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Saudi Arabia

Spotlight on infrastructure
March 2013 2772

A rise in the number of pilgrims visiting Saudi Arabia for Haj and Umrah is boosting domestic tourism growth and the kingdom’s hospitality sector could be worth $18.1 billion by 2016, a report said.

Tourism receipts for Haj and Umrah currently account for around three per cent of GDP and, according to tourism officials, the country gained a reported $16.5 billion from tourism in 2012, representing a 10 per cent increase on the previous year, it said.

The largest hospitality market in the GCC, Saudi Arabia also accounts for the bulk of international tourist arrivals, at 46 per cent, according to an October 2012 GCC Hospitality Industry Report from Alpen Capital, representing a 50 per cent year-on-year increase against 2011 figures.

The kingdom is also investing heavily in its infrastructure as expansion plans for the new $7 billion Jeddah airport project move ahead, with the airport projecting annual passenger volume of up to 80 million passengers within the next two decades.

HRH Prince Sultan bin Salman bin Abdul Aziz president of SCTA reiterated that, Saudi government’s support for tourism through a series of new resolutions and the resolutions to be issued during the current year, reflects the state’s belief in the importance of tourism as key economic driver and creator of jobs for the citizens.

“Tourism is an important tool for achieving large economic development as well as creating huge job opportunities. This explains Saudi government’s persistent support to tourism, besides adopting the cultural dimension of the country under auspices of the Custodian of the Two Holy Mosques King Abdullah bin Abdul Aziz, which is seen through a number of on-going heritage and tourism projects, in addition to issuing a number of regulations in support of tourism and heritage projects, the latest of which is the approval  of the Council of Ministers for the establishment of a specialized company for hospitality and heritage in the Kingdom of Saudi Arabia. Also many other resolutions are expected to be issued in this respect reflecting government’s attention on rehabilitating historical, cultural and archaeological monuments,” he added.

Saudi government investment into key infrastructure projects including airport expansion, railways and roads, is pegged at around $80 billion between now and 2022, with investment into major tourism initiatives forecast to grow at a CAGR of 6.9 per cent.

According to the Alpen report, tourist arrivals are expected to grow at a CAGR of four per cent between 2012 and 2022, driven by strong growth across all sectors, with occupancies set to jump from 67.5 per cent in 2011 to 74.2 per cent by 2016.

Hotel room supply in the kingdom is expected to increase at a CAGR of 1.5 per cent between 2011 and 2016, increasing from 243,117 rooms in 2011 to 262,049 in 2016, with 69 properties currently in the planning or construction phase.

The tourism sector is now the country’s second largest industry, with around eight per cent of total jobs, and industry growth presents a huge opportunity for job creation in the local market, with Takamul [an SCTA affiliate] organising a number of job fairs around the country and working hand in hand with tourism companies to attract young Saudis looking to embark on a career in hospitality.

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