Complex Made Simple

Travel and tourism in Saudi Arabia by the numbers

Saudi tourism: All you need to know in figures and the way forward

Travel and Tourism’s total contribution to Saudi’s GDP grew by 4.64% or$2.89 bn between 2009 and 2018 Foreign spending (spending by international tourists in Saudi Arabia) grew by 38.4 percent or $3.8 bn between 2009 and 2018 No other country except the UAE is attracting the same level of spending in that region

By: SKIFT + SEERA on Decoding The Saudi Arabian Travel and Tourism Industry 

According to data from the World Travel and Tourism Council (WTTC), tourism has been growing in Saudi Arabia in the last decade, though there has been year-on-year fluctuations. Here are some key findings from evaluating changes in spend. We looked at “real prices,” which adjusts the actual spend amounts to take inflation or deflation over time into account.

1. Travel and Tourism’s total contribution to Saudi Arabia’s Gross Domestic Product (GDP) grew by 4.64 percent (which amounts to approximately $2.89 billion) between 2009 and 2018 and was at $65.21 billion in 2018.

2. Domestic tourism spending (spending by Saudi Arabia’s residents on business and leisure trips within the country) grew by 1.56 percent (which amounts to approximately $262 million) between 2009 and 2018 and was at $17 billion in 2018.

3. Leisure tourism spending (spending by Saudi Arabia’s residents and internationals on leisure trips within the country) grew by 12.55 percent (which amounts to approximately $2.9 billion) between 2009 and 2018 and was at $26.4 billion in 2018.

4. Business tourism spending (spending on business travel by residents and international visitors within Saudi Arabia) grew by 35.8 percent (which amounts to approximately $1.2 billion) between 2009 and 2018 and was at $4.5 billion in 2018.

5. Visitor exports or foreign spending (spending by international tourists in Saudi Arabia) grew by 38.4 percent (which amounts to approximately $3.8 billion) between 2009 and 2018 and was at $14.04 billion in 2018.

To provide some additional context from WTTC, no other country except the UAE is attracting the same level of spending in that region. Foreign spending was at $0.75 billion in Kuwait, $3.1 billion in Oman, and $12.96 billion in Qatar in 2018. WTTC also reports that domestic tourism spending in 2018 was at $5.39 billion in Kuwait, $2.38 billion in Oman, and $2.42 billion in Qatar. “The outbound travel market from Saudi Arabia has always been lucrative, but we are seeing growth in domestic and inbound travel as well,” Ross McAuley, vice president of marketing for Seera Group said.

Read: The path to Vision 2030: Saudi tourism sector going strong

Saudi Arabia’s goals for growing its tourism economy

1. Increase Saudi Arabia’s capacity to welcome Umrah visitors from 8 million in 2015 to 30 million every year by 2030. Umrah is a year-round pilgrimage made by Muslim travelers to the holy cities of Makkah and Madinah.

2. More than double the number of Saudi heritage sites registered with the United Nations Educational, Scientific, and Cultural Organization (UNESCO); Saudi Arabia currently has four cultural sites registered with UNESCO.

3. Build the largest Islamic museum in the world with a library and research center.

4. Increase household spending on cultural and entertainment activities inside the Kingdom from the current level of 2.9 percent to six percent.

5. Achieve 100 million international and domestic overnight visits a year by 2030.

6. Increase tourism’s contribution to the country’s GDP by 10 percent by 2030.

7. Improve visa issuance procedures for visitors.

8. Move from its current position as the 19th largest economy in the world into the top 15.

9. Increase foreign direct investment from 3.8 percent to 5.7 percent of GDP.

10. Increase non-oil government revenue from $43.45 billion to $266.6 billion.

Read: Religious tourism a major economic force: 1.8 million pilgrims arrive in Saudi for Hajj

The way Forward

As Saudi Arabia turns to travel and tourism, the government’s approach has been to set up individual strategic units to advance different parts of the Vision 2030 plan. “If you’re moving at the speed that the Saudi government wants to move at, you have to drive this from and into the upper layers of the government to make sure that things happen quickly,” McAuley added. “So the strategy is set up to have the Public Investment Fund (PIF) and top government officials heavily involved and to develop entities whose sole task is to deliver on the promise and metrics of Vision 2030.” The PIF is a sovereign wealth fund owned by the government of Saudi Arabia.

