Development of Tourism Sector in Saudi Arabia - JLL Vantage Point

Tourism Sector in Saudi Arabia is not on the top when it comes to leisure tourism. This sector, however, may soon change as the Kingdom turns to

January 11, 2018

Saudi Arabia does not often top the list of destinations when it comes to leisure tourism. This, however, may soon change as the Kingdom turns to tourism as a means to wane itself off hydrocarbon dependence. A key part of the Saudi Government’s Vision 2030, tourism witnessed a record year of announcements in 2017 aimed at growing the sector in the Kingdom on an unprecedented scale. The first indication of loosening reforms was the announcement of the Red Sea Tourism project, a mega project spanning more than 34,000 sq km incorporating 50 islands that will be specially zoned to allow most international visitors to enter visa free. Speculation soon followed that tourism to the Kingdom will open on a broader scale, which was validated following the announcement that the Saudi Government will begin to issue tourist visas in Q1 2018.

The local market

The Kingdom is also working towards developing tourism and entertainment for its largely youthful population who are accustomed to traveling to neighboring GCC countries during weekends, school, and public holidays for leisure. The General Authority for Entertainment, tasked with expanding the Kingdom’s entertainment sector, has backed a number of highly attended concerts and events in 2017, which are expected to grow in number and variety during the coming years. Local entertainment received a further boost in 2017 when the ban on cinemas was lifted, and the Public Investment Fund signed with AMC Entertainment Holdings, the world’s largest provider of cinemas. Retailers, many of whom had reserved dedicated space for cinemas in their shopping centres, welcomed the much-anticipated announcement with some expected to open cinemas as soon as mid-2018.

The high attendance in events and concerts held in 2017 is a positive indicator of the pent-up up demand for entertainment in Saudi, and the willingness of households to spend on entertainment locally. Something the government aims to double to 6% of total household spending. These events have even attracted visitors from neighboring GCC countries. Showing the first signs of reverse tourism from these destinations.

Time to catch up

The tourism and entertainment industries in Saudi have lagged behind those in the UAE and elsewhere in the GCC for several decades, and many investors are aware of these virtually untapped markets, and with the high level of domestic demand. The Kingdom has a mix of historic sites, desert landscapes and beaches that could work favorably towards developing its tourism sector, and the loosening of the previous social and economic constraints are undoubtedly a step in the right direction. Attracting large numbers of international tourists will however require time and additional investment in developing the necessary tourism infrastructure and marketing the country’s natural attractions to overseas tourists.

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