Economic Growth Amid Efforts to Open Up: When Will Saudi Arabia Become a Tourist Destination?

Saudi Vision 2030, a plan for a prosperous future for the Kingdom, has three strategic objectives: to develop “a vibrant society, a thriving economy, and an ambitious nation.” Those driving this vision intend to make Saudi a global hub for investment, innovation, diversified economy, and tourism.

Tourism in Saudi Arabia, historically tied to the Kingdom’s religious significance, has begun to experience a revival after decades of being closed to foreign tourism.

Today, the development of a thriving tourism industry is considered crucial for economic, social, and cultural growth, especially considering the Kingdom’s numerous and diverse archaeological sites (including six listed on UNESCO's World Heritage List), a clear competitive advantage, and its vast area, several times larger than neighboring countries.

Currently, Saudi Arabia is the world's largest investor in the tourism sector, having allocated $550 billion for new destinations to welcome visitors by 2030, and its promise to invest over $800 billion in the tourism industry over the next 10 years. Saudi Arabia has managed to attract around $13 billion in private sector investments in tourism, aiming to share the spending costs associated with its plan to become a new travel attraction. The Kingdom has also implemented a comprehensive set of reforms and investment programs to establish tourism as a key contributor to the non-oil GDP.

Strategic Goals and Achievements

In March 2019, the National Tourism Strategy was launched, allocating $1 trillion by the end of the decade (including $800 billion for mega projects), with the hope of making Saudi Arabia a leading entertainment destination. Goals to be achieved by 2030 include:

– Attracting 100 million tourists annually:

The Kingdom celebrated reaching this number at the close of 2023, and since raised its target to 150 million tourists annually by 2030. With 16.6 million foreign visitors in 2022, Saudi Arabia climbed 12 ranks to the 13th position in the World Tourism Organization ranking, surpassing its pre-COVID-19 rank of 25th. Similarly, in the World Economic Forum's Travel and Tourism Index (TTDI), Saudi Arabia ranked second among 117 countries, for largest improvement.

– Distribution of 45% for domestic tourism and 55% for international tourism:

The Ministry of Tourism defines a tourist as any visitor (local, incoming, or outgoing) whose trip includes at least one overnight stay in the country or place of visit. It reported that Saudi Arabia welcomed 27 million international tourists in 2023 (25% of the total tourists), a notable increase of 65% compared to 2022, compared to a mere 2% increase in domestic tourism (79 million local tourists) compared to the previous year. The aim is to raise the number of international tourists to about 70 million by 2030, compared to 68 million domestic tourists.

Currently, Saudi Arabia is the world's largest investor in the tourism sector, having allocated $550 billion for new destinations to welcome visitors by 2030, and its promise to invest over $800 billion in the tourism industry over the next 10 years.

– Increase tourism's contribution to GDP to 10%:

According to Saudi Minister of Tourism Ahmed Al-Khatib, the tourism sector's contribution to Saudi Arabia's GDP reached 8% in 2023, with an expectation to reach 10% by 2030. Given its steady rise, the target has been adjusted to 15% by 2030.

According to tourism expenditure data within the balance of payments, the Kingdom saw spending exceed 100 billion Saudi Riyals. This resulted in a surplus estimated at around 37.8 billion Saudi Riyals, reflecting a significant growth of 72% compared to the same period in 2022.

– Create one million new jobs within the sector:

The labor market in the Kingdom is witnessing rapid progress, with the number of workers in the tourism sector rising from 579 thousand in 2019 to 913 thousand in 2023. Consequently, the target for new jobs to be created has been raised to 1.6 million by 2030.

In parallel, various initiatives are being implemented to support and encourage Saudis working in the tourism sector, including a campaign titled "Your Future is in Tourism" aimed at providing 100,000 job opportunities annually for national cadres in the tourism sector. This comes as the "Saudization" policy led to an increase in the percentage of Saudis working in the sector from 41% in 2020 to 48% in 2023.

