- Global tourism GDP declined 49 percent in 2020 due to unprecedented lockdowns and travel restrictions. Saudi Arabia’s tourism economy declined 39 percent by comparison and accounted for 7 percent of national GDP.
- Saudi Arabia has the largest travel and tourism sector in the Middle East, valued at SAR182 billion ($49 billion) in 2020. The tourism sector accounted for 633,000 direct jobs and 792,000 indirect jobs in the Kingdom during 2020, according to WTTC estimates.
- The hospitality sector was particularly hard-hit in Makkah where the occupancy rate fell from 61 percent in 2019 to 25 percent in 2020. Revenue per available room (RevPAR) in Makkah declined 77 percent, lower than all other major Saudi cities.
- The official 2021 Saudi budget plans a 26 percent reduction of capital expenditures from SAR137 billion ($37 billion) in 2020 to SAR100 billion ($27 billion) in 2021, which will momentarily slow the current pace of tourism projects along with other non-oil sectors targeted by Vision 2030.
- Major business reforms affecting foreign ownership, procurement, and competition have been implemented since the launch of Vision 2030 in 2016 to boost private investor confidence in the business potential of sectors where the public sector has historically dominated.
- Consumer spending and travel has picked up since the Kingdom lifted nationwide lockdown measures in June 2020. Spending at hotels totaled SAR2 billion ($531 million) in Q1, around 3 percent below pre-pandemic levels while spending on recreation & culture stood 22 percent higher than pre-pandemic levels, accounting for SAR3.7 billion ($973 million). Other related segments, including transportation and restaurants, have fully recovered and currently exceed pre-pandemic levels.
- The Kingdom’s newly launched SAR15 billion ($4 billion) Tourism Development Fund (TDF) is also expected to play a leading role by providing equity and debt investment vehicles in collaboration with commercial and investment banks for the tourism sector.
- The Tourism Partners program represents a new public-private approach to develop the sector and is expected to enable the development of 113 tourism projects in Saudi Arabia this year.
- The PIF has also expanded its tourism portfolio with the launch of Cruise Saudi, an entity that will develop ports and terminals in several Saudi cities along with tourist destinations.
- According to MEED Projects, SAR22.9 billion ($6.1 billion) in leisure or hospitality projects are currently under execution. Saudi megaprojects including the Red Sea Project, NEOM, Amaala, and Diriyah Gate have tendered sizeable hospitality, site readiness, and project management contracts that have involved a variety of U.S. companies including Bechtel, Parsons, and Hill International.
- Domestic tourism was the primary driver of Saudi Arabia’s tourism GDP in 2020 due to international travel limitations. Domestic spending in travel and tourism totaled SAR44 billion ($12 billion) compared to SAR23 billion ($6 billion) in international spending.
- PIF-owned Soudah Development Company (SDC) announced SAR11 billion ($3 billion) in projects that offer an array of investment opportunities to local and international investors. The projects involve tourism infrastructure in Soudah and Rijal Alma’a Governorate in the Asir region.
- According to the government’s Qiwa labor services platform, the fastest growing segment is ‘micro and small enterprises’ in the tourism sector, which grew from 395 establishments to 457 establishments between January and April of this year. The Kafalah SME lending program also announced that it planned to target the tourism and entertainment sectors specifically in 2021, in addition to the communications and information technology sectors.
- While Saudi Arabia has lifted some international travel limits and most domestic business restrictions, these policies are subject to change based on the dynamic and unpredictable current public health crisis. In recent weeks, flights to and from the U.A.E, Ethiopia, and Vietnam have been suspended due to the spread of the Delta variant strain of COVID-19. Other GCC countries such as Oman have reinstituted some domestic lockdowns due to rising virus cases in the region. Renewed lockdown and travel measures in Saudi Arabia remain a distinct possibility.
