Tourism to the Middle East has been significantly affected by ongoing tensions in the Persian Gulf region. According to Reuters in March, Middle East tourism, valued at $367 billion annually to the region, “is taking a hit from the widening conflict between U.S.-Israel forces and Iran, putting at risk the region’s carefully constructed image as a safe and high-end vacation hotspot.”
It is contributing to a diversion of travelers toward North African destinations … lifting its hospitality industry,” according to a May article in Arabian Gulf Business.
A report by U.N. Tourism published in June shows a drop in the expected annual growth in international arrivals to the Middle East in 2026 to between 2% and 3%, depending on the duration and scope of the war, compared with the 3%–4% initially forecast. In addition to flight disruptions, the report cited “the sudden rise in oil prices and shortage of jet fuel in some markets is leading to higher fares and reduced air capacity in other regions.”
Among North African nations, Egypt recorded the strongest growth across flights, hotel occupancy and excursions in the first quarter of 2026 on Wego, a travel search engine, according to Enterprise. Inbound tourism to Egypt increased 15.6% compared to the same period last year, government data showed.
Booking shift
With the Middle East accounting for 5% of international arrivals globally and 14% of international transit traffic, losses resulting from the war are substantial. Last month, the London-based World Travel and Tourism Council said the Middle East’s tourism sector was incurring at least $600 million per day in losses from international visitor spending due to the conflict.
According to forecasts from the analytics and advisory company Oxford Economics, arrivals in the Middle East could fall by 11% to 27% in 2026, wiping out $34 billion to $56 billion in visitor spending.
The GCC is the most affected region. According to Jasem Albudaiwi, GCC’s Secretary General in April, “Tourism revenue losses in the GCC arising from the US-Israeli war with Iran are estimated between $13 billion and $32 billion.” The revenue drop will be driven by tourist inflows falling by between 8 and 19 million tourists.
GCC countries used to enjoy high tourist inflows, establishing themselves as global destinations and diversifying their economies. In 2024, GCC countries received more than 72 million tourists, generating revenue of nearly $120 billion, according to data from the Gulf Statistical Centre.
To restore such records, Albudaiwi emphasized that GCC countries should move from traditional coordination to a higher level of practical integration and proactive response, given that the tourism sector is a fundamental pillar for achieving economic sustainability.
Egypt as regional anchor
Rather than destroy Middle East travel demand, the war has reshuffled it. “We saw demand shift toward Egypt and Morocco, almost immediately,” Mamoun Hmidan, Wego’s chief business officer, told EnterpriseAM. “Many travelers who had planned to visit elsewhere in the region were redirected.” Wego’s main customer base is in Southeast Asia, India, the Middle East and Egypt.
The shift in demand was clearly visible in Egypt on Wego’s platform. “That translated into nearly 30% growth on Wego,” said Hamidan. “Egypt posted the strongest growth across every category we track. Morocco ranked second, but Egypt remained comfortably ahead.”
Accordingly, Egypt is emerging as a chief beneficiary of the redistribution of travel demand within the Middle East. While tourist arrivals in the Middle East fell 14% in the first quarter of 2026, Egypt posted a 16% increase, according to the U.N. Tourism report.
In May, government figures showed arrivals rose 7% to 6.1 million in the first four months of the year, up from 5.7 million during the same period of 2025. Egypt also expects to attract as many as 20 million tourists this year, which would set a new record, according to Bloomberg.
As planned, the country is targeting 30 million tourists annually by 2030, according to the State Information Service. The surge in visitors in recent years reflected “the growing availability of cheap flights from Europe, as budget airlines and tour operators catered to holidaymakers attracted by Egypt’s year-round sunny climate,” said an April article in African Business magazine.
Gulf travelers played a crucial role in demand for Egypt, as many residents sought a respite from the war. According to Wego, Saudi Arabia and Kuwait became Egypt’s largest source markets.
