The Bench, organisers of Future Hospitality Summit Saudi Arabia, hosted a webinar on March 18 as part of its commitment to keeping the hospitality investment community informed during a period of regional uncertainty. David Goodger, Managing Director of Tourism Economics EMEA, laid out a data-driven picture of what the escalating regional conflict means for aviation, hospitality, and tourism worldwide, and what the industry needs to do now.
The Middle East’s sudden reversal
Not so long ago, the outlook for Middle East travel was one of the most exciting stories in global tourism. “Middle East was one of the standout regions for travel growth and recovery from the pandemic,” Goodger noted. “It outpaced other regions.” Entering 2026, Tourism Economics had been expecting that strong trajectory to continue, forecasting 13% growth in international arrivals to the region this year.
Then came the conflict.
“We’re set to see this falling pretty sharply by up to around 30% this year,” Goodger said. The team worked up two immediate scenarios. The first is an early resolution of one to three weeks, which would have resulted in an 11% drop in arrivals, with airspace closures driving disruption for a short, sharp period. The second, and now more likely scenario, is a two-month conflict with far wider consequences.
“It doesn’t feel like there’s political will or will on all sides to keep this going much beyond this period. There will be some form of negotiated conclusion.” But even in this scenario, the damage is substantial.
The $56 billion hit
The most striking figure Goodger shared was the scale of the revenue loss facing the region. “We’re looking at a $56 billion loss in tourism revenue for the region,” he said. “This is hugely important for all businesses in the region.”
And that figure, he was quick to point out, actually understates the full picture. It captures spending by travellers (for business, leisure, and religious purposes) but excludes the wider economic ripple effects of lost events, cancelled conferences, and disrupted investment activity.
ATM, one of the region’s flagship travel trade events, has already moved to August. Reports of other major regional events being pushed back or cancelled are mounting. Our own event, WiT Phocuswright Middle East, has also been rescheduled to August.
A nine-month ripple
Even once a ceasefire or resolution is reached, Goodger warned against assuming a quick rebound. Under the two-month conflict scenario, his team is forecasting a recovery tail lasting around nine months, meaning disrupted arrivals and depressed sentiment throughout the remainder of 2026.
That timeline was informed by historical benchmarking of prior conflicts and terrorist attacks like the Arab Spring and 9/11. The current situation, Goodger noted, sits in what he classified as a “high impact” category, largely because of the number of countries involved and the disruption to major aviation hubs.
He did acknowledge that recovery timelines have been getting shorter over time as travellers become more resilient, and said his current nine-month estimate is “quicker than where we have seen a lot of these impacts in the past.” But he added a measured caveat: “I think we do need to be aware that there could be a longer run sentiment effect.”
Who’s coming back, and when?
Of total GCC travel last year, 46% was domestic, 22% was intra-regional and 32% came from longer-haul inbound markets outside the region entirely. “The longer-haul inbound is needed in order to get recovery within the GCC, within the Middle East,” Goodger stressed. “We need to get that perception of safety.”
While some substitution is possible, outbound residents choosing to stay home rather than travel abroad, the scale of that opportunity is limited. Goodger estimated it would only represent a 7% offsetting opportunity, dwarfed by the gap left by the absence of international visitors.
On which source markets might return fastest, he highlighted CIS and Eastern European travellers as a potential early-mover segment.
Aviation at the heart of it all
The Gulf offers competitive fares and efficient routing that a large proportion of the world’s long-haul travel is built around. Rerouting around those hubs means longer flights, more fuel burn, and significantly higher costs.
“Taking into account the travel from Asia Pacific, primarily, but also from Africa that passes through Middle East hubs, that’s potentially 4% of international travel that is at risk,” explains Goodger. For Asia Pacific the exposure is around 8% of travel potentially disrupted, and when broader connecting routes are factored in, “that’s getting up to 20% of Asia Pacific potentially affected.”
Drilling into specific destination impacts, “4% of European travel is exposed, but that’s 12% of travel to the UK potentially at risk from this,” Goodger said. “Asia Pacific at 8% and Thailand up to around 14% at risk.”
On South Africa specifically, he said, “It would be somewhere around the 25 to 30% exposure.”
On whether Istanbul and other alternative hubs might fill the void, he was cautiously optimistic. “Turkey, Istanbul are likely to see benefits. There’s potentially some others like Ethiopia who have been building up as a bit of a hub for some of the Africa to Europe routes as well.” But he tempered expectations, “[The Gulf represents] such a high share of overall travel, it is hard to replace that unless those airlines start flying through alternative hubs. But I think that would be a very extreme measure.”
