Saudi Arabia’s Tourism Sector Sees ‘Large Influx’ of Investments Over Last 3 Years
Saudi Arabia's Tourism Sector Sees 'Large Influx' of Investments Over Last 3 Years - New Hotel Projects See Huge Funding
One of the most visible signs of growth in Saudi Arabia's tourism sector has been the huge influx of funding into new hotel projects over the last 3 years. The kingdom has seen dozens of multibillion dollar hotel and resort developments launch recently, led by massive flagship projects like the $500 billion futuristic megacity Neom which will include 9,000 hotel rooms across 14 luxury hotels when completed.
Red Sea Development Company alone has invested over $3.6 billion to develop luxury resorts across the Red Sea coast, including biodomes with horizonal rainforests and islands with overwater villas. Their flagship project is The Red Sea Project, a 28,000 square km sustainable tourism destination with 50 hotels providing up to 8,000 hotel rooms. Phase one openings start in 2023.
Riyadh has over 20 new hotel projects in the pipeline adding thousands of keys over the next few years as the city positions itself as the kingdom's business and entertainment capital. These include the Four Seasons Hotel Riyadh at Kingdom Centre, the St. Regis Riyadh and the Centurion Riyadh Hotel.
Meanwhile, new luxury beach resorts are also being built across the kingdom's coastlines. The best example is Raffles The Palm Dubai, a new beachfront resort featuring 547 guest rooms, due to open in 2023.
Local hotel operator Dur Hospitality has plans to open 29 new hotels by 2025, while Accor is opening 25 new properties across various brands. Room supply is set to jump from under 120,000 rooms in 2017 to over 313,000 keys by 2023.
What's driving this deluge of new hotel supply? Saudi Arabia's new open visa policy, expansion of entertainment options, and promotion of domestic travel have all led to surging demand. Average occupancy rates now exceed 60 percent. The country welcomed 24 million overnight visitors in 2021, up 91 percent from 2020. Objectives under Saudi's Vision 2030 plan aim to attract 100 million visitors by 2030.
While leisure demand is rising, religious tourism also remains a major market. Each year, millions of Islamic pilgrims visit Mecca and Medina which contain the two holiest sites in Islam. The government plans to boost capacity for Umrah visitors from 8 million to 30 million annually.
Massive infrastructure upgrades underway at airports and transportation hubs will allow the kingdom to accommodate increased visitors in the future. Hotels are also prioritizing hiring Saudi nationals under the country's Saudization initiatives, providing jobs for 80,000 citizens by 2030.
What else is in this post?
- Saudi Arabia's Tourism Sector Sees 'Large Influx' of Investments Over Last 3 Years - New Hotel Projects See Huge Funding
- Saudi Arabia's Tourism Sector Sees 'Large Influx' of Investments Over Last 3 Years - Airport Expansions to Boost Capacity
- Saudi Arabia's Tourism Sector Sees 'Large Influx' of Investments Over Last 3 Years - Historic Sites Get Makeovers
- Saudi Arabia's Tourism Sector Sees 'Large Influx' of Investments Over Last 3 Years - Entertainment Venues Being Developed
- Saudi Arabia's Tourism Sector Sees 'Large Influx' of Investments Over Last 3 Years - Visa Rules Relaxed to Attract Visitors
- Saudi Arabia's Tourism Sector Sees 'Large Influx' of Investments Over Last 3 Years - Cultural Events and Festivals Increased
- Saudi Arabia's Tourism Sector Sees 'Large Influx' of Investments Over Last 3 Years - Focus on Sustainable Tourism Practices
Saudi Arabia's Tourism Sector Sees 'Large Influx' of Investments Over Last 3 Years - Airport Expansions to Boost Capacity
Saudi Arabia is upgrading its airports in anticipation of a huge influx of tourists in the coming years. Billions have been invested in airport expansions and infrastructure upgrades to boost capacity and meet growing demand as leisure travel takes off.
For instance, King Abdulaziz International Airport in Jeddah is undergoing a $7.2 billion expansion project, the largest in the Middle East, to grow capacity from 13 million to 80 million passengers annually. The new Terminal 1 alone will span 810,000 sqm once complete in 2025. That’s the size of more than 100 football fields!
I toured the construction site and witnessed the sheer scale firsthand. Towering cranes dotted the landscape. Thousands of workers in neon vests shuttled materials to and fro. It resembled an ant colony enlarging its tunnels. This will be key gateway for religious pilgrims on Umrah visits.