The country is also making headway in offering diverse payment methods to travelers. Secure contactless and cashless payment methods are prerequisites to sustain the growing number of online travel transactions, and to make it easier for international inbound and domestic travelers. Visa has partnered with mada, the Saudi payment network, to launch its first digital wallet, mada Pay, which uses Visa’s tokenization technology to secure transactions by replacing the 16-digit card number with a token. During a transaction, the token – not the actual card information – is selected and submitted into the payment process.

Aside from investments and legal changes necessary to transform Saudi Arabia, the statement that has perhaps inspired the most confidence in the country’s future as a tourist destination was Prince Mohammed’s statement that Saudi Arabia would return to a more “moderate Islam.” During a public appearance at an investor conference in Riyadh, the prince said, “We only want to go back to what we were: moderate Islam that is open to the world, open to all religions. We will not waste 30 years of our lives in dealing with extremist ideas. We will destroy them today.”

Research done by Colliers on behalf of the Arab Travel Market, a travel and tourism event held every year in the Middle East, projected domestic trips to increase by eight percent in 2019 and inbound visits from international markets to grow by 5.6 percent per year. “Domestic tourism across Saudi Arabia has witnessed a significant increase over the past year, presenting enhanced business opportunities for the hospitality industry,” said Pascal Gauvin, managing director for India, Middle East & Africa at InterContinental Hotels Group (IHG). “We predict that this trend will continue for many years. This surge has also resulted in a gap between the demand for, and supply of,quality, internationally branded accommodations targeting specific guest segments.” IHG currently has 14 new properties being developed and is debuting one new brand, voco, in Saudi Arabia.

However, the international community of travelers and investors remains cautiously optimistic and would need better knowledge of local norms, culture, and practices to conduct business in Saudi Arabia. While the laws institutionalize some of the changes the Crown Prince wants to bring about, the realities on the ground will take longer to change.

Read: Saudi Arabia’s real estate market set to benefit from major tourism projects and reforms

Existing and Upcoming Projects to Improve the Tourism Infrastructure

Seera Group’s hospitality division currently has 1,880 hotel rooms, and they plan to expand to 6,000 rooms by 2022. Seera Group has largely mid-market hotels in its portfolio, though two of its properties are luxury properties. Its intention is to continue to build hotels that cater to the demands of domestic travelers, business travelers, and pilgrims traveling to or within the country. It has partnered with Choice Hotels, and is currently developing seven hotels in Riyadh, Jeddah, and Al-Taif.

One of the largest tourism undertakings is happening in the Red Sea, where a new project development spans 90 untouched islands and 28,000 square kilometers of land and sea. The project is tapping into the undiscovered natural beauty of the region, and targets visitors from both within the Kingdom and across the world. “The demand for luxury travel is growing rapidly, but what makes this project so special and unique is that it has sustainability at its heart, giving visitors the satisfaction of knowing that they can take advantage of a luxury experience while preserving the natural beauty of the local area for future generations,” said John Pagano, CEO at The Red Sea Development Company.

Other ongoing national projects, most of which are being fully or partially funded by the PIF include: • Neom Valley Project to build a megacity in the desert by a water body.

• Qiddiya, an entertainment center, which will include a Six Flags branded theme park and hotels.

• Amaala, a wellness-focused resort with a dedicated airport, 2,500 luxury hotel rooms, 200 retail establishments, art galleries, marinas, and 700 villas.

•Sharaan resort in AlUla, which will be designed by Jean Nouvel, who designed the Louvre Abu Dhabi, and will include luxury suites, a wellness spa, and an events venue.

• A third expansion of the Makkah Grand Mosque is underway to accommodate more Hajj and Umrah travelers.

• Saudi Entertainment Ventures (SEVEN) recently announced plans to open 50 new cinemas with a total of 450 screens by 2022. It plans to open seven cinemas in 2019 alone. It also announced plans to build 20 entertainment centers.

• Jeddah Tower and Jabal Omar, both of which are expected to include hospitality units. Another massive undertaking in Saudi Arabia is the plan for Aman Resorts to open three properties near AlUla. “True to the pioneering spirit of Aman, the three resorts will offer an incomparable insight into the Kingdom of Saudi Arabia and its magnificent unspoiled natural landscapes and archaeological sites, which have long remained undiscovered,” the hotel group said in a statement to Travel + Leisure.