Investment in Tourism in Saudi Arabia
Why should I read this document?
Prior to the coronavirus outbreak, the global tourism sector has seen almost uninterrupted growth for decades. However, the sector has been one of the worst affected by the impacts of the COVID-19 pandemic. In early 2022, with severe travel limitations still in place, the UN World Travel Organisation (UNWTO) reported that international tourist arrivals remained at 72% below 2019 levels. This equates to over 1 billion fewer international arrivals compared to pre-pandemic levels, keeping the industry at levels last seen in the 1980s. Many experts believe that the sector will not fully recover until 2024. However, as restrictions lighten, UNWTO predicts that international tourist arrivals could increase by 30 to 78% in 2022.
According to the World Travel and Tourism Council, Saudi Arabia was the fastest-growing tourism market in the Middle East in 2019. Saudi Arabia is one of the oldest and most famous spots for pilgrimage tourism due to its Islamic heritage. The country welcomed over 17 million tourists in 2019. The country remains optimistic in Saudi Arabia’s Vision 2030 economic reform plan, which aims to make tourism a key part of the Kingdom’s economy. The plan aims to increase the contribution of the tourism sector to the GDP to over 10%, and to attract 100 million visitors annually by 2030.
Who is this document for?
This document provides an overview on the tourism industry in Saudi Arabia. This article is mainly aimed at:
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EU investors who seek to improve their knowledge about tourism in Saudi Arabia and similar countries;
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Policymakers working to improve their region’s tourism;
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European SMEs operating or with interest in the tourism sector.
In the subsequent levels, you will find a deeper understanding about Saudi Arabia’s tourism.
Vision 2030
Tourism is a priority sector under Saudi Arabia’s Vision 2030 economic diversification plan. The government wants to increase spending on entertainment and to transform the country into a major global travel destination. As part of Vision 2030, Saudi Arabia plans to welcome over 100 million visitors annually by 2030. To facilitate this, the Kingdom has started taking various measures. An e-visa system has been established for the citizens of 49 countries, making it easier for tourists to obtain a visa to visit the country for up to 90 days. The country also played part in establishing the country as a cruise destination.
Saudi Arabia has started the Red Sea Project. Aiming to create a luxury destination, it is one of the projects backed by the Kingdom’s Public Investment Fund. It covers over 28,000 km2 of lands and waters, including an archipelago of over 90 islands. The Kingdom aims to set standards in regenerative tourism and sustainable development, with supporting infrastructure emphasizing renewable energy and water conservation and re-use. Featuring mountain canyons, dormant volcanoes and ancient culture and heritage sites, the Red Sea Project aims to construct hotels, residential properties, leisure facilities and entertainment ventures.
Saudi Arabia Tourism Destinations
As well as the future plans and aims of Vision 2030, Saudi Arabia has a range of current tourist destinations, highlighting its position as tourism hotspot in the Middle East.
Cultural Heritage Sites
Saudi Arabia is one of history’s most culturally significant regions in history and is at the heart of Arab culture. It is characterized by rich elements of physical and human heritage, traditions and urban civilization. While experiencing continuous growth in various cultural sectors, the number of libraries, museums and events highlighting Saudi Arabia’s diverse culture is rapidly increasing.
The Kingdom has continued to try and preserve its heritage and culture. Many institutions and cultural bodies have been established to support these efforts. These bodies have issued various decrees and programmes devoted to protecting cultural heritage.
The Kingdom was among the first UNESCO State Parties to ratify the World Heritage Convention in 1972 and clearly holds its culture close to its heart. Currently home to six UNESCO World Heritage sites, with another 10 on the Tentative List, the Kingdom plans to exploit its unique cultural heritage to further bolster tourism in the region by developing culturally or historically significant monuments or sites.
Al Ula, home to Saudi Arabia’s first UNESCO World Heritage Site, is located in the northwest region of the country and features historical and cultural sites such as the Mada’in Saleh, the second largest Nabatean heritage site after Jordan’s Petra. The government is transforming the city into a cultural eco-tourism destination that is expected to offer various recreational activities, sports, and festivals.
