Tourism and Saudi Arabia

Most people don't think of vacationing in Saudi Arabia. Why?

Given the strength of the Saudi economy, by default a tourism sector emerged. Regarding tourism within the country, we did a lot of surveys concerning your statement that people don't tend to think of Saudi Arabia for tourism. We found out that about 60 percent of Saudi tourist expenditure is being spent in Saudi Arabia rather than outside the kingdom.

How will you get the remaining 40 percent?

I think the objective is not to get 100 percent, the objective is to develop a quality product to cater to Saudis, to cater to Arab visitors, to cater to Muslim visitors and to cater to special niche markets that are looking at the cultural heritage aspect of Saudi Arabia. The market is growing, so we're trying to capture a bigger percent of a growing market rather than trying to capture the whole market. The portfolio will not allow us to cater to every whim or need. We know exactly the market that we're going after. But it will take time to start developing the products and to try to market these products in a manner that will be beneficial to the Saudi economy and the social objectives behind the creation of the Supreme Commission.

Did September 11th have an impact on local tourism?

September 11th definitely had an effect throughout the world. We see a lot of people traveling regionally and not going on long-haul flights. They're consciously or subconsciously trying to stay in an environment they'd be more comfortable in. The Arab world in general benefited from Saudi tourists going to Lebanon, Egypt, Syria, less so to Jordan and even Saudi Arabia. The tourism sector benefited from that, but it's too early to really tell.

What is being done specifically to encourage tourism?

The commission's role is to facilitate the growth of the sector, which means that we are working with the sector and the various regions to determine the supply and demand gaps, and identify the impediments that they are facing. If, for example, it's a land tenure issue, we deal with that. If it's a regulatory issue, we deal with that. But we try to deal with it on a national level rather than on a case by case basis.

What are the main problems that you have had to deal with?

The board gave us two years to study, to analyze, to develop a plan of action for the sector. Phase one has been finished, and the master plan was presented by the board, approved by the board and now it's with the Supreme Council. Phase one basically looks at where we are, where we want to go and what are the issues that need to be dealt with in the long term. It's a 20-year plan rather than a short-term plan.

What are your target markets - for both nationals and expatriates?

Our primary target market is Saudis and expatriates living in Saudi Arabia. The second target market is Muslim communities everywhere. The third target market is specialized niche markets, that is looking at the sociocultural, ecotourism, diving, that type of niche product.

We will focus on the regulatory framework and the institutional framework. The tourism sector is a micro-decision, the tourists decide to go to this place or that place, and the investor will decide to invest in this location or that location. We have to provide an institutional framework that will allow the sector to grow in the regions, in the cities, across the country. Our role is that of a coordinator because we have to look at partnership between the public sector with itself, we have to look at the partnership with the private sector and linking the private sector with the public sector.

What's the size of the tourist market in Saudi Arabia and how do you see it evolving?

The data shows that in 2000 there were 16 million tourist nights inside the country. Direct expenditure was about 18 billion riyals. In terms of people going outside the country, there were about 4.6 million travelers leaving the country via airports, land ports or seaports.

What was the reaction of Saudi businessmen who have invested in tourism all over the world to the change in the Saudi approach to tourism?

I think they're very happy about it. We have a lot of interest, and they've been working with us as individuals, as members of the National Tourism Committee or as members of the Chamber of Commerce.

We've been engaging with them and taking into account the issues that they would like us to be aware of and to address. By the end of the two-year period, we shall be in a position to start implementing a regulatory framework and an institutional framework, but the institutional framework will take time.

By 2003, will there be major changes in tourism in Saudi Arabia?
With a hotel, once you start the process, you're not going to see the results overnight. You need to do design work, identify the target market you're after, you need to know more about the target market.

By the time you make a decision to invest or to investigate the feasibility of a resort, for example, it's not an overnight process. You're not going to be seeing a lot of activities early on because we're focusing on the foundations that will allow these things to happen and to be a common occurrence rather than to be a one-shot deal.

Will you open institutions to train Saudis to work in the hospitality industry?

One of the objectives for encouraging growth in the sector is its employment potential. In order for that to take place and in order to make it feasible for the private sector to invest, we have to work very hard at improving the supply of qualified people doing different things.

Currently in Saudi Arabia, there is one institution, the Prince Sultan Hotel and Hospitality School. King Abdulaziz University has several courses catering to that, but we recognize that there is a major shortfall in qualified Saudis that will add value to their employers.

Could they be international institutions?

I hope so, but in the future. I think that will be something that will be very good. We are working very hard to make something like that happen because people have to benefit and people have to add value. If we are to succeed, we have to focus on this particular issue very closely.

What will the market size be five years from now?

That's a tough one because when you look at population growth, it's roughly 3.5 percent. So, if nothing happens, we expect the market to grow by 3.5 percent. If the public sector and the commission are to add value, it needs to be more than that.

We don't think the changes that we are working on - and the improvements that we are being encouraged by the board to work on - will have an overnight effect. It will take at least five years for things to come to a state where momentum kicks in.

For the first five years, we would be very happy to have something at the rate of between four to five percent. After that, depending on the economic situation because tourism reflects everything that is happening in the economy.

How are you going to compete with Dubai, Beirut, Jordan and Syria?

We have a different product than they do. We have different offerings to provide to tourists. In terms of competition, I think that the market as a whole is growing and that everybody is trying to capture their piece of the pie.

Capacity is a problem for Lebanon, especially given the seasonality of the demand there. We have strengths, and we have weaknesses. We have to deal with these things in terms of the products that we offer, in terms of how we distribute them and how we promote them.

How will you promote them?

It will be a private/public initiative that will be focussing on changing the perceptions of people. We have to make them change the perception of the brand as we are developing the distribution system.

Then we can facilitate the private sector in terms of offering packages to Saudi tourists. We don't have them. We have very limited offerings now, and it will not take very long to see packages being sold and distributed in the country for Saudis.

What role do airlines play?

Saudi Airlines has been very responsive. We're working with them on some issues because airline cost is a major component. Unless a mechanism is found to deal with that, then the packages will continue to be uncompetitive in terms of price.

But we're not looking at price, we're looking at value for money: what you get in that location vis-à-vis what you get in other locations. Saudi Airlines will have a significant role in making these things happen. It is an important strategic partner. It benefits the economy and the airline to work closely with us and to promote tourism.