Tourism: The New Oil

by shariff mohammed | Oct 01, 2017

Kingdom set to raise Tourism profile

Unveils new heritage tourism to attract global tourists

Underlining the potential for tourism development in Saudi Arabia, the economy which had not slowed, despite the global downturn: and the  government budget in 2009 which was the biggest ever in order to keep projects on-stream with an unsurpassed expansion of the infrastructure. The tourism sector set to increase the pace of progress, as Kingdom's economy is based on factors that make it more resilient to fluctuations. By Mohammed Shariff

Tourism master plan for Saudi Arabia set to raise its profile and stimulate private sector investment, and this is considered to be another engine of economic prosperity. President and Board Chairman of the Saudi Commission for Tourism and Antiquities, HRH Prince Sultan bin Salman bin Abdulaziz Al-Saud stressed that development in the Kingdom was responding to demand from the domestic market. The Prince Sultan outlines sector opportunities ranging from airport development through to resorts, heritage hotels and agro projects.

"Development in the Kingdom was responding to demand from the domestic market and that the emphasis in the next two years would be to fulfill this need rather than cultivate overseas visitor markets: "More than $10bn is spent by Saudi Arabians on travelling overseas. But they are now eager to spend a good part of their holidays at home," said, Prince Sultan.

Tourism development has become a part of Kingdom's overall economic diversification strategy. It has become responsibility of SCTA to safeguard and showcase the cultural heritage of the Kingdom as one of the country's defining dimensions. "We are developing a deep sense of responsibility to rediscover and protect the national antiquities, which is a part of world's heritage s well as an essential part of Saudi's national identity," Prince Sultan said.   

According to Deputy Chairman of SCTA Mr. Salah A-Bakhit, Kingdom's tourism industry is expected to make a revenue of   SR66 Billion this year. This is 4.76 percent more than the revenue earned in 2009. The authorities expects country's tourism industry to grow rapidly, which by the year 2015 to reach SR118 Billion and by 2020 it would jump further to SR232 Billion.

The Kingdom of Saudi Arabia is a SR74 billion ($19.7billion) tourism industry according to 2008 statistics, as (50.7percent) of the total internal expenditures are made by domestic tourists and (49.3 percent) by international tourists. The latest statistics show that total tourism expenditure declined to SR39.83 billion ($10.62 billion) during January to August 2009 compared to SR52 billion ($13.87billion) in the same period of 2008, showing a decrease of (-23.5percent). This can be attributed to currency fluctuations, A(HINI) flu virus and the global financial crisis.

If the current trend continues, the size of the Saudi tourism industry is likely to shrink to SR60 billion ($16 billion) by the end of 2010. This is a reasonable result in light of the severe global recession and a very challenging time for tourism businesses. It also demonstrates the resilience of the Saudi tourism industry. To diversify the tourism product, the SCTA has other initiatives included the launch of eco-lodges and farm hotels, as well as heritage accommodation: It has already started licensing several projects in these areas, and are talking to some of the major hotel chains about this side of development.

Realizing the potential of this industry, SCTA plans to establish a holding company for tourism development in order to carry out tourism projects in various parts of the country in association with private and public sectors. The SCTA is also intend to provide public land on long lease to attract more foreign investment. It has already decided to lease, The Old Okaz Souq in Taif to private investment in order to develop the area for cultural tourism.

The investment in the Kingdom's tourism sector would grow as a result of the country's increasing tourism prospects, its economic strength and growing population. The government also expecting this sector would strengthen the economy, diversify its revenue, create more jobs for its citizens and provide investment opportunities for small and medium enterprises.

Encouraging Factors

The Kingdom has variety of investment opportunity concerned to the diversity of its geography. The Kingdom is home to thirteen provinces, each having its own investment rules accommodating its economic recourses, developmental plans, and needs. The extensive area of the Kingdom and the diversity of its opportunities is also another reason for investment, since this gives the investor a chance to select the province that suits the commercial plan, products, and services.

The Kingdom is currently witnessing the large scale expansion and construction of shopping malls  and tourist spots that aims to meet the needs of different quarters from north to south. The increase in liquidity plays a major role in absorbing capitol through local investments, for a number of reasons.

The population of the Kingdom is also another emerging factors, which is known for its high growth rate in comparison to other growth rates of the Arab world. It is also known for its capability to absorb both Saudis and non-Saudis, increase in education, a decrease in unemployment, which prepares a suitable job market for good investment projects.

 

Right from the beginning, the SCTA adopted the partnership principle with its public and private partners. That is obvious through presenting the tourism destinations and licensing their different tourism activities. The SCTA took into account the approved systems of the related bodies such as the company system, the foreign investment system in the KSA, the income tax system, the pasture and forest system.

