Mukalla as a corporate tourism destination Projects:

12. Convention center with trade offices Concept: cluster in integrated complex convention center and trade offices. Construction of complex phased to take into account growth pace of corporate business in Mukalla. To save on construction and operating costs, convention center combined with trade offices and trade fair facilities. Trade fair exploiting existing parade grounds. Objectives: promote specialized corporate tourism to Mukalla in the most cost effective and sustainable fashion Responsible agency: specialized public entity Partnerships: Chamber of Commerce, Governorate, private businesses Financing: private investors; equity funds; banking system; central and local government for trunk infrastructure Expected horizon and implementation timeframe: medium-term; 4 to 6 years Expected benefits: strengthened business environment in Mukalla and Hadramout region; increased tourism receipts; improved hotel occupancy rates; enhanced tourism appeal of Mukalla; ______

5.31 Enhancing public and private partnership in the tourism sector. Consonant with the limited population size of the city and its region, the administrative, economic and social leadership of Mukalla and the Hadramout Region is small. The regional Governor and a handful of other government officials exercise great influence on local economic development policies and decision-making. Yet, partnership and coordination between government officials and private entrepreneurs in the tourism sector has yet to reach satisfactory levels of efficiency and effectiveness. This goes for tourism promotion, the organization of cultural events, the protection, conservation and exploitation of cultural assets, the facilitation of tourism investments, the development of human resources for the tourism industry, and the interface with central government and national tourism organizations. No one is in charge of assessing the challenges faced by the local tourism industry and offering adequate solutions that can be shared among all the parties concerned. With the development of tourism in Mukalla and the Hadramout Region it is essential that appropriate institutions be established to promote partnership and to facilitate coordination. ______

Enhancing public and private initiative in the tourism sector Projects:

13. High Commission For Tourism Development and Operations Objectives: support development of tourism sector; assess operational needs of tourism sector; facilitate operations of hotels and other tourism establishments; assist tourism industry to deal with local social and economic realities Membership: Hadramout Governor (chairman), representatives of Governorate administration --economic, tourism, culture, public works, education, and social affairs departments--, representatives of tourism industry --hotel owners and managers, restaurateurs, tourist agents and tour operators--

43 14. Chamber of Commerce - Tourism Chapter Objectives: establish formal tourism chapter within Chamber of Commerce; promote interests of tourism industry; monitor activities of tourism industry; support local activities by Yemen Hotel Union and Yemen Travel and Tourism Association Membership: president of Chamber of Commerce (chairman), representatives of tourism industry --hotel owners and managers, restaurateurs, tourist agents and tour operators-- ______

5.32 Promoting tourism investments. The potential for vacation tourism in Mukalla by GCC citizens, in particular of Hadrami origins, combines with the availability of ample investment capital in the GCC countries (para 2.29). Central and local government authorities should carry out specific efforts to address the above capital to the creation of tourism accommodation facilities (hotels, villas and apartment buildings) and other establishments (restaurants, recreational parks, cultural centers) in Mukalla and the Hadramout Region. These efforts should include: contacting friendly GCC governments and through them inviting institutional investors to consider funding tourism projects; promoting joint ventures between Yemeni entrepreneurs and these institutional investors; enticing GCC investors of Hadrami origins to invest in their ancestral land. Once identified and contacted, potential investors should be reasonably confident that their projects could be implemented according to schedule, within the estimated costs, and without unwarranted bureaucratic and other interferences. They should be confident that the land for the realization of their projects has clear tenure or lease rights. Finally, they should be confident that, upon completion, their tourism facilities could be operated without the hassle of import constraints or government requests for free services. To carry out the above efforts and facilitate the activities of investors, the Hadramout Governorate should devise appropriate institutional measures and undertake appropriate operational activities. ______

Promoting tourism investments Projects:

