Saudi tourism numbers cross 100 million
22 February 2024
Saudi Arabia has confirmed that it met its target for the tourism sector by welcoming 100 million tourists in 2023.
The landmark announcement was made by Tourism Minister Ahmed Bin Aqeel Al Khateeb at the Private Sector Forum held by the Public Investment Fund (PIF) in Riyadh in early February.
The kingdom has outperformed expectations. When tourism e-visas were first launched in the country in September 2019, the aim of Riyadh’s National Tourism Strategy was for the kingdom to receive 100 million visits a year by 2030, compared to about 41 million at the time.
Al Khateeb also revealed that the tourist numbers comprise 77 million domestic and 27 million international visitors, generating revenues of SR100bn ($27bn) for the kingdom.
Saudi Arabia wants more growth, with the minister outlining future tourism plans that include increasing tourist numbers to 150 million by the year 2030, with a split of 80 million domestic and 70 million international tourists.
The minister also disclosed Saudi Arabia’s investment in human capital within the tourism sector. Over 100,000 young people received training in 2023, with 15,000 of them attending premier institutes globally to prepare for careers in tourism.
This initiative is part of a broader commitment to enhancing the sector’s workforce capabilities and is supported by the Human Resources Development Fund’s efforts to improve salary structures.
Al Khateeb also emphasised the importance of fostering a conducive environment for investment in tourism.
He pointed to the establishment of the Tourism Development Fund, which has already financed more than 50 projects with a total investment of SR35bn. Over the past year, it has signed several deals and agreements with hotel investors and operators such as Hyatt, Radisson Hotel Group and Minor Hotels for the development of new properties in the kingdom.
Al Khateeb pointed to the establishment of the Tourism Development Fund, which has already financed more than 50 projects with a total investment of SR35bn
Hotel pipeline
Saudi Arabia’s tourism strategy is supported by a robust pipeline of hotel developments. While some of these are being developed by pure private sector developers, the majority are being built by the PIF subsidiaries that are leading the development of major projects across the kingdom, including the five official gigaprojects.
Over the past two months, there has been a raft of hotel projects launched in the kingdom, most notably for the Gulf of Aqaba development at Neom. They include Zardun, which will be a 4 square- kilometre tourism destination featuring three luxury boutique hotels comprising 100 rooms and suites.
In November, Neom also launched Siranna, a 65-key hotel in the Gulf of Aqaba.
Other hotel projects are at the tendering stage. For example, Saudi Arabia’s Destinations Development Company, a wholly-owned subsidiary of the PIF, has issued a tender for the main contract to build the Monolith resort in the Al Ula region, and the Mohammed Bin Salman Foundation (Misk Foundation) has invited companies to bid for a contract to construct an Indigo-branded hotel and serviced apartments at Prince Mohammed Bin Salman Nonprofit City in Riyadh.
According to regional projects tracker MEED Projects, there are $67bn-worth of hotel schemes in the kingdom at various stages of development. There are projects estimated to be worth $11bn in the study phase and $27bn-worth of projects under construction.
For construction contract awards, the hotel sector’s performance has been mixed. The past five years have been pivotal, with a total of $8.6bn in contracts awarded, the bulk of which came in the past two years.
After a lull between 2018 and 2021, there was a spike in 2022, with $3.8bn-worth of contract awards as development accelerated on key projects in the kingdom, such as The Red Sea Project, which includes a wide range of hotel properties.
In 2023, there were $2bn-worth of hotel construction contract awards, as the kingdom maintained a high level of investment in the sector, albeit at a lower level than in 2022. For 2024, by early February there had been $168m-worth of hotel construction contract awards.
Welcoming guests
The first hotels at Saudi Arabia’s gigaprojects, which aim to transform the kingdom’s economy by developing sectors such as tourism, have opened for business.
In October last year, Red Sea Global, which is developing The Red Sea Project and Amaala, welcomed guests to the Six Senses Southern Dunes, the first hotel to open at the destination.
Other gigaprojects with significant hotel components include Neom, the cultural and historical destination of Diriyah, and Qiddiya entertainment city.
Hotels also form a critical part of the development of Al Ula; the holy cities of Mecca and Medina, which receive the majority of the kingdom’s religious tourists; and other destinations including Jeddah and regions such as Asir.
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