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Reforms and investment in Saudi Arabia to drive growth in the hospitality market

  • Published by Ozgur Tore

According to a new report, recent reforms and investments in Saudi Arabia will drive growth in the hospitality market of 13.5% compound annual growth rate (CAGR), higher than the established markets of the UAE (10.1%) and Oman (11.8%).

saudi arabia skyscrapper

Saudi Arabia is expected to see a vast expansion of its hotel and resort inventory, along with a steep increase in airport passengers, as Crown Prince Mohamed bin Salman continues to drive economic and social reforms, including direct investment in tourism.

The study produced by Colliers, found that religious tourism in the kingdom is still driving demand, with 30,000 rooms opened during 2017, with a further 40,020 guestrooms in 89 projects currently under construction – compared to 35,050 rooms in the UAE.

Last year, Saudi Arabia set the stage for this to expand to leisure tourism, as it pursues targets of 30 million visitors annually by 2030. As a result, 2018 will see the first tourism visas granted to international travellers and, for the first time, women aged 25 and older will now be able to obtain a single entry, 30-day tourist visa without a male chaperone.

The kingdom has announced a series of leisure projects in recent months, including the creation of a Six Flags theme park in Riyadh by 2021 and a Red Sea resort built on 100 miles of sandy coastline and backed by investment from Virgin Group founder Sir Richard Branson. Featuring hotels, residences and a transport hub, the project will create 35,000 jobs, adding SAR15 billion to the economy.

Aligned with the vision, the Public Investment Fund (PIF) ploughed SAR10 billion into entertainment ventures in 2017 and, under the National Transformation Programme (NTP) the kingdom has invested SAR171.5 billion in tourism development.

The report, forecasts that five-year air passenger numbers will increase 8% at King Khalid International Airport Riyadh and 6% at King Abdulaziz International Airport, Jeddah. This is compared to 8% at both Muscat and Dubai International and 7% at Abu Dhabi International.

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