15. Tourism Investment Commission for Mukalla and Mukalla Beaches Objectives: coordinate tourism investment promotion activities by the General Tourism Authority, the General Investment Authority, local government and the Hadramout Chamber of Commerce; facilitate tourism investment Responsible agency: Governorate in cooperation and with the assistance with the General Tourism Authority, the General Investment Authority and the Hadramout Chamber of Commerce; Governor, chairman Membership: Hadramout Governor (chairman); representatives of local and central government --tourism, public works, GTA, GIA--; president and representatives of Chamber of Commerce; representatives of tourism industry

16. GCC Tourism Investment Campaign Objectives: inform GCC governments about tourism investment opportunities in Mukalla and Hadramout Region; promote tourism investment by GCC bilateral financial institutions, equity funds and private investors; promote contacts between qualified Yemeni as well as international tourism investors and hotel management companies and GCC financial institutions, equity funds and private investors Responsible agency: Ministry of Tourism; GIA; Tourism Investment Commission for Mukalla and Mukalla Beaches Financing: central and local government Timeframe: short and medium-term ______

5.33 Promoting and marketing the tourism destination Mukalla. Tourism promotion is a joint responsibility of government and the tourism industry. Government involvement should encompass central and local authorities, whereby the first are responsible for the promotion of

44 the Country and its tourism destinations and the second for the promotion of the tourist facilities and attractions located in their territory. Conversely, the tourism industry operates on both dimensions at once. At present, the promotional effort is limited at all levels both in scope and participation. Through the Tourism Promotion Board and the Tourism Promotion Fund, the Ministry of Tourism organizes and funds promotional activities including the preparation of tourism information material, the implementation of media campaigns, and the participation to international tourist fairs and other events. However, because of lack of resources and the infant conditions of the local tourism industry, these activities are seldom geared to the effective promotion of Mukalla and the Hadramout region or opened to the effective participation of representatives of its tourism establishments. This results in lack of specificity in branding and marketing the Region’s tourist products. Addressing the above shortcoming calls for increased cooperation between the Ministry of Tourism, its representatives at local level and the local tourism industry. Such cooperation should focus on: (i) preparing comprehensive tourism guides for Mukalla and the Hadrami coast as well as for Wadi Hadramout; (ii) fostering the branding of Mukalla and its Region through a clear identification and an effective promotion of its main tourism products; (iii) targeting the promotional efforts to the markets for the above tourism products; and (iv) using appropriate indicators to monitor the performance of the tourism sector and the result of the associated branding and promotional activities. The implementation of such a cooperative effort would require the recourse to highly qualified human resources, including at local level. ______

Promoting and marketing the tourism destination Mukalla Projects:

17. Tourist guide of Mukalla and the Hadrami coast Objectives: assist tourists in their visit to Mukalla and the Hadrami coast with appropriate information on their history, their natural and cultural assets and their tourism attractions and services; promote use of tourism facilities; foster tourism expenditures on food and beverage, recreational services and handicraft productions; Responsible agency: Governorate in association with Ministry of Tourism Partnerships: Ministry of Culture; Chamber of Commerce; individual members of tourism industry Financing: local and central government; advertising Timeframe: short-term; 6 months

18. Branding tourism destination Mukalla Objectives: identify main tourist products and their market; promote Mukalla’s tourism identity domestically and internationally; prepare brochures on tourism products with potential; carry out targeted promotional activities Responsible agency: Governorate in association with Ministry of Tourism Partnerships: Chamber of Commerce; tourism industry Financing: local and central government; local tourism industry; advertising Timeframe: medium-term

19. Special Hadrami pilgrims campaign Objectives: promote visit to Mukalla and Hadramout Region by East Asian pilgrims of Hadrami origin; carry out targeted promotional activities through Yemeni Embassies, airlines and travel agents in East Asian countries Responsible agency: Ministry of Tourism in association with Governorate Partnerships: Chamber of Commerce; tourism industry Financing: central government Timeframe: short-term