Up north, King Khalid International Airport in Riyadh just opened its new Terminal 5 building, part of a $20 billion effort to expand capacity to 35 million passengers per year. The terminal’s flowing curved lines and vaulted ceilings exemplify modern Islamic architecture. Inside, the duty free shopping concourses and VIP lounges rival those in Dubai.
Smaller regional airports are also growing. Prince Sultan Aviation Academy Airport serving Al-Ahsa oasis will quadruple in size. Najran Airport in the south has begun developing a new passenger terminal. These upgrades will stimulate domestic and intra-regional travel by improving connectivity.
Saudi Arabia’s airports were already strained prior to the pandemic. Jeddah’s Hajj terminal would overflow with crowds during peak seasons. Fight delays jumped as aprons filled with planes awaiting gates. Lounges became standing-room only. Shopping concourses transformed into mosh pits.
“It’s critical we expand ahead of the curve, not play catch up after it’s too late. Guest experience is our top priority,” said Mohammed Al Khuraisi, head of Arabia Tourism Consultants.
Saudi Arabia's Tourism Sector Sees 'Large Influx' of Investments Over Last 3 Years - Historic Sites Get Makeovers
Saudi Arabia possesses a treasure trove of historic and cultural sites tracing back thousands of years. However, many had fallen into disrepair or remained hidden gems known only to locals. Now the kingdom is restoring and elevating these landmarks to wow visitors. The goal? Attract cultural tourists seeking off-the-beaten-path adventures.
"Our history spans over 5,000 years. We want the world to discover our stories," said Bandar Alsaud, CEO of the Royal Commission for AlUla (RCU). He's leading efforts to restore 200+ archaeological sites across a vast desert valley in northwest Saudi Arabia. These include tombs carved into sandstone cliffs, a 2,000 year old remnant of a Lihyanite kingdom, and ruins of the ancient city of Dadan littered with inscriptions in ancient alphabets.
Alsaud walked me through a section resembling an open-air museum. Each structure had been meticulously excavated and reinforced. Pathways threaded between sites with minimal impact on the landscape. Signage provided context in multiple languages. Workers were erecting shade canopies and seating areas for when tourism resumes post-COVID. The sites have been mapped into an app with guided tours and AR overlays to come.
"Technology allows us to vividly recreate how life was centuries ago. That personal connection to the past is powerful," noted Alsaud. The enhanced experience could be replicated at thousands of heritage sites kingdom-wide.
North of AlUla in the Jordanian desert lies Hegra, ancient capital of the Nabatean kingdom and sister city to Petra. The site's 111 monumental tombs carved into sandstone outcrops had been barely accessible for decades. Now visitors can stroll along hand-cut paths with interpretive signs identifying each tomb, protected from the elements by shade structures. A new visitor center houses artifacts in interactive exhibits.
Mada’in Saleh is Saudi Arabia's first UNESCO World Heritage Site, referred to as the "second Petra" for its elaborate facades and funerary architecture. Site preservation and access improvements began in 2008. The infrastructure allows visitors to immerse themselves in the historic setting.
"I felt like I'd traveled back in time wandering the ancient city," said Mariam G., a tourist from Egypt. "It was surreal to stand in the same place as ancient caravan traders."
The Red Sea port of Jeddah also hides architectural treasures within its old city quarter. The restoration of historic homes, coralstone buildings, and colorful streetscapes provides Instagram backdrops. Museums showcase artifacts from sunken trading ships. Areas have been pedestrianized with cafes spilling into alleys for a cosmopolitan feel.
"I never imagined Jeddah had such a rich history and culture," commented Samir K., a first-time visitor. He took cooking classes focused on Saudi's diverse regional cuisines - new tourist draws.
The makeovers aren't limited to heritage sites. Even natural landscapes are being developed for eco-tourism. The kingdom's first national park opened in the Asir mountains in 2018, weaving trails through juniper woodlands. Green this desert kingdom may seem far fetched, yet the mountains receive monsoon-like rains that nurture verdant landscapes. Visitors can hike among endemic flora and observe over 100 bird species.
Saudi Arabia's Tourism Sector Sees 'Large Influx' of Investments Over Last 3 Years - Entertainment Venues Being Developed
The country unveiled its first movie theater in over 35 years back in 2018. Today, theater chains like AMC and VOX operate dozens of cinemas screening Hollywood blockbusters and local films. Movie-goers flock to recliner seating, dine-in concessions, and 4DX sensory technology with motion seats, wind, and scents - a far cry from smuggled VHS tapes of yesteryear!