Energy prices, inflation, and the macroeconomic overhang
Beyond aviation connectivity, Goodger addressed the broader economic consequences stemming from a blocked Strait of Hormuz and the resulting spike in energy prices. “We’re seeing a spike in the oil price which is consistent with an average of around between $90 and $100 a barrel for the year,” he said, noting that in the near term prices are spiking even higher.
The impact flows through to jet fuel, with reports of fuel costs doubling in some cases, and from there into airfares, acting as a further brake on demand. Goodger’s team modelled the knock-on effect for global inflation, identifying an uplift of “at least 0.4%, with much greater exposure in India and Europe due to reliance on oil supply for energy.”
The result, Goodger argued, will be a softening of GDP growth and a mild erosion of consumer spending power which in turn affects the appetite for travel.
The resilience of travel demand
For all the headwinds, Goodger was keen to stress that the consumer desire to travel remains intact. Drawing on Oxford Economics’ broader research and industry surveys, he highlighted a post-pandemic shift in how people allocate their spending.
Since the pandemic, leisure travel spending has hit record highs in advanced economies and has remained elevated even as other categories have softened. That said, the nature of that spending is evolving. Cost-consciousness is rising, and Goodger referenced a concept that kept appearing across industry surveys and research. “There’s this concern about increased cost of business, cost of accommodation, cost of flights, potentially deterring travellers from destinations. People are spending on what they see as being valuable. There is still a lot of strength in luxury travel out there.”
In practical terms, this means travellers may cut back on accommodation costs while splurging on experiences, or seek out destinations that offer better perceived value, a trend with implications for Middle East hospitality pricing strategies.
On discounting – don’t do it
The temptation during a demand shock is to slash rates. Goodger urged decisionmakers to resist it.
“It’s a mistake,” he said flatly. “We’ve seen in the past, particularly when we’re looking at accommodation, to cut rates to try and stimulate that demand. But that demand is not necessarily there. Once rates are low, it becomes normalised, and it’s very hard to rebuild that rate.”
He cited the pandemic recovery as a rare positive precedent, where the industry largely held firm on pricing and was rewarded. “I think there was that widespread realization that we’re not going to get this demand back by cutting rates. If the product is right, if the experience is right, people are willing to pay for it. Have that rate discipline.”
Who benefits?
Goodger identified a number of potential beneficiaries in Europe and North Africa, drawing parallels with what happened following the Arab Spring, when travellers who might have visited the Middle East redirected to Mediterranean destinations instead.
“Spain is set to see large gains,” he said, building on a growth trajectory that was already well-established. But he was also bullish on North Africa’s moment. “Morocco has been doing phenomenally well, been adding a lot of connectivity, investing in new destination development.”
On Egypt, Goodger offered a nuanced view. “There’s a lot of GCC travel that went into Egypt, so that’s potentially at risk.” But he added, Egypt has an opportunity to position itself as an accessible and safe alternative: “It’s not being directly affected by all of this. From European travel, I think there’s an opportunity for Egypt.”
Communication, events, and the road back
Events are going to be a cornerstone of the recovery strategy.
“Events show that yes, it is possible to have successful events in these destinations. Get the business travellers back in, have that great experience, show how successful this could be, how safe, and then continue to rebuild that confidence and show that things are business as usual,” he said.
He acknowledged it was probably “a bit too early to be seeing any sort of real positives” just yet, with the industry still in reactive mode – managing repatriations, dealing with flight disruptions, and waiting for clarity. Business recovery is likely to precede leisure, he noted, with the business travel and events segment expected to lay the groundwork, while leisure confidence builds more gradually through the autumn and winter months.
The bigger picture
If there is one message Goodger returned to throughout the session, it is that uncertainty is the defining challenge but uncertainty is also manageable, if you have the right framework.
“No, we certainly did not forecast this,” he admitted at the start of the Q&A. “We have been hoping that cooler heads would prevail, as they have in the past, and there wouldn’t be any action, because we know there’s a lot at stake from these events.”
The two-month conflict assumption, with a nine-month recovery tail and $56 billion in lost revenue, is now the baseline to work from. How quickly sentiment recovers beyond that period, and what destinations and carriers do to accelerate it, will shape the rest of the year.
The webinar poll results offered a telling industry temperature check, too. 55% of attendees reported significant negative impact on their businesses, 29% moderate disruption. But 29% are also still actively considering attending regional events – a signal, however tentative, that the will to reconnect and rebuild is already there.
