KSA more than meets the eye
With several UNESCO-listed sites to its name and a huge project pipeline, there’s more to the Kingdom than Mecca, as Tarek Hammoud, offshore team manager and consultant at Hodema consulting services explains
|Think holiday spots and Saudi Arabia is unlikely to spring to mind as a must-visit destination, ticking few of the usual boxes mandatory for international tourists. For many, the country’s beaches and local dishes remain a mystery, with media coverage often focused instead on KSA’s strict dress code and alcohol ban. However, as home to Mecca, one of Islam’s most revered holy sites, Saudi Arabia offers another kind of break which makes it hugely popular across niche markets. Mecca attracts up to 2 million worshippers during the Hajj alone, with more than 15 million pilgrims flocking to the ever-expanding western city throughout the year. |
In 2016, the country welcomed 18 million visitors, with 120 million passengers passing through KSA’s airports. The travel and tourism industry contributed USD 65.2 billion to the country’s GDP in the same year, while providing 1.14 million jobs, representing 9.7 percent of total employment. This share is forecast to rise by 3.7 percent in 2017.
A projected GDP per capita of USD 5378 in 2017, up from USD 5184 last year, and a rapidly growing population, which is forecast to reach 37.6 million in 2025, are expected to benefit the Kingdom’s travel and tourism industry. In a further positive sign, investment in the sector is expected to rise by 9.8 percent in 2017, up from USD 28.6 billion in 2016, when it accounted for 14.7 percent of total investment.
Vision 2030: An ambitious strategy for the future
|6.1 percent. This ambitious program is aimed at diversifying the economy and boosting the contribution made by non-oil related sectors against a backdrop of oil-price volatility. The government has set three main objectives, the first of which is to increase the number of Umrah pilgrims to 30 million per year. Efforts to facilitate visitors’ journeys to the holy sites range from mosque expansion plans to major infrastructure projects in Mecca and Medinah. With this in mind, Deputy Crown Prince Mohammed bin Salman has announced major airport expansion works in Jeddah and Riyadh. King Khaled International Airport will house an extra terminal, a large mosque, one of the world’s tallest control towers and a new separate terminal for royalty, heads of state and VIPs. King Abdulaziz International Airport in Jeddah is also being overhauled. Increased capacity means it will now be able to accommodate up to 80 million passengers a year. The facility will also have a special Hajj Terminal, offering direct access to Mecca and Medinah via rail. Low-cost airlines, such as Nesma and Flyadeal, have put themselves forward, in anticipation of a growing influx of visitors.|
The second target is to double the number of UNESCO heritage sites as part of broader plans to boost domestic leisure tourism. Four sites have already made the list, with another 10 under consideration. Thirdly, the government plans to increase public spending on cultural and entertainment activities from 2.9 percent to 6 percent. The recently appointed Board of the General Entertainment Authority is already moving forward with these objectives and has set the bar high, with plans that include the construction of Al-Qidiya, a new entertainment mega-city just outside of Riyadh. With a target completion date of 2022, the project will comprise nine cities or sections focused on entertainment and educational experiences. The theme park company Six Flags has also announced its expansion into Saudi Arabia, with the first center slated to open around 2020-2021. In a separate development, an Islamic museum is planned.
Hotel market review
|contrast, rates have gone up from USD 259 to USD 267 due to stronger market demand. However, Mecca remains well ahead in the game, with 24,133 rooms under construction. The Swissotel Al Maqam is the latest addition to an ever-expanding sector, which has jumped from 13,911 keys to 21,093 in branded hotel supply in just one year. The highly anticipated Abraj Kudai Tower, which, with 10,000 rooms, is set to become the world’s largest hotel when it opens its doors, is also in the pipeline. Increased capacity has had only a minimal impact on rates, which remain stable, having risen from USD 214 in 2016 to USD 216 this year. Khobar, Dammam and Dhahran in the Eastern Province also enjoyed their fair share of growth, helped by the opening of Aloft Hotel. Key numbers reached 6039 in 2016, marking a rise of 1062 on the previous year.|
F&B pipeline looks promising
With high hopes come strategic challenges