Bahrain is well on the road to economic recovery, thanks to a surge in the international arrivals and tourism more generally looking up after a challenging 2011, says a major new report by Oxford Business Group.

The tourism sector, an important element in Bahrain government's plan to diversify the economy, looks healthy with its direct contribution to GDP projected to grow by 3.7 per cent every year until 2022, according to the World Travel and Tourism Council.

Recent investor activity is largely in line with these expectations, with a number of new hotels set to open in the coming years, says the report, released online yesterday.

Tourism is an important element in the government's plan to diversify the economy, as outlined in Economic Vision 2030, the kingdom's long-term economic development plan.

In 2011 the direct contribution of tourism to GDP was BD513.2 million ($1.35 billion), or 5.6pc of GDP, according to the council.

The sector's total contribution is expected to rise by 4.2pc this year, followed by an average of 3.7pc growth per year between 2012 and 2022, reaching BD769.4m in the final year of the projection period.

The council also predicts that employment in the sector will rise from around 27,500 jobs in 2011 to 36,000 in 2022.

Similarly, the number of annual visitors is expected to grow from 5 million in 2011 to more than 8 million in 2022, and investment in the sector is predicted to hit BD326.1 million ($859.6 million) compared to BD205.5 million in 2011.

Some of these additional funds will likely be directed towards the building of new hotels, with a number of projects in the works from global and regional hotel chains, such as the Four Seasons, Marriott and Rotana.-TradeArabia News Service