Saudi Arabia pumps $810bn into transforming tourism sector
Investment into Saudi Arabia’s portfolio of massive tourism projects will reach US$810 billion in the next 10 years, as the Arab nation looks to diversify its economy and move away from its oil dependency.
That is according to the Middle East and North Africa Leisure & Attractions Council (MENALAC), which published a report looking into the extent of Saudi’s growing leisure and entertainment tourism sector.
“Mega tourism projects being developed by Public Investment Fund will be spread over an area of more than 64,634 square kilometres, with a value exceeding $810 billion (AED2.97 trillion),” according to Saudi Commission for Tourism and National Heritage (SCTH), the country’s tourism regulator.
Among these, the $500 billion (AED1.8 billion) Neom leads the list of the mega projects – which once completed, will deliver a futuristic mega sustainable city, followed by the $10 billion Qiddiyah Project, spread across 334 square kilometres in Riyadh.
The third project is Amaala, or the Saudi Riviera, located in the northern region with an area of 3,800 square kilometres, and developing islands in the Red Sea with a total area of 34,000 square kilometres.
Mishal Al Hokair, board member of MENALAC, said, “Saudi Arabia has an array of dynamic plans and attractions planned over the next few years, each of which will add to the fast growing Leisure and Entertainment sector. Its Vision 2030 will change the entire economic and tourism landscape of not only Saudi Arabia, but the entire Middle East region, that will have a massive positive knock-on effect on the leisure tourism industry.
“Once the current COVID-19 situation improves, the investment and development in the Saudi Arabia’s tourism sector will bring massive opportunities for the industry. It is time for everyone to prepare for the next big growth.”
In addition, SCTH will be developing museums in various Saudi regions, and preserving Saudi heritage with a cost of more than $1.3 billion.
“Saudi Arabia foresees that the national tourism will significantly contribute to the gross domestic product as the most growing non-oil economic sector. The tourism revenues increased to more than SR193 billion ($51 billion) in 2017, and to more than SR211 billion ($56 billion) in 2018,” SCTH said in a report.
The total number of inbound and outbound tourist trips in Saudi Arabia is expected to reach 62 million trips, where tourism revenues are anticipated to exceed SR142 billion ($37 billion) by the end of 2020.
“Therefore, it is anticipated to rank as the 24th on the scale of tourist business environment, and 124th in the international openness of tourism, and the 60th in the travel and tourism competitiveness indicator,” the report said.
SCTH’s licensed tourist facilities have also been doing well over the past decade or so. In 2008, the number of tourist accommodation did not exceed 800 hotels, and hotel apartments. In 2018 the number increased to 7,388. The number of travel and tourism agencies went up from 589 to 2,414, with the presence of 633 tourist trips organisers.
SCTH plans to facilitate investment SR171.05 billion that will boost the tourism industry capacity and the number of hotel rooms to 621,600 rooms and boost the tourism sector’s contribution to the GDP by 3.1 percent, and increase direct employment to 1.2 million jobs.
Prakash Vivekanand, board member of MENALAC, said, “The latest news from Saudi Arabia is very encouraging. The government wants to push ahead with the mega projects that will boost not only the country’s gross domestic product (GDP) but also the tourism sector. It will create massive opportunities for all the players in the leisure attractions business and we could count on an exciting future for the industry in the MENA region.”
According to Saudi Arabia’s General Investment Authority (SAGIA), the country wants to increase investment in recreational facilities to 6 per cent from the current 2.9 percent per annum – more than double the current level, as part of Saudi Vision 2030.
“In 2017, the Saudi Arabian tourism sector attracted investment of SR172 billion (US$28.6 billion), which was six times the world average in tourism capital investments,” according to a report by SAGIA. “Investments are expected to rise 5.5 per cent per annum over the next ten years to SR200 billion (US$54 billion) per annum.”
Despite the current situation, Saudi Arabia is pushing ahead with construction of some of these massive projects. A number of construction contracts have recently been awarded following the partial re-opening of the economy after the lockdown.
Red Sea Development Company has recently awarded construction contracts worth US$1 billion while Neom has awarded Bechtel and AECOM programme management contract.
Rosa Tahmaseb, secretary general of MENALAC, said, “The leisure attractions industry in the MENA region is upbeat with the new opportunities that are arising in Saudi Arabia. We see massive opportunities for our industry being created by more than a US$1 trillion investment in the Saudi Economy between now and 2030.
“I urge the leisure industry stakeholders, both our suppliers and operators to explore these opportunities and ascertain how they can take a leading role in helping Saudi Arabia develop its leisure facilities in the coming decade.
“Despite the short-term setback created by the COVID-19 pandemic, the long-term prospects for our industry remain bright. One example of this can be seen in the dynamic projects planned for Saudi Arabia.”