tourism expenditure. Religious tourism is also considered one of the cornerstones of its buoyant travel and tourism industry. Given these strong fundamentals, SCTA
forecasts that the number of people visiting Saudi Arabia solely for business and religious tourism will continue to grow to around 15.8 million by 2014, rising significantly from the 13 million recorded in 2010. SCTA likewise predicts that travel and
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ONE OF STTIM’S MAJOR OBJECTIVES IS TO BRING REGIONAL AND INTERNATIONAL INVESTORS TO SAUDI ARABIA
The Saudi government alone has
committed to invest over SAR300 billion (US$80 billion) by 2020 in building infrastruc- tures that support the travel and tourism sector, while at the same time developing attractions in various destinations across the kingdom. Such initiatives have given strength to the National Tourism Development Strategy, a 20-year programme launched in 2005 that aims to promote tourism develop- ment projects and encourage new invest- ments in the country.
ATTRACTING INVESTORS One of STTIM’s major objectives is to bring regional and international investors to Saudi Arabia, an effort that is being supported by the country’s robust economy, industry analysts say. According to the latest data from global
consultancy firm Ernst & Young (E&Y), Saudi Arabia appeals to investors due to its upbeat hospitality performance. This is supported by the fact that the hotel
occupancy rate in Jeddah has been above 80 percent in 2012 compared with 74 percent in 2011. Makkah also saw a favourable occupancy level at 75 percent, followed by Madinah at 68 percent last year, making Saudi Arabia one of the best Middle East locations for hotel invest- ment, according to the E&Y report. In its Real Estate Investor Sentiment Survey published in November 2012, property management firm Jones Lang LaSalle (JLL) notes that Saudi
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Arabia ranks second in investors’ choice of loca- tion. Riyadh alone has attracted more than 70 new hotels, set to open in the next two years. “All of Saudi’s major markets (Riyadh,
Jeddah, Eastern Province, Makkah and Madinah) have scored well in our survey as the kingdom benefits from a large local popula- tion, high energy prices and a stable political structure, which has insulated the market from social and political unrest,” JLL mentions.
STRONG DYNAMICS Home to a population of more than 26.5 million, Saudi Arabia enjoys an upbeat domestic tourism sector, while its position as a global economic powerhouse has spurred growth in the business tourism sector, which currently represents 17 percent of its total
tourism’s direct contribution to the coun- try’s GDP will exceed SAR56 billion (US$15 billion) in 2013. The huge influx of both Saudi and international visitors, however, has led to a growing demand in accommoda- tion and hotel services in the kingdom. As a result, the past 10 years has wit-
nessed a dramatic 172 percent increase in hotel numbers and around 381,000 new hotel rooms are expected to be delivered to the market by 2015, posting a 63 percent hike in available capacity. The city of Makkah alone is set to more
than double its current capacity of 90,000 rooms in less than five years, while Riyadh’s hotel sector is set to grow by 79 percent. Jeddah’s hotel room supplies will jump by almost 17 percent in 2014 to 13,200. Hotel development in the kingdom
continues to remain strong. The total value of hotel construction contracts awarded in Saudi Arabia reached approximately SAR247 billion (US$66 billion) in 2011, a six percent increase on the previous year. STTIM’s efforts over the past six years are
gradually paying off as hospitality projects planned in the kingdom reach more than SAR1.1 trillion (US$300 billion) and industry figures show Saudi Arabia will acquire around 66 new hotels in the next five years.
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