Report: Saudi tourism to keep on growing

Saudi Arabia’s tourism industry is unique in that despite the limitations of
strict entrance visa regulations, the industry has strong growth potential. BMI

Saudi Arabia’s tourism industry is unique in that despite the limitations of
strict entrance visa regulations, the industry has strong growth potential. BMI
forecasts tourist arrivals to the Kingdom to remain constant in 2009, at just
over 12mn, and to grow by an average of 6.5% year-on-year (y-o-y) to the end of
our forecast period in 2013. One of the main drivers for the tourism industry is
religious tourism. Saudi Arabia is home to two of Islam’s holiest cities, Mecca
and Medina, and every year millions of Muslims come to Mecca for hajj, the
largest annual pilgrimage in the world. In 2009, we expect concern about the
spread of the H1N1 virus (swine flu) to cause a slight decline in pilgrimage
numbers. Business travel is also a growing area, given the country’s position as
the world’s largest oil exporter, not to mention its other large industries such
as defence.

The hospitality sector looks set to grow in tandem with tourist arrivals. BMI
forecasts that there will be 321,000 hotel rooms in Saudi Arabia by the end of
our forecast period in 2013, up from an estimated 230,000 in 2008. In 2009
alone, a plethora of international chains have opened up their first hotel in
the market, including Rotana, Hyatt Hotels & Resorts, Accor Group and Raffles
Hotels & Resorts; while those already present in the market are expanding. These
include InterContinental Hotels Group (IHG), Al Hokair Group, Starwood Hotels &
Resorts and Rezidor Group.

Saudi authorities have said they want to diversify away from their dependence on
oil, and the tourism industry has been a focal point. Government expenditure has
focused on developing the religious tourism and business travel sectors in
particular, which accounts for the decline in collective government expenditure
(expenditure that cannot be assigned to a particular group of tourists) and the
increase in individual government expenditure, which refers to investment in
services with an identifiable individual customer.

The government is also keen to develop its domestic tourism market in an effort
to capture some of the capital spent by the millions of Saudi citizens that
travel abroad each year. Saudi tourists mainly travel elsewhere the Middle East.
Despite efforts to keep more Saudis at home, we see the number of citizens
travelling abroad increasing from an estimated 6.30mn in 2008 to a forecast
8.53mn in 2013. International tourism expenditure is also forecast to increase,
reaching US$10.74mn by the end of our forecast period.

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Linda Hohnholz

Editor in chief for eTurboNews based in the eTN HQ.

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