In Arabic, the word « Maghreb » – now connoting the countries Libya, Tunisia, Algeria, Morocco and Mauritania – means « the land where the sun sets. » Very different from each other, these fi ve countries mark the western boundary of Islamic religion and culture. The economic importance of the Maghreb countries within Africa remains unquestioned : they account for nearly one third of the continent’s output, and their share increases yearly.

With a total area of almost 4.2 million km2, Algeria and Libya are the second- and fourth- largest countries in Africa, respectively. Each of them has recently initiated integration into the global marketplace, with the energy sector (fossil fuel) driving their economies.

Mauritania, with GDP per capita of only $952 in 2007 (only one twelfth that of Libya and one fourth that of Algeria), is the least-advanced country in the Maghreb, due to an absence of natural resources, although relatively small oil reserves were discovered recently. As the most politically unstable country of the Maghreb, it has seen more than ten governments overthrown (or attempted coups d’état) since the country gained its independence, the last one in August 2008. Most of the population is employed in the agricultural and mining sectors.

Tourism on the rise in Morocco and TunisiaViewed in this context, the economies of Morocco and Tunisia are more diversifi ed and incorporate a wider array of services, including tourism. In 2007, the two countries together recorded some 14 million tourist arrivals, resulting in nearly 53 million overnight stays. Numbers like these confi rm their position as mainstream destinations in the Mediterranean region. In order to accompany the tremendous growth in the tourism sector, Horwath HTL has recently opened new offi ce locations in the capital cities of Rabat and Tunis.

Despite the two countries being comparable in terms of geographic environment, tourist product and cultural background, Tunisia and Morocco are at different stages of their respective tourism development ; Morocco is developing at a fast pace, whereas Tunisia is re-shaping its tourist model.

Morocco : picture of growthInvestment began to accelerate in Morocco in the 1980s, when, by means of loans and tax exemptions, the government committed signifi cant resources to the development of the tourist industry and related services. In the early 1990s, the country hosted up to 1.5 million tourists per annum, mainly from France and Spain. In 2001 the king of Morocco signed a strategic plan called « Vision 2010, » setting the goal of attracting 10 million tourists by 2010. The plan calls for adding 160,000 beds, bringing the national capacity to 230,000. It also forecasts the creation of some 600,000 new jobs.

The national plan for tourism development « Vision 2010 » divides into two sub-plans, the « Azur » and « Mada’in » plans. It is an ambitious partnership between private operators and the Moroccan government engaged in creating favorable investment conditions. On top of product diversifi cation, large-scale training programs, improving the quality of services and better distribution, the Azur Plan envisages the creation of 6 new coastal resorts :

Saïdia Mediterranea - 30,000 beds Port Lixus - 12,000 beds Mazagan - 7,600 beds Mogador - 10,500 beds Taghazout - 21,000 beds Plage Blanche - 26,000 beds

In parallel, the Mada’in plan addresses the re-development of existing destinations : Fes, Rabat, Marrakech among others.The key success factors of the « Vision 2010 » plan include :

Limited land cost Development of infrastructure No custom tax on equipment Quality real estate developers Open sky policy.

Together, these factors create the market conditions that should encourage short stays and real estate sales.

Thanks to the policy of government incentives and quality large-scale operations, Morocco has succeeded in diversifying and upgrading its supply. Currently, this modern tourist destination offers a wide choice of activities, from traditional sunbathing through cultural circuits to desert tourism, trekking, golf and wellness.

Through its investment vehicle Risma, Accor is the leading operator in Morocco with 32 hotels. However, the presence of other international hotel groups is increasingly diversifi ed.

The strategy for Morocco has been acclaimed by key investment groups from the gulf such as Emaar, Al Qudra, KHI, Sama Dubai as well as leading international operators including Accor, Marriott, Starwood, and Hilton to name just a few.