45 20. Survey of market response to tourism development efforts Objectives: monitor tourist arrivals and bed-nights through regular collection of information at tourist establishments; monitor tourist expenditures through periodical surveys at airport and tourist establishments Responsible agency: Ministry of Tourism (Mukalla Delegation) Partnerships: Chamber of Commerce; tourism industry Financing: Ministry of Tourism Timeframe: medium-term ______

5.34 Exploiting tourism synergies between Mukalla and the Hadramout Region. Given its central administrative, economic and geographic position within the Hadramout Region, Mukalla could greatly benefit from the development of tourism in Wadi Hadramout and Socotra. Moreover, it can benefit from the vicinity of Oman and the city of Salalah, which is progressively growing into an international tourism destination. Exploiting the synergies among tourism development in Mukalla and the above locations could increase substantially tourism traffic to the region and contribute to diversify and stabilize its clientele. ______

Exploiting tourism synergies between Mukalla and the Hadramout Region Projects:

21. Tourist guide of Wadi Hadramout Objectives: assist tourists in their visit to Wadi Hadramout with appropriate information on its history, its natural and cultural assets and its tourism attractions and services; promote Wadi Hadramout on international market; inform guide readers about Mukalla’s tourist attractions and travel opportunities to Mukalla Responsible agency: Ministry of Tourism Partnerships: tourism industry Financing: central government; advertisements Timeframe: short-term

22. Organization of tourism packages with Oman Objectives: promote visit to Mukalla and Hadramout Region by Omani and international tourists spending vacation in Salalah; carry out targeted promotional activities in Oman Responsible agency: Ministry of Tourism in association with Governorate and tourism industry Partnerships: Chamber of Commerce; tourism industry Financing: central and local government; tourism industry Timeframe: medium-term

23. Protection and development of Hadrami Coast Objectives: avoid visual and environmental degradation of scenic sites and beaches; control construction activities; create natural parks and nature sanctuaries; create appropriate parking areas and beach facilities for daily visitors; minimize visual and environmental impact of tourist establishment and facilities by confining them in designated areas; ensure easy access to coastal areas and their tourism facilities by visitors to Mukalla Responsible agency: Hadramout Governorate, Ministry of Environment Partnerships: tourism industry Expected costs: US$1.5 million of which US$1 million by public sector and US$500,000 by private investors Financing: central and local government; private investors Timeframe: medium-term Expected benefits: enhanced tourism appeal of Mukalla; facilitation of tourist activities; increased tourism receipts ______

46 BENEFITS

5.35 Forecasting the benefits of tourism development in Mukalla is questionable because of the difficulty of predicting with acceptable accuracy the nature, scope and characteristics of tourism demand and supply. Yet, based on the proposed development strategy, it is possible to make assumptions on the growth of tourism and evaluate its potential impact on the local economy. Although based on assumptions, such evaluation could help assess the development strategy and the associated public and private investment activities.

Assumptions

3.36 The proposed assumptions are limited to the two horizons selected for the definition of Mukalla’s tourism development objectives and associated indicators: short-term (5 years–2012) and medium-term (10 years–2017). The relevant parameters encompass: arrivals, length of stay and average daily expenditure by type of tourism demand; occupancy rates by type of tourism demand and accommodation facility; investment costs by type of facility; employment generation by type of tourism facility.

______

Horizon ______2012______2017______

Arrivals Stay Bed nights Av. Expend. Arrivals Stay Bed nights Av. Expend. (days) (US$) (days) (US$) Business tourism 188,380 3.8 715,844 60 227,940 3.8 866,172 60 Corporate tourism - - - - 11,397 3 34,191 80 Vacation tourism Domestic residential 179,408 8 1,435,264 25 538,224 9 4,844,016 25 Domestic hotel 59,804 5.5 328,922 40 179,412 6 1,076,472 50 Regional residential 29,900 6.5 194,350 50 119,600 7 873,200 50 Regional hotel 14,952 4.5 67,284 100 59,808 5 299,040 110 International 6,728 3 20,185 160 20,185 4 80,741 170 Cultural tourism 26,912 1.8 48,441 160 59,206 2 118,412 160 Specialized tourism 2,019 3 6,056 120 6,056 3 18,167 120 TOTAL 508,103 5.5 2,816,346 1,221,828 6.7 8,174,410 TOTAL (hotel only) 298,795 4.0 1,186,732 564,004 4.4 2,493,194