The city of Diriyah aims to showcase Saudi Arabia’s 300-plus years of culture and history through heritage experiences, cultural and educational opportunities and various lifestyle, entertainment and dining experiences. At the heart of the project in Diriyah is the At-Turaif UNESCO World Heritage Site, a mud-brick city and capital of the First Saudi State.
Entertainment and Sports
Saudia Arabia is heavily investing in entertainment and sports to further meet its entertainment and tourism related goals. Qiddiya is planned to be the world’s largest entertainment city, aiming to attract over 13 million visitors per year. The New Jeddah Downtown project, King Salman Park, and the Sports Boulevard in Riyadh are other projects planned to overhaul the entertainment and sports sectors in major cities. Investment opportunities in stadium development, sports, football, and games solutions are projected to increasing, creating more opportunities for private and foreign partnerships.
Religious Tourism
Islamic religious pilgrimages of Hajj and Umrah are a major element of Saudi Arabia’s tourism activities and remain the largest economic contributor to the Kingdom’s tourism. To further increase the benefits, the government aims to increase the capacity and accommodate more Hajj and Umrah visitors; aiming for over 30 million by 2030 compared to 10 million visitors per year in 2019.
Investment in Tourism
In 2020, the Saudi Ministry of Tourism announced that it would invest $4 billion into the tourism industry, and established the Tourism Development Fund. The ministry plans to actively work with private sector investors to capitalize on new growth opportunities over the coming years. The fund encourages tourism investments in Saudi Arabia and opens doors for cooperation with foreign investors by providing direct support in all matters related to tourism. The fund supports the private sector by granting investment loans and investing in projects by owning shares of the project, and providing guarantees on some other projects, and by supporting promising projects by helping their implementation and coordinating with government agencies.
The fund enables projects that serve underdeveloped areas across the tourism value chain. It supports private sector investments by providing viable funding options, advisory and support services. It aims to focus on long-term sustainability, and enabling the development of financial products that suit the needs of both SMEs and large organisations. It supports investors by providing access to the tourism ecosystem and establishes partnerships between public and private leaders to unlock investment potential.
The government also launched the National Tourism Monitoring Platform to monitor the performance of accommodation facilities and tourism movement, and to act as a centre for collecting statistics and data related to the tourism sector. This aims to further facilitate tourism by providing analysis and information to businesses in the sector.
Saudi Arabia is also working to develop human capital for tourism. The Kingdom, represented by the Human Capital Development Agency at the Ministry of Tourism is targeting recent graduates, job seekers, tourism sector employees, entrepreneurs and SMEs in tourism by offering programmes to achieve Vision 2030. These include the SMEs Training Programme, Tourism Scholarship Programme and Tourism Entrepreneurship Hubs.
The Ministry of Tourism aims to facilitate licencing procedures and to promote quality through all stages of operation and process control. By providing electronic applications for licensing of various tourism related activities, the Kingdom hopes to ease market entry and investments.
Investment Opportunities in Tourism in Saudi Arabia
With heavy investment in tourism related industries and projects, it is evident that Saudi Arabia aims to be one of the world’s tourism heavyweights in coming years. This creates chances for access to and investment in the country’s tourism sector. The construction, infrastructure, technology, consultancy, equipment and management needed for Saudi Arabia’s plans should create opportunities for foreign investment and businesses. Operations, engineering and entertainment talent in the entertainment industry, stadium and sports development, and software and solutions design and development will be other key areas of development to ensure the success of Vision 2030.
References
https://www.weforum.org/agenda/2022/01/global-travel-tourism-pandemic-covid-19/
https://www.my.gov.sa/wps/portal/snp/aboutksa/tourism
https://edition.cnn.com/travel/article/msc-cruises-saudi-arabia-voyages/index.html
https://www.vision2030.gov.sa/v2030/v2030-projects/the-red-sea/
https://whc.unesco.org/en/statesparties/sa
https://mt.gov.sa/en/TourismInvestment/Pages/TourismInvestment.aspx