Boosting tourism to diversify the economy

TOURISM GROWTH

On the institutional side of the coin, new socio-economic laws accompany the fast development and gradually reshape Saudi society. The introduction of a legal minimum wage in 2013 has increased the general level of income and purchasing power. Shopping is the main entertainment activity of the country so consequently this rise in purchasing power is expected to translate into increased spending on leisure and F&B.

For a number of years now, the country has recorded a steady increase in demand for all hospitality related sectors. This trend represents a wide spectrum of opportunities

With a growth rate of 3.6 percent in 2014, Saudi Arabia continues its long efforts to shift from dependency on oil exports to a diversified economy. In order to achieve this, real estate and infrastructure are on the rise. Mega projects include the creation of brand new economic cities, fast-track development of the Red Sea Coast and large scale public transportation schemes. Toufic Akl, partner handling operations at Hodema breaks down the numbers

for both local and foreign investors.

Saudi Arabia’s tourism sector is expected to boom in the next five years. The current USD 15 billion tourism revenue is forecasted to reach USD 65 billion in 2020 creating over 2.3 million jobs.

Riyadh and Jeddah are prime destinations for business travel while Mecca and Medina attract more than 3 million religious pilgrims every year for the Hajj and Umrah seasons.

The Kingdom however wants to diversify and for that purpose has its eyes set on the Red Sea. Tourism mega projects on the Red Sea Coast imply no less than half a million rooms spread over 1,800 km of coast. This massive project is expected to start launching at the end of 2015.

This spectacular growth however, also comes with challenges for Saudi Arabia. Human resources is an issue in both F&B and hotels sectors, especially with the Nitaqat or Saudization law initiated by the Ministry of Labour, which limits the possibility of issuing work visas to foreigners.