Occupancy rates (%) ______2012______2017______

5* hotel room occupancy: 0.42; persons per room: 1.2 room occupancy: 0.50; persons per room: 1.25 4* hotel room occupancy: 0.50; persons per room: 1.25 room occupancy: 0.50; persons per room: 1.25 3* hotel room occupancy: 0.65; persons per room: 1.3 room occupancy: 0.65; persons per room: 1.3 2*, 1* and NC hotels room occupancy: 0.75; persons per room: 1.35 room occupancy: 0.80; persons per room: 1.35 Secondary residencies occupancy: 25%; stay: 6 days; aver. people: 5 occupancy: 25%; stay: 6 days; aver. people: 5

Tourist investment (US$) Accommodation facilities Secondary residences: - average cost per unit (80% apartments and 20% chalets): US$ 50,000 (2012) and US$ 55,000 (2017) Hotel rooms: - cost per room : 5*: US$ 140,000; 4*: US$ 100,00; 3*: US$ 70,000; 2*, 1* and NC: US$ 25,000 Other facilities Tourism services: estimated total investment = 10% of accommodation facilities Infrastructure: estimated total investment = 30% of accommodation facilities + tourism services

47 Employment Direct: 5* = 1.2 jobs per room 4* = 1.0 jobs per room 3* = 0.8 jobs per room 2*, 1* and NC = 0.4 jobs per room secondary residences = 1.2 jobs per unit (2012) and 1.4 jobs per unit (2017) Indirect = 1 job per every direct tourism job (2012) and 1.1 job per every direct tourism job (2017) Construction industry = 1 job per every US$12,000 of investment per annum (2005-2012) 1 job per every US$15,000 of investment per annum (2006-2012) ______

Expected benefits

5.37 Based on the above assumptions, it is estimated that in 2012 (short-term) and 2020 (medium-term) the direct expenditures of tourists in Mukalla will total US$102 and US$232 million, respectively. The expenditures related to tourists staying in hotels will amount to 73% and 76% of the above amounts or US$75 and US$176 million, respectively. The remaining expenditures relate to tourists staying in secondary residences, including rental apartments and chalets. Also, it is estimated that the direct and indirect employment generated by tourism will provide some 9,500 and 21,300 jobs per annum in 2012 and 2017, respectively. Finally it is estimated that during the periods from 2008 to 2012 (short-term) and from 2012 to 2017 (medium-term), the investment outlays for the development of tourism accommodations and other related facilities, including infrastructure, will exceed US$160 and US$450 million, respectively. During the same periods, the number of jobs associated to the above construction activities will be in the range of 2300 and 6000 per annum, respectively. The private sector is expected to finance most of the above investment outlays. However, central and local government should support tourism development by financing at least part of the trunk infrastructure investment. Such support could call for a public expenditure of US$30 and US$90 during the periods from 2008 to 2012 and from 2013 to 2017, respectively.

5.38 The expected benefits presented above are indicative not only because they are based on a tourism development strategy that has yet to materialize but also because they are defined on the basis of parameters that often draw from international rather than local experience. Notwithstanding such limitations, they represent a reasonable estimate of the impact that tourism could have on the economy of Mukalla and its region.

48 ANNEX I

Mukalla City Development Strategy Tourism Sector

IMAGES OF MUKALLA PICTORIAL TOUR

Mukalla is endowed with a well preserved historic center, picturesque sites and a number of buildings of historic and architectural value. Such cultural patrimony constitutes a precious asset not only because it contributes to the identity of its inhabitants but also because it could benefit their economic wellbeing through the development of tourism.

