Saudi Arabia scraps hotel licence fees to draw investment

• Licence fees for Saudi hotels scrapped
• Hotels asked to reapply online
• Targeting tourism for 10% of GDP

Saudi Arabia has removed licensing fees for hotels and resorts in a further effort to increase tourism and improve the kingdom’s investment environment. 

The Ministry of Tourism and Ministry of Municipalities and Housing said they would ask hotel establishments to reapply for operating licences online. The decision applies to hotels, hotel apartments and residential resorts. 

The ministries will “organise workshops to explain and clarify the decision to hotel owners and give advice and support to investors in the tourism sector.”

They described the decision as aimed at attracting more investment into tourism. 

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A travel consultant AGBI spoke to said details of the exemption plan were not yet clear.  

“We don’t have a good understanding as yet to quantify the impact. Naturally such incentives are quite encouraging but between announcements and implementation and quantification of impact, a large delay typically occurs,” the consultant said. 

The government approved a revamp of its investment law last month, aiming to reassure overseas investors that they would be on a level playing field with Saudi nationals by simplifying business registration procedures. 

Lower-than-expected foreign investment and lower global oil prices have forced the government and its Public Investment Fund to delay some of the $1.25 trillion giga-projects at the heart of Saudi Arabia’s development plans. 

• Mena hotel construction to focus on Saudi Arabia and Egypt
• Tourist spending in Saudi Arabia hit new high in 2023
• Recruitment a sticking point for Gulf hospitality

Total foreign direct investment for 2023 was SAR46 billion ($12.3 billion), according to the General Authority for Statistics – well below the $100 billion a year that has been set as a 2030 target and below the 2022 inflow of almost $33 billion. 

Saudi Arabia had 27.4 million tourists in 2023 – the UAE was ahead with 28.2 million visitors, but Saudi Arabia only began issuing tourist visas in 2019. 

Real estate consultant Knight Frank said in a recent report that religious tourists could double to 30 million in 2025, in light of hotel sector expansion. The government has a target of 50 million religious tourists per year by 2030.