– Increased female workforce participation in the tourism sector from 39% to 45%:

According to a 2022 World Bank report, “Saudi women have made unprecedented progress in joining the labor market.” The rate of women's participation in the private sector workforce jumped by 64% in just two years, progress unparalleled anywhere else in the world.

This is fueled by a variety of factors, including proactive government policies advocating for women's economic empowerment, higher educational attainment among Saudi women, increased demand for female labor in the private sector, significant legal and regulatory reforms, women's right to choose their place of residence, prohibition of gender-based discrimination in employment and access to credit, and new job opportunities for women in industries previously dominated by men. As a result, Saudi female participation in the workforce has risen from 20% in 2018 to 35% by the end of 2022. In the tourism sector, the participation of the female workforce increased from 39% to 45% between 2022 and 2023.

According to the World Bank, “Saudi women have made unprecedented progress in joining the labor market.” The rate of women's participation in the private sector workforce jumped by 64% in just two years, progress unparalleled anywhere else in the world.

– Elements enabling the tourism sector's revival:

To develop tourism and increase the number of Saudi and foreign tourists, Saudi Arabia has also made sustainability a top priority. In addition to a ten-year tourism strategy, the Kingdom has sought to support this goal with appropriate regulatory frameworks, promote tourism diversity, ensure the development of advanced infrastructure, and create innovative mega-projects that take into account climate, nature, and local communities (NEOM will be completely carbon-free, an example of sustainable tourism).

Regulatory and Executive Frameworks

To guide the emerging tourism industry, Saudi Arabia has activated a system composed of three main public entities:

– The Ministry of Tourism, which is responsible for defining the national tourism strategy, issuing licenses, formulating policies and regulations, promoting an attractive environment, and developing human capital.

– The Saudi Tourism Authority, which focuses on presenting Saudi Arabia as an attractive tourist destination, developing its tourism brand, and establishing partnerships with relevant parties to attract more visitors.

– The Tourism Development Fund, which focuses on implementing the Ministry of Tourism's investment strategy that includes designing investment plans, providing funding for large and small tourism companies, and enhancing the sector's appeal to lenders and investors, with an initial capital of $4 billion.

The Ministry of Tourism has expanded the issuance of electronic visas to citizens of several new countries, now benefiting 64 countries in total.

The new King Salman International Airport will cover approximately 57 square kilometers and is expected to accommodate up to 120 million passengers by 2030.

The same applies to transportation, as Saudi Arabia recently launched an updated national strategy for transportation and logistics services, to enhance mobility in line with the increase in foreign arrivals. This includes the new King Salman International Airport, which will cover approximately 57 square kilometers and is expected to accommodate up to 120 million passengers by 2030. Additionally, in February 2023, Saudi Arabia announced the launch of Riyadh Air, a new airline expected to serve 100 destinations by 2030.

Tourism Diversity: Religious, Recreational, Sports, and Business

Religious tourism

In 2023, a record number of 13.5 million Muslims participated in Umrah, an unprecedented level of international participation in this religious ritual. This figure marks a significant increase from 2019, when 8.5 million foreign pilgrims made the journey to Saudi Arabia. The government expects religious tourism to grow substantially in the coming years, targeting 30 million religious tourists by 2030.

Recreational tourism

The entertainment and events sector in Saudi Arabia is undergoing a major transformation. The market, valued at around $800 million, is expected to expand to $1.12 billion by 2026. This growth is attributed to a significant increase in recreational activities, highlighted by lifting the decades-long cinema ban, establishing the Media City in Riyadh, and launching Saudi Seasons with various events like concerts and races.

In 2023, the total number of visitors to events and entertainment activities exceeded 72 million, a 17% increase from 2022. In the same year, 5,406 entertainment events were held, including diverse shows and live performances in restaurants and cafes. Audience participation rates provide tangible measures of the sector's growth (e.g., attendance at Riyadh Season increased from 2.5 million in 2019 to over 10 million in 2023).

