This article by Bird & Bird partner Osama Abu-Dehays was first published by Travel Law Quarterly (Volume 4 2012, Issue 3).
The tourism industry in Qatar is rapidly growing: according to a report published by the World Trade & Tourism Council , the direct contribution of travel and tourism to Qatar’s GDP in 2011 stood at 0.6% of the country’s GDP, totalling QAR 4.2 billion. The same report forecasts this contribution to grow by 5.7% per year to reach QAR 8.2 billion in 2022. This is in line with the Qatar Tourism Authority’s (QTA) plans to grow its tourism industry by 20% over the next 5 years.
With this growth forecast and in light of the Football World Cup 2022 to be hosted in Qatar, the Qatari authorities are looking to put in place clearer laws to regulate the tourism industry and provide a more user-friendly set of requirements for licensing, tourism activities and complaints procedure that will further attract foreign investment.
As a result of the relative surge in tourism across the Middle East, this growth and transition to a tourist based economy has been affected by lack of regulation to govern the industry. Given some of the peculiarities involved in doing business in the Middle East, for instance ‘nationalisation quotas’ whereby employers are encouraged (and in some countries are under an obligation) to employ a certain number of ‘local/national’ employees, to continue to encourage foreign investment it is important that any regulation is transparent and governed by a body such as the QTA. Historically, all decisions regarding matters of licensing and leisure were handled by the relevant Ministries, for instance in Qatar the Ministry of Business & Trade and Ministry of Foreign Affairs which ultimately led to a very centralised and a hectic red tape process.
A recent example to demonstrate the impact of unclear changes in policy within the leisure and tourism industry relates to the removal of alcohol from restaurants in the Pearl in Qatar. This has significantly impacted the profitability of a number of restaurants with some reporting they have lost over half of their turnover since the alcohol ban was introduced in December 2011.
It is still unclear why the change occurred, however such lack of clarity in regulations, especially in terms of licensing requirements and other procedures, should be minimised with the anticipated introduction of a law to govern touristic activities. It is also expected that the introduction of this new law should help restore the confidence of international investors in the tourism industry in Qatar.
The draft Law for the Regulation of Touristic Activities (‘Tourism Law’) is said to provide a clear division of power and streamlined decision making process, therefore will mean a licensing and approval system that is easier for incumbents to understand. This, whilst putting pressure on the regulator, allows the investor or entity to know what to expect, to prepare themselves and their business plans accordingly, and help alleviate fears of the ‘unknown’.
The regulator will also be granted the necessary power and flexibility to set up the required tourism infrastructure ahead of the Football World Cup and is arguably a crucial element in the success of hosting this tournament.
We understand the draft Tourism Law has already been presented to the Council of Ministers in the State of Qatar, and is expected to be officially issued towards the second part of this year.
Qatar has achieved prestigious status through what is sometimes referred to as MICE (Meetings, Incentives, Conferences and Exhibitions) and in order to grow the tourism industry, Qatar needs to expand beyond its current status as an international business hub and embrace its position as a multicultural international tourist destination.
It is anticipated that the new Tourism Law will clarify procurement, licensing and permitting rules, and provide the requisite powers to the relevant authorities to approve and administer tourism related plans. The law will also provide a regulatory framework for the tourism industry as a whole, and further, act as impetus for the industry and Qatar generally to work towards the ultimate goal of improving the country’s readiness for the influx of tourists over the next 10 years.
Qatar is progressing in its move from a business centre to become a bigger player in the tourism industry: the new law is a sign of this change.