Spectacular Growth Of Tourism Delivers Boost to Saudi Economy
Picture yourself in your perfect holiday location. It might be a luxury resort, a vibrant city, or an area of stunning natural beauty. Now imagine that you could enjoy that same experience in the Kingdom of Saudi Arabia.
Since launching a new National Tourism Strategy in 2019, the Saudi government has been pouring vast resources into tourism and hospitality. In the process, it hopes to turn Saudi Arabia into a thriving centre of international and domestic tourism. At the heart of the government’s strategy are a number of government-funded giga-projects designed to boost travel to the Kingdom and diversify its economy away from oil.
Examples of these projects include Diriyah, a new city being built on the outskirts of Riyadh, which combines traditional architecture with modern infrastructure. Upon its completion, it is expected to cost a total of $63.2 billion and add $18.6 billion to Saudi Arabia’s GDP. A little further from the capital, Qiddiya is under construction. This new mega-city will create a new, purpose-built capital for entertainment, sports and culture.
Then there is Red Sea Global, which is developing resorts and “regenerative” tourism along Saudi Arabia’s West Coast. Meanwhile, the Soudah Development, a project covering a staggering 627 Square Kilometres, will turn the highest peak in the country into a destination for luxury travel, cultural experiences and adventure holidays.
These are just some of the impressive giga-projects currently underway in Saudi Arabia. Together, they promise to turn the Kingdom into a flourishing destination for a variety of modern tourist pursuits.
Crucially, the potential for future expansion is vast. The Saudi government’s investments in tourism and hospitality are already driving spectacular growth, even before its colossal giga-projects have been realised. The Kingdom was the fastest growing tourism destination in the G20 in 2023, according to data from UN Tourism. Indeed, the speed of this growth has even caught the Saudis themselves by surprise: last year, the country welcomed over 100 million tourists and in doing so surpassed the goal for the number annual visitors that had originally been set by the Saudi government for 2030.
The UN data also demonstrate that tourism in Saudi Arabia has rebounded strongly from the coronavirus pandemic, buoyed by a strong domestic tourism industry and the continued growth of international tourists visiting the country. In 2023, Saudi Arabia experienced a 156% recovery in international tourist arrivals compared to 2019. Last year, the Kingdom hosted 27.4 million international tourists, who spent a total of $36 billion.
By comparison, 28 million international tourists visited the United Arab Emirates in 2023, spending some $32 billion in the country.
Saudi Arabia’s strong performance in 2023 also appears to be carrying over into the First Quarter of 2024, which witnessed compared to the First Quarter of 2023.
The tourism industry in Saudi Arabia is also becoming more diversified. The country has long been a centre for religious tourism, with the Hajj and Umrah pilgrimages accounting for a large proportion of visitors to the Kingdom. Now, however, increasing numbers of tourists are also travelling to Saudi Arabia for leisure.
According to data from the Saudi Ministry of Tourism, in 2015, the year before the Saudi government announced its Vision 2030 reform programme, just 8.7% of international tourists who visited the Kingdom travelled for leisure, compared to 49% who did so for religious reasons. In 2023, however, nearly 23% of the 27.4 million tourists who visited the country travelled for leisure, whereas 41.8% did so for religious reasons. At the same time, larger numbers of tourists are now using hotels during their visits rather than private accommodation.
The growth of the Saudi tourism and hospitality sectors in recent years has delivered a significant boost to the country’s non-oil economy. Data collected by the Saudi government’s statistical agency, GASTAT, show that wholesale and retail trade, restaurants, and hotel activities together achieved the highest growth of any sector of the Saudi economy, boasting a 5.9% year-on-year growth rate.
These sectors also accounted for a combined 10.4% of GDP during the First Quarter of 2024. During the same period, economic activities related to crude oil and natural gas accounted for 23.4% of GDP.
The Saudi government is not taking these recent developments in tourism and hospitality for granted. Indeed, the Minister for Tourism, Ahmed Al-Khateeb, recently announced the government’s intention to invest almost $1 trillion in tourism over the next decade, and attract between $60-80 billion in private investments for the industry by 2030. In that year, the Saudi government aims to bring 150 million tourists to the country.
The sheer scale of the Saudi government’s ambitions for tourism in the Kingdom promises to provide continued opportunities for Saudis and international investors alike.