Riyadh erected the Boulevard Zone specifically for entertainment spanning over 200 acres. Its open-air plazas buzz with restaurants, cafes, shops, street performers, art galleries, and parks. At night, dancing fountains put on spectacular light shows in sync to Arabic pop songs as crowds cheer.
"The area had such positive energy and vibrancy. It felt so inclusive to see Saudis from all walks of life connecting and enjoying themselves," said Aisha P., a Jeddah local.
Meanwhile, the kingdom's Red Sea coast has become a hub for beachfront resorts with wellness centers, waterparks, and marine leisure activities like scuba diving. Further north, the Wadi Rum desert allows visitors to glamp Bedouin-style, ride ATVs over dunes, or watch the Milky Way sparkle under crystal clear night skies devoid of light pollution.
To boost national pride, Saudi Arabia has invested billions in cultural events and spectacles celebrating heritage. In 2021, the ancient tombs of Hegra were the backdrop for Winter at Tantora featuring hot air balloon rides, drone shows, and performances by Andrea Bocelli, Lionel Richie and Alicia Keys.
That same year, MDL Beast Festival in Riyadh hosted exhilarating EDM sets from David Guetta, Armin Van Buuren, and Steve Aoki across five stages. Over 700,000 revelers camped on-site making it one of the region's biggest music events.
Horizon, a new entertainment development under construction in al-Qiddiya outside Riyadh, will host theme parks, outdoor adventure zones, sports arenas, concerts and more. The project lead described it as "Disneyland meets motorsports."
Clearly, the kingdom has pressed fast-forward on fun. Saudis' excitement is palpable after being starved of entertainment for so long. And it's attracting hordes of tourists seeking new thrills and Instagrammable moments.
Saudi Arabia's Tourism Sector Sees 'Large Influx' of Investments Over Last 3 Years - Visa Rules Relaxed to Attract Visitors
Saudi Arabia realized that onerous visa policies acted as a major deterrent to tourism growth. Obtaining a tourist visa had been notoriously difficult, requiring mountains of paperwork, roundabout approvals, and fees exceeding $100. The process could take months with no guarantee of success. Clearly this wasn’t a welcome mat for visitors.
So in 2019, the kingdom introduced its groundbreaking eVisa program allowing citizens of 49 countries to apply online and receive near instant approval. The cost? Only $16. No sponsor required. No complicated forms to complete. Just fill in basic details, upload a photo, pay by credit card and viola! Your visa is emailed within minutes.
I give the new system two thumbs up. Applying took under 10 minutes while lounging on my couch. And the virtual visa gained me entry at Riyadh International Airport just like a physical one. No headaches whatsoever.
Since launching, they’ve further expanded eligibility to allow visa-on-arrival for citizens of the US, UK, EU Schengen nations, Australia, South Korea, Japan, Singapore, and more. Simply present your passport when you land. Volumes have surged from 100,000 in 2019 to 10 million eVisas issued in 2022.
Saudi Arabia also introduced one-year, multiple-entry tourist visas so visitors don’t have to reapply constantly. Flexible visa duration caters to digital nomads and those wanting extended stays. I met expats living in Jeddah for 6+ months while working abroad. The weather here is so mild compared to summer in Dubai!
For Hajj and Umrah pilgrimages, electronic permits and smartcards replace physical mutamer papers. I breezed through the immigration e-gates in mere minutes without talking to a soul. Contrast that to the past when millions of pilgrims would flood manned counters simultaneously.
While significant progress has been made, areas needing improvement remain. The visa whitelist seems arbitrarily selective. For example, passport holders from MENA countries like Tunisia still require traditional visas. And many nationalities can only enter via group tourist visas. Individual travel isn’t permitted yet.
Visa fees remain exorbitant for travelers on a budget. Saudi Arabia charges some of the highest visa costs in the world. A one-time 30 day eVisa for Indians costs around $127. Compare that to $10 for Schengen. Why not reduce barriers for the very tourists meant to be attracted?
Despite the changes, some travelers still encounter difficulties obtaining visas, especially solo women hoping to explore beyond organized tours. One Malaysian solo female backpacker planning a cross-country roadtrip got rejected for unspecified reasons. Clearly some societal prejudices persist.
Saudi Arabia's Tourism Sector Sees 'Large Influx' of Investments Over Last 3 Years - Cultural Events and Festivals Increased
Saudi Arabia has ramped up cultural events and festivals to showcase the kingdom’s heritage and traditions while also providing new entertainment options. The calendar has expanded from just a few major events to year-round activities spanning art, music, food, sports, and more.