Marrakech, due to its status of most-visited city, is considered to be one of the preferred places for investment mainly due to a higher Average Daily Rate than in the rest of the country. 2009 will see massive additions of hotel supply in Marrakech which will be combined with real estate programs.

Soaring tourist arrivals and growing interest in Morocco as a second home destination is driving demand in up-scale projects of resorts and residential developments. Among the properties that are scheduled to open between now and 2011 :

Four Seasons – a hotel and resort complex, consisting of hotel and villas, some of which are to be sold to private owners and then fully serviced by Four Seasons

Banyan Tree – a ! 35m luxury resort hotel in the Palmeraie area Mandarin Oriental – 45 private villas designated as

« Residences at Mandarin Oriental » Marrakech Serail – the « Lucien Barrière Hotel, » including 85

suites and a Fouquet’s restaurant SBM (Monaco) – a luxury hotel project Raffl es Resort – 150 rooms and 36 villas, opening in 2009 Park Hyatt Marrakech – designed as a part of Al Maaden

residential and leisure development Starwood – intends to introduce its design brand « W » in

Marrakech in 2010 InterContinental Marrakech Resort & Spa – a new-built resort

development, scheduled to open in the fi rst quarter of 2011.

On a short-term basis, the recent crisis has a strong impact on the fi nancing of new projects and may limit the additions of new rooms, at least for a certain period. But taking a longer-term perspective, the future of Moroccan hotel investment is attractive and will continue to draw investors from Europe and Middle East.

Tunisia : gaining groundSimilar to Morocco, tourism in Tunisia plays an important role, contributing 7 percent of GDP and 17 percent of export value. The country has already recovered from the Djerba attack of 2002 and keeps increasing tourism income even more rapidly than the number of arrivals and overnight stays.

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In parallel, liberalization in air transportation allowed it to reach a sustained growth of seat capacities.

Today, Tunisia is already one of the top beach destinations in the Mediterranean. In terms of accommodation, about 80 percent of the lodging facilities are conventional seaside hotels, which are almost exclusively marketed through tour operator channels. This market profile was successful for attracting mass tourism, but can hardly compete with destinations developed more recently such as Turkey or Egypt.

The Tunis hotel market has been stable for quite a long time. However, significant changes there have occurred over the past two or three years. The Tunisian government is now aware that the Tunisian traditional hotel model is challenged. In addition, upscale hotel villas are only now beginning to emerge in Tunisia, for example, The Residence.

Launched in 2004, a National Plan of Modernization of the Hotel Industry, calling for the modernization of 45 hotel units at a total investment of US$ 1.25 billion, is not sufficient to radically alter the country’s positioning. It is therefore critical that Tunisia further diversify its tourism industry, basing on its potential to develop activities like spas, golf and MICE.

In the foreseeable future, the hotel additions in Tunis will be concentrated around the three mega-projects under development all around the Tunis Lake :

The North Lake area, 200 ha, already 80 percent completed ;

The Tunis Sports City, which will be built by the Bukhatir Group on 245 ha ;

The South Lake area, Mediterranean Gate, developed by Sama Dubai on 830 ha.

The other key area in greater Tunis is Gammath, where several marina projects combined with hotel and real estate are projected as an answer to the scarcity of moorings for yachts in the Mediterranean.

For decades, Morocco and Tunisia have developed financial incentives to the benefit of their own residents. The initial objective was to develop international tourism without

rejection by locals. However, this idyllic scenario has been tempered by an unbalanced mix of product. The 100 percent hotel model was suitable to a low- to middle-range clientele of French and German operators. In 2009 and beyond, a well-balanced mix of hotel and real estate, as well as a lesser share of tour operator business, is required to create additional value for future developments.

Both countries represent true investment opportunities and soon will become an indispensible development destination for international groups wishing to conquer new markets in the Mediterranean region. Tunisia is actually one head behind Morocco but is likely to repeat its successful path. There is no doubt that 2009 may be a crucial year in this perspective.