The first 5 pages of this Annex provide pictures of important sites and buildings. The preservation of some of these sites and buildings is menaced by either neglect or unwarranted construction activities. Mirroring what described in the main text of the report, the Annex indicates interventions for their protection, conservation and rehabilitation.

Page 50 Old City Page 51 Old Port Page 52 Khour Al Mukalla Page 53 Corniche Page 54 Governorate Administrative Compound

The remaining 6 pages of the Annex provide pictures of the most significant tourism places within the city of Mukalla and its adjacent coastal areas.

Page 55 to 58 Panoramic views of the city, buildings and beaches Page 59 to 60 Coastal areas. Monuments, sites and landscapes

49 OLD CITY  MEDINA. PROTECTION, REHABILITATION, RESTRUCTURING

Old Arcade Building

Palace behind open lot from collapsed building

Small plaza next to the Sidaht Al Mukalla Gate

Project objectives: . Improve infrastructure, stop vehicular traffic, equip public spaces . Foster building rehabilitation, promote small recreational, shopping and handicraft activities . Recover to public use open spaces resulting from collapsed buildings

50 OLD PORT  RESTORATION AND RECOVERY OF ORIGINAL QUAY

old port (general view from the cornice)

old port, original quay (central view)

old port, original quay (view from south edge)

Project objectives: . Conservation and recovery of old port quay . Partial demolition of separation wall and creation of equipped pedestrian path integrated in the medina’s pedestrian network

KHOUR AL MUKALLA  REDEVELOPMENT OF BANKS AND ADIACENT AREAS

water body (view from northern edge)

water body (view from east bank)

water body (view from west bank)

Project objectives: . Redevelop banks of Khour to better exploit land value increase resulting from creation of scenic water body and equipment of its banks . Promote establishment of tourism facilities such as restaurants, café bars, shops, boat rental center . Provide for parking facilities and public transportation areas along the banks and in their vicinities

CORNICHE  REHABILITATION AND BEAUTIFICATION

seawall (central view of pedestrian path)

central portion (view from bottom of seawall)

western portion (side view)

Project objectives: . Protect, preserve and restructure original front and rear buildings . Selectively demolish and replace obsolete structures with architecturally conform buildings . Enlarge pedestrian areas and reorganize vehicular traffic . Promote modernization of existing food and beverage and commercial facilities . Develop parking facilities at the western edge of the corniche

53 GOVERNORATE ADMINISTRATIVE COMPOUND  RESTAURATION, RESTRUCTURING AND REDEVELOPMENT

Old Sultan Palace (Albaqh Palace)

Governor Offices

Sultan Palace (Castle Al Thourah), facing compound

Project objectives: . Restore, preserve and reuse adaptively the compound buildings for the establishment of cultural, commercial and recreational facilities (tourism compound) . Restore Castle Al Thourah, expand and upgrade museum, upgrade premises of Tourism Delegation and create tourism information center . Create pedestrian area and integrate Castle Al Thourah into tourism compound

54 MUKALLA  PANORAMIC VIEWS, STREETS, BUILDINGS AND BEACHES

Medina. Old palace

Medina. View of eastern sea front

Old city. Main street.

55 Sultan Al Qu’aiti Palace. Main gate

Fowhah. Beach-front, pedestrian promenade.

Sultan Al Qu’aiti Palace. View of sea-front.

56 Old city. Old palace.

Corniche. East side view.

Medina. View of western sea-front.

57 Fowhah. Pedestrian promenade and beach.

Hella. Palm grow.

58 HADRAMOUT COASTAL AREA  MONUMENTS, SITES AND LANDSCAPES

AL Shihr. Main gate

Al Shihr. Gate.

Al Shihr. Patrician palace.

59 Hadramout west coast. Beach at Borum.

Hadramout east coast. Beach at Sharma

Hadramout east coast. Oasis at hot spring site