Dubai: 100 million. Done.
Next up – 150 million. By 2030.
That’s what Saudi Arabia is setting as its ambition for tourist arrivals by the end of this decade. It’s unlikely anyone will be suggesting the Kingdom’s ambitions are too strikingly bold.
Because the earlier target was to reach 100 million by 2030 – and that’s the number Saudi Arabia did in 2023 itself.
The bottom-line? Saudi Arabia, already going through an unprecedented project buildup in the hospitality sector, will keep requiring more hotels, resorts, and all sorts of tourism-focused destinations to support the sector and keep churning out those millions of new and repeat tourist arrivals.
Dubai’s Jumeirah Group, the name behind multiple signature hotels, recently opened its first in the Kingdom. The 1,121-room Jumeirah Jabal Omar Makkah started operations as part of the second phase of the city’s flagship Jabal Omar project, designed by Fosters + Partners architects.
And there are more hotels – catering to every sort of visitor experience – that will be opening in the months and years ahead. “The Saudi hotel development scene will not be seeing any project slowdown in the near future,” said a hospitality industry consultant. “Any such project that gets into delays will be missing out on opportunities.
“This Saudi hospitality boom is ‘once-in-a-generation’ kind.”
One that no one will want to miss out on.
Funding falls into place
Many of Saudi Arabia’s ‘giga’ destination creation projects – and the ones that will help set the pace for the entire tourism and hospitality sectors – are clearing some of their initial milestones. A case in point is Red Sea Global.
The developer has just completed a SR2 billion ($533 million) financing agreement with Riyad Bank, to support its joint venture with the Kingdom Holding Company. This will see the building of an upscale Four Seasons resort at The Red Sea destination.
"The Kingdom’s tourism potential is truly limitless and with our first two hotels now open, we are at the vanguard of putting Saudi Arabia on the global tourism map,” said John Pagano, Group CEO at Red Sea Global. “Riyad Bank has been with us since our first debt financing deal in 2021 and we’re honored to have them partner with us once again.”
This isn’t just another financing for another resort in a market that’s already seeing a fair bit of both. What this does is set up more public-private partnerships and the funds to make these happen.
“Until now, the Saudi real estate development scene had been driven by equity and debt brought in by individual players,” said a real estate consultant. “The market can expect to see more JVs and targeting debt funding taking place to finance the dream projects into reality.
“In this regard, the Red Sea Global tap for SR2 billion is a benchmark of sorts.”
Doing well on FDI
At this week’s Saudi Capital Market Forum, Khalid Al-Falih, Minister of Investment, said the Saudi GDP has increased from SR2.6 trillion in nominal terms to over SR4 trillion - and its ‘standing among G20 countries has leapfrogged to number 16’.
Going forward, he said, underpinning the GDP growth gains will be investment. Saudi Arabia’s gross capital formation has ‘gone from less than 22 per cent to close to 28 per cent’ by Q3-2023. The target of the National Investment Strategy is to hit 30 per cent mark.
Chalk some of these upcoming funds down for Saudi hospitality, entertainment and leisure projects.
In December 2023, headline inflation contracted 1.5%.
Total Saudi employment jumped 8.4% to over 15.8 million in Q3-2023.
Credit: CBRE
Another year or two to hit full stride?
“Even with everything that Saudi Arabia has done in the tourism sector, there is still a feeling that full-scale momentum will start being felt in another year or two,” said the hospitality consultant. “Because that’s when many of the new-age projects, such as the ones in NEOM, will get into full build phase."
In all these plans, no one is losing sight of that headline-defining number of 150 million tourists heading into Saudi Arabia in 2030. Or can the Kingdom, its airlines, hotels and destinations do that earlier?