Focus Easter Province

The Eastern Province covers about 36 percent of the total area of the Kingdom. It extends the whole length of the Kingdom from Iraq and Kuwait in the north to Yemen, Oman and Abu Dhabi in the south and southeast. The Gulf coastline extends some 600 km from Kuwait to Qatar and then another 70 km from Qatar to Abu Dhabi. A causeway links the coastline to offshore Bahrain. Inland along the western border of the Province are the Kingdom’s Provinces of the Northern Frontier, Riyadh in the centre and Najran in the south.

According to the National Tourism Plan the tourism expenditure in Eastern Province in 1441H (2000) was SR 4.56 billion, i.e. about 13 percent of the total Kingdom tourism expenditure of SR 35 billion. This has increased to SR11.5 Billion. In terms of the provincial economy this is likely to be relatively low as the province’s main economy, namely oil, gas and other industries, is by far the largest contributor to the overall Kingdom's economy.

Engr. Abdullatif M. Al-Benayyan, Executive Manager, Eastern Province (PTO) of SCTA said, "We are streamlining the development process, build capacity at both Provincial and local community level and provide a vehicle for stakeholders to work together in an integrated and fully supported program of action in order to revitalize the existing tourism product and expand Eastern Province tourism into a solid and sustainable industry."

 

Chairman of Tourism Committee, Eastern Province Chamber of Commerce & Industry, Mr. Abdullah AL-Qahtani said, " The Chamber is in consult with Bahrain based consultancy to streamline and set the tourism bar of eastern province high. The discussion are in early stage, because of which we could not do much in this season and we were not able attract more FDI into the sector. We expect the FDI rate to increase by next year, as the sector has shown much more potential in the last two years."

"The competition between the different provinces of the Kingdom is at peak, and in the coming years eastern province also will explore more and more tourism spots and its gifted islands and huge shopping malls will play a vital role in the coming years," he added.

 Upcoming projects such as Dammam regional Museum at Sea Port, Development of Jarout Island at Khatif Governorate, Jannah island at North of Jubail and Development of Traditional Arab handicrafts outlets at Al-Rashid Mall would add colors to the existing tourism infrastructure.

Marketing Specialist of SCTA Eastern Province PTO, Eng Nader N Al-Sayaseb said, "The existing infrastructure such as King Fahad Causeway, Dammam Chorniche, Khobar Chorniche, Half Moon Beach has already attracted large number of Domestic tourists. King Fahad Park has already become primary weekend destination for eastern province people. The further exploration of new island is under way and we are expecting good number of investment into this sector."

The Azizia Beach, Azizia Amusement park, Sunset Beach, Al-Siman caves, Coral island and Al-Siwidi Zoo have also attracted considerable number of tourists in the last two years. The ongoing mega project, Al-Uqair Development Project, which is in progress and this is approved as a high priority tourism development destination of on the national level.

The country's hospitality sector estimates visitor numbers will nearly double from 47 million in 2008 to 88 million by 2020, while the number of hotel rooms would rise from 117,097 to 254,310 apartment units would increase from 101,544 to 185,853 - and employment in the industry is set to grow from 1.1 million to 1.5 million. Eastern province will also contribute over 22 percent in this.

According to the authorities, the numbers will be even more than these prudent estimates.  As tourism touches every service provider - for example, the government has approved bank financing to process loans to fund heritage projects (for small and medium size enterprises), and it will soon announce a national crafts and heritage industry plan to incubate projects in this sector. This is expect to increase the FDI in this sector.

 

Tourism elevates Hotel & Transportation industry's profile

According to SCTA reports, restaurants and coffee shops are expected to earn a revenue of SR36 billion in 2010, up 9 percent compared to last year. The number of jobs in the tourism sector rose from 333,125 in 2000 to 457,658 in 2009, registering an annual growth rate of 7.4 percent. The number of Saudis working in the field rose by 60 percent from 66,704 to 117,384 during the same period.

Direct Jobs created in the Tourism Sector

Source: www.mas.gov.sa

According to the SCTA, it  is working with the Ministry of Transport through a technical work team to develop the procedures and provisions for issuing tourism transportation licenses (for busses).  This is to provide an equipped transportation mean for tourism activities. This will bring further investments in transportation sector.

The volume of tourist trip arrivals by air was the highest than arrivals by land and by sea. Most arrivals by air came from Middle East and South Asia and Europe. Tourist trips arrivals by land was less than the tourist trips by air, most of the arrivals by land came from the Middle East, but the trips by sea was the least in terms of number, most of which came from the Middle East.

 Authorities predicted that there would be 45.3 Million tourists in the year 2020, and tourist expenditure of 80 Billion Riyals. This would require huge investment from the private sector, to provide 50,000 hotel rooms and 74,000 housing units. The hotel investment will be one of the biggest growth areas in Saudi Arabia as tourism is accepted on the national agenda.

  There were 2828 establishments, with 4.08 million rooms and 9.49 million beds. The room occupancy rate for the Kingdom stood at (62.5 percent); while the bed occupancy rate was (61.3 percent).Around 5.81 million nights were sold, (43.6 percent) of which were sold to Saudis. Hotel operators in Makkah have slashed room rates and claim business had declined by about a third or more.

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