Cairo and the Mediterranean coast saw a surge of Gulf visitors during the Eid Al Adha holiday. With record-high airfares, Egypt stood out as an appealing option, as Gulf travelers favored shorter trips over long-distance travel, which carried higher costs and greater uncertainty, Enterprise noted.
The U.N. report cited a range of attractions that draw visitors to Egypt. These include the Grand Egyptian Museum, which opened in November; the Giza Pyramids; Nile cruises between Luxor and Aswan; Alexandria’s Mediterranean coastline; and Red Sea diving destinations.
Even when interest rose beyond expectations, businesses were largely able to absorb the increase without significant disruption. “Hotels in Egypt typically operate at about 70% to 75% occupancy year-round. Even when that exceeded 90%, it remained manageable – there was sufficient capacity,” said Hmidan.
North Coast and Red Sea destinations are set to build strong momentum this summer. According to a June article by Ahram Online, industry leaders expect Egypt – especially the North Coast and Red Sea – to attract growing numbers of Arab tourists seeking stable destinations, further reinforcing the summer season’s expanding role in supporting national economic growth.
Morocco in the spotlight
Morocco has become one of the top beneficiaries of the broader shift toward experiential and diversified leisure travel as the African continent’s top tourist draw for a second consecutive year in 2025, recording almost 20 million visitors and generating about $14.8 billion in revenue, according to a June article by Hospitality Investors, a tourism and hospitality news platform.
Between January and the end of May, Morocco received 7.7 million tourists, a 7% year-on-year increase, according to figures released by the country’s Ministry of Tourism, Handicrafts, and Social and Solidarity Economy.
Data published in April by Lagos-based advisory firm W Hospitality Group, Africa’s hotel development pipeline has reached a record 123,846 rooms across 675 hotels, up 19% year-on-year. Egypt and Morocco alone account for more than 45% of all rooms under development on the continent, with a 27% year-on-year increase.
Preparations for the 2030 FIFA World Cup, which Morocco will co-host with Spain and Portugal, are enhancing the country’s attractiveness. “Infrastructure and hospitality investment are accelerating, with the country counting on a $4 billion investment drive to increase hotel capacity by a fifth before the tournament,” according to Bloomberg in March.
Morocco aims to add 25,000 hotel rooms, representing “one of the most significant expansions ever undertaken in the kingdom, both in terms of its scale and its pace,” according to Imad Barrakad, head of the Moroccan tourism development agency SMIT.
Notably, around three-quarters of the 700 planned projects are to be funded by Moroccan investors. International brands are expected to manage at least 15% of the new capacity, he added.
Short-term challenge
While ongoing tensions in the Middle East region impact the tourism sector, the flexibility of North Africa’s destinations remains the biggest competitive advantage. “You might feel some pressure at airports, passport control or ground transportation. But those are operational issues. The infrastructure is there, the workforce is there, and operators know how to respond quickly. The more demand the region sees, the faster the sector adjusts,” Hmidan told Enterprise. “Tourism here is far more flexible than many people assume.”
It is notable that the “immediate impact [of the war in Iran] is more visible in booking behavior, air connectivity concerns, insurance and risk perception and in softer pricing in some leisure segments,” said Nandini Roy Choudhury, senior analyst at Future Market Insights, in May.
She added that despite persisting concerns, hoteliers do not expect the conflict to have a tangible impact on their North African operations. “The [Iran] conflict is now creating a short-term confidence shock rather than fundamentally changing the long-term hospitality story,” Choudhury said.
Abdellah Essonni, regional vice president for North Africa at hotel management firm Aleph Hospitality, said hotel industry growth in the region will be secured by infrastructure development driven in part by preparations for the 2030 FIFA World Cup.
“Projects already under construction or backed by strong developers are likely to continue, particularly in strategic tourism zones,” said Choudhury. “However, investors may delay final investment decisions, financing closures, land commitments or brand signings for projects that are still at an early stage.”
