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Abu Dhabi, UAESaturday 23 February 2019

Saudi hotel industry to boom on religious and business travel

Kingdom has 48,000 rooms in pipeline, more than double current stock, says Savills

Shores of the Red Sea in Gizan, Saudi Arabia, where the kingdom plans to boost tourism as part of Vision 2030. (Courtesy: flydubai)
Shores of the Red Sea in Gizan, Saudi Arabia, where the kingdom plans to boost tourism as part of Vision 2030. (Courtesy: flydubai)

Saudi Arabia’s hotel sector will grow in 2019, fuelled by increasing demand from religious, business and leisure visitors and the ongoing diversification of the kingdom’s economy through Vision 2030, real estate consultancy Savills said.

“The diversification of Saudi Arabia’s economy has provided a boost for employment and its GDP outlook,” said David O’Hara, Savills’ head of Saudi Arabia, in a report on Monday.

“Major hotel groups are driving construction trends across the country as they aim to meet the demands of an increasing number of domestic tourists and international visitors. We think this trend is likely to continue for many years, as both private and public capital is invested into tourist infrastructure.”

Savills’ hotel sector report for Saudi Arabia notes a 13 per cent annual increase in the number of rooms in 2017 and an extra 48,000 under construction. This would increase current stock levels by 51.4 per cent, it said, citing figures from hotel data company STR.

Over the past three years, several international hospitality brands have increased their investments in the kingdom by opening new hotels, including Marriott International, Rocco Forte Hotels, Hilton and Swiss-Belhotel International. There are also plans for Accor and InterContinental.

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Saudi Arabia’s Vision 2030 economic diversification plan aims to grow the contribution of tourism to the kingdom’s GDP under the National Transformation Plan. Officials are working to expand the industry by liberalising visa regulations and opening up new areas of the kingdom, including the Red Sea coastline, to international and domestic visitors.

The kingdom also aims to grow numbers of Hajj and Umrah tourists – currently the biggest contributor to Saudi visitor numbers – to 30 million by 2030, from around 19 million today.

Recent tourism growth was driven by three key groups – leisure, pilgrims and corporate visitors, Savills said. International arrivals are due to increase by around 4 per cent per year to reach 22.1 milllion by 2025, according to the World Travel and Tourism Council.

Corporate travel demand is also expected to expand as the country grows alternative industries away from its traditional oil-based economy, Savills’ trends report said.

“Improving the transport network for travellers is vital for the sustainable growth of tourism,” Mr O’Hara said. “As such, we expect heavy investment into connectivity infrastructure.”

Updated: January 21, 2019 06:39 PM

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