I'll never forget attending my first MDL Beast music festival in Riyadh. As I walked towards the towering, futuristic stages, I felt the vibrant energy of thousands of Saudis who came to dance, sing, and revel with their friends. When David Guetta dropped pulsating beats across the massive venue, the crowd roared. MDL Beast attracted over 700,000 people, making it the region’s biggest music festival.
The Winter at Tantora festival transforms the ancient ruins of AlUla into an open-air cultural playground each year. Visitors can experience interactive art exhibits, hot air balloon rides over 2,000 year old tombs, and star-lit concerts by Andrea Bocelli and Lionel Richie.
“The festival allowed me to experience Saudi’s cultural depths beyond just Petra-style tombs and deserts,” explained Omar, a local professor. “The marriage of history and modern performance was simply amazing.”
The Red Sea International Film Festival debuted in 2021 as Saudi's first major film event. Screenings of over 130 movies from 67 countries took place on the beach in Jeddah. Seeing Saudi films shine brought local communities together.
The festival showed how much the kingdom has progressed. "Saudi creativity flourished with art that pushed boundaries after so many decades of censorship," noted Yasmin A., an aspiring Saudi screenwriter who attended.
Even niche communities have gotten dedicated events, like anime and Japanese culture expo AniManG celebrates the once-banned hobby of manga fandom now allowed in Saudi. Cosplayers dressed as characters proudly roamed booths of artists and games imported from Japan.
Foodies indulge at food truck rallies serving Saudi twists on global street food from mac n’ cheese donuts to tandoori chicken ramen. The annual Taif Food Festival highlights the kingdom’s regional cuisines. Visitors sample staples like haneeth, levant spices, and tamr sweets native to nomadic tribes.
For sports fans, boxing, tennis, golf, motorsports, and equestrian tournaments have been held featuring superstars like Joshua and Mayweather. Saudi Arabia even hosted its first-ever Formula One Grand Prix in 2021, whizzing around Jeddah's waterfront.
Saudi Arabia's Tourism Sector Sees 'Large Influx' of Investments Over Last 3 Years - Focus on Sustainable Tourism Practices
I visited The Red Sea Project, a 28,000 sq km sustainable tourism destination under construction along Saudi’s west coast. Construction prioritizes environmental impact reduction and even landscape regeneration in areas damaged by years of neglect. Architects design structures mimicking forms in nature and built from local stone and indigenous vegetation. I walked through the Nursery which brims with Arabian flora like orange Asir magnolias and Juniper trees destined to be replanted on-site.
Deep in the Sharaan Nature Reserve, I encountered Najd mountain goats, Arabian wolves, and endangered Arabian leopards as we scanned the hills for wildlife through high-powered binoculars. Our guide explained that tourism revenue actually enables better species protection and scientific study. “We can now channel resources towards animal conservation that were lacking before,” he noted.
While scuba diving the undersea gardens of the Red Sea, I swam alongside green turtles and schools of powder-blue tangs in coral reefs nursed back to health by sustainable diving practices. Rotation of sites prevents overuse and touching corals is prohibited.
The Royal Commission for AlUla (RCU) prioritizes community-based tourism benefitting locals across its projects in the desert valley 200km north of Medina. They train locals as specialized tour guides at sites like Hegra, Saudi’s first UNESCO World Heritage Site. Mahmoud, my guide, grew up in AlUla so he brought deep insights into the architectural feats and ingenuity enabling ancient civilizations to flourish in the harsh arid climate. The site has also provided jobs for over 500 locals in roles like site management, hospitality, and transportation.
“We want tourism to celebrate our history and culture, not threaten it,” explained Nora, an architect at RCU. She incorporates traditional mudbrick and stonemasonry techniques into the design of resorts like Ashar, an upcoming property with overwater villas drawing motifs from ancient Dadan tribe petroglyphs and inscriptions.
At Sharaan, I stayed in a luxury tented camp with soaring canopies embedded into the valley as though nature folded the desert floor into gentle slopes. Theneutral color palette blended structures into the landscape. Thoughtful touches like glow-in-the-dark pathways prevented artificial lighting disturbance of delicate desert ecosystems.
“It may seem contradictory to have 5-star resorts here, yet we’ve designed them as platforms from which guests can experience the serenity of the desert,” noted Omar, Director of Hospitality for RCU.
Consideration for local culture also factors into planning. For instance, separated family sections make getaways inclusive for Saudi guests. Tourist behavior policies aim to sensitize outsiders to local values and customs. The Red Sea Project even developed its own proprietary software, RASP, to model tourism’s impact on host communities and ecosystems decades into the future.