This year alone, major events and concerts, including Riyadh Season, Diriyah E-Prix concerts, the Red Sea International Film Festival, the FEI World Cup Finals, the Saudi International E-Commerce and Retail Show, and many more, are set to take place, further illustrating the sector's dynamic growth.

Sports events

Saudi Arabia is set to host a series of significant sports events in the coming years, most notably the 2034 FIFA World Cup. Other major sporting events to be held in Saudi Arabia include the Winter Olympics, the Asian Games, the AFC Asian Cup, the Asian Winter Games, the Asian Challenge Cup, Formula 1, and other international events.

In addition to traditional sports, the National Gaming and E-sports Strategy aims to establish Saudi Arabia as a global hub for gaming and esports, targeting up to 10 million visitors by 2030.

Business travel

Historically, business trips contribute to 9% of tourist visits to Saudi Arabia. In 2018, four million business travel visits were recorded, and the current goal is to increase the number of business trips to 10-11 million by 2030.

Hotel infrastructure

The hotel market in Saudi Arabia is one of the strongest globally, expected to reach $62.57 billion by 2030. The Kingdom is now the leading country in the Middle East and North Africa for the construction of new hotels, even surpassing the United Arab Emirates. The Kingdom plans to expand the tourism sector by adding 315,000 hotel rooms by 2030 at a cost of $37.8 billion, bringing the total to around 450,000 rooms.

In line with its policy of 'greater openness', Saudi authorities have allowed foreign tourists to stay in its hotels without needing to prove the family relationship, including marriage, through documentation. Previously, Saudis and foreigners wishing to stay in a hotel in the Kingdom had to prove their family relationship should a man and woman wish to share a hotel room. Although restrictions have eased for foreigners, Saudi nationals are still required to prove their relationship status.

Major projects

Major projects play an active role in developing infrastructure, diversifying the economy, and advancing tourism. For example, NEOM, a smart and sustainable initiative on the northwest coast of Saudi Arabia, is expected to accommodate up to 2 million people by 2030. These projects are diverse in their locations and specialties, including:

– Trojena: A mountain tourist destination within the NEOM project, featuring a ski village, luxury resorts, retail stores, and various restaurants.

– The Red Sea Project: A luxury tourist destination on the Red Sea coast, including luxury hotels and residences.

– Amaala Project: A luxury tourist destination on the northwest coast, featuring hotels and wellness resorts.

– Sindalah Project: An island resort on the Red Sea, including hotels, a yacht marina, and recreational facilities.

– Qiddiya Project: Near Riyadh, it aims to be the entertainment capital of Saudi Arabia, with theme parks, water parks, and sports facilities.

In a report by Knight Frank, these projects represent nearly 73% of hotel supplies in the Kingdom.

Despite its recent entry into this sector, Saudi Arabia is trying to establish its presence on the global tourism stage by combining its abundant natural and historical heritage, with strategic investments in infrastructure and the development of tourist destinations.

The Flourishing of Tourism and Its Impact on Saudi Society

Under the Saudization policy to localize jobs, the tourism boom has contributed to creating more job opportunities for Saudis.

Reports indicate that the percentage of the Saudi workforce is higher than the non-Saudi workforce in the 15-24 age group. In the 25-54 age group, the numbers of foreign and local workers are close. These figures reflect the targeting of the youth in Saudization efforts, which will have positive repercussions on Saudi society as a whole.

Despite its recent entry into this sector, Saudi Arabia is trying to establish its presence on the global tourism stage by combining its abundant natural and historical heritage, with strategic investments in infrastructure and the development of tourist destinations.

The development of tourism in Saudi Arabia will inevitably reflect positively on all segments of Saudi society, both in terms of employing its youth at high rates and increasing women's employment in all fields. Most importantly, this will reflect on Saudi Arabia's conservative traditions, transforming the Kingdom into a more open place, capable of competing with development in the region and the world, while reducing future dependence on oil resources.