Reimagined kingdom: Saudi Arabia’s tourism challenge

Habitas

• Hotels and attractions to generate new income streams and jobs
• Rotana trebling its hotel rooms to over 6,000 in coming years
• Kingdom wants to attract 100m visitors annually by 2030   

Not so long ago, the extent of tourism in Saudi Arabia amounted to pilgrims and business travellers. Other visitors were largely discouraged.

Attracting them is now a priority, in a reimagined kingdom where hotels, leisure venues and cultural assets stand to generate income and jobs. 

Saudi Arabia now has ambitious goals in tourism: it wants to attract 100 million visitors annually by 2030, making it one of the top five global destinations. It also wants to create a million new jobs in the sector by 2030.

The green shoots emerged in 2019, when the first tourist visas were issued.    

“Vision 2030 is the primary driver of its tourism push,” said Reem el-Shafaki, leader of DinarStandard’s travel and tourism practice. 

“The objective is to diversify the economy away from oil dependency and make tourism a significant contributor to GDP.” 

• Red Sea Global to spend $20bn by 2024
• Saudi hotel development costs estimated at $38bn
• Marriott signs deal with Saudi firm for eight Madinah hotels

That is still a seismic challenge, but analysts see a logic behind the tourism push.

‘Build it and they will come’

“Saudi Arabia’s modus operandi is akin to that of some Gulf nations, like the UAE, which is: build it and they will come,” a spokesperson for Euromonitor, a research firm, said. 

“And they certainly have been building in an effort to diversify their offering. The kingdom has been investing heavily in the development of tourism infrastructure, including new airports, hotels, and cultural attractions.”

According to Euromonitor’s forecast, Saudi Arabia’s tourism sector will record a 42 percent increase of inbound trips over the next five years.  

Meanwhile, international hotel groups are doubling down with new projects. 

“As we speak, over 40,000 new hotel rooms are under construction, which is by far the highest in the region,” said Siegfried Nierhaus, vice president for the Middle East at Deutsche Hospitality, which has hotel projects underway in Saudi Arabia.   

Red Sea Global

This positions the kingdom as one of the most dynamic travel and hospitality markets globally, said Guy Hutchinson, president and CEO at Rotana. He cites figures from analysts Smith Travel Research that rank Saudi Arabia behind only China and the US globally in terms of the number of hotel rooms currently being built. 

“Saudi Arabia presents one of our key markets, where we are developing seven hotels. They will almost triple the number of rooms to over 6,000 in the next four years,” Hutchinson said.

“We are also in negotiations for five new properties under the Edge by Rotana brand, in Riyadh and another one in Al Baha.”   

Luxury tourism

“Saudi Arabia is a country with a rich history and culture, stunning natural landscapes, and modern entertainment and sports facilities. It offers a diverse range of attractions that can appeal to a broad spectrum of tourists,” said Nierhaus.    

High net-worth individuals form a core target market. 

“Saudi Arabia punches above its weight when it comes to luxury spending, said the Euromonitor spokesperson.

“It offers ample opportunities for luxury tourism domestically, thanks to rising disposable incomes and overall wealth, particularly among the rising younger urban middle class.” 

Religious tourism remains important

It will also seek to attract more religious tourism. Hajj and Umrah visitor numbers are due to treble to over 30 million by 2030.   

“Saudi Arabia has been investing heavily in infrastructure and facilities, including the expansions to the Haram in Mecca and Medina,” said el-Shafaki.

Creative Commons/Prof Mortel

Decentralising the umrah booking and management process and allowing online travel agencies and the private sector to become part of it, will add hotel rooms in the holy cities.

Saudi Arabia’s rapid tourism growth will require accelerated investment in infrastructure.

“Customer service skills [including those that speak different languages] are also a challenge, but that can be easily rectified through training,” said el-Shafaki.

Perhaps the biggest hurdle is to overcome an unfavourable image in some western countries. That may take time, but Saudi strategists are confident in their capacity to transform perceptions.