Lo­cal tourism: A vi­able long-term in­vest­ment strat­egy

Arab News - - News Saudi Arabia - BASIL M.K. AL-GHA­LAYINI

As most of us know by now, tourism is one of the main pil­lars of the Saudi Vi­sion 2030 eco­nomic re­form plan aimed at wean­ing the coun­try off its de­pen­dence on oil rev­enue. Last year, the King­dom opened up to in­ter­na­tional tourists, launch­ing a new visa sys­tem while ap­peal­ing to for­eign com­pa­nies to in­vest in the sec­tor, a move which was predicted to con­trib­ute more than 10 per­cent to the gross do­mes­tic prod­uct by 2030.

Prior to that, a num­ber of new cul­tural des­ti­na­tions, such as AlUla and Diriyah, were launched by the Pub­lic In­vest­ment Fund (PIF) and fu­ture en­ter­tain­ment des­ti­na­tions in­clude the Six Flags amuse­ment park in Qid­diya, an area just out­side Riyadh, ul­tra-lux­ury Red Sea water­front re­sorts, and the iconic NEOM city which will at­tract tourists and ar­ti­fi­cial in­tel­li­gence en­trepreneur­s. De­spite Saudi Ara­bia’s eco­nomic con­trac­tion this year as a re­sult of the coro­n­avirus dis­ease (COVID-19) pan­demic and as­so­ci­ated drop in oil rev­enues, there is a grow­ing con­fi­dence in the pri­vate sec­tor over the long-term out­look for the coun­try’s tourism sec­tor.

This op­ti­mism is driven by the lat­est de­vel­op­ments in the tourism sec­tor around the world which has been faced with un­prece­dented chal­lenges due to travel re­stric­tions im­posed by gov­ern­ments to stop the spread of COVID-19.

Last week, the Saudi gov­ern­ment ap­proved a Tourism De­vel­op­ment Fund with an ini­tial cap­i­tal of SR15 bil­lion ($4 bil­lion). It will launch a range of equity and debt in­vest­ment ve­hi­cles where pro­ceeds will be de­ployed to sup­port mixed-use des­ti­na­tions, ad­dress gaps in the tourism value chain, and en­able tech­no­log­i­cally en­hanced tourism.

The Min­istry of Tourism is han­dling strate­gic and reg­u­la­tory con­trol of the in­dus­try in Saudi Ara­bia, and the Saudi Tourism Au­thor­ity is re­spon­si­ble for desti­na­tion pro­mo­tion and tourist ex­pe­ri­ence.

Col­lec­tively, these en­ti­ties will col­lab­o­rate to evolve and en­hance

Saudi Ara­bia’s tourism eco-sys­tem for decades to come.

Vi­sion 2030 will cater very much for fu­ture gen­er­a­tions of Saudis, and the tourism de­vel­op­ments spring­ing up all over the coun­try will hope­fully en­cour­age them to spend sum­mer breaks and other hol­i­days lo­cally.

My teenage chil­dren said they would def­i­nitely pre­fer to hol­i­day in the King­dom if its at­trac­tions matched those of other for­eign des­ti­na­tions.

A year ago, I wrote an ar­ti­cle about lo­cal tourism, high­light­ing the im­por­tance of the sec­tor as a de­fen­sive in­vest­ment strat­egy. De­spite the cur­rent pan­demic, I be­lieve that this in­vest­ment strat­egy still ap­plies.

Not only will re­li­gious tourism to Makkah and Mad­i­nah flour­ish by the en­hance­ment of the transporta­tion and hos­pi­tal­ity in­fra­struc­ture in the holy cities, but new de­vel­op­ments and des­ti­na­tions sup­ported by the fund across the coun­try will help to sat­isfy tourism ob­jec­tives cov­er­ing ar­eas in­clud­ing en­ter­tain­ment, well­ness, cul­ture, and na­ture.

In view of its im­por­tance to Vi­sion 2030 and the pro­mo­tion of for­eign di­rect in­vest­ment into the coun­try, there will be a panel on tourism dur­ing the forth­com­ing BMG Eco­nomic Fo­rum on July 15, fol­lowed by a clas­si­cal mu­sic con­cert con­ducted by mu­si­cians from G20 coun­tries play­ing Saudi na­tional tunes in clas­si­cal notes for­mat at one of the iconic mu­sic halls in Vi­enna.

The longer-term plan is for the G20 or­ches­tra to be in­vited to Saudi Ara­bia to play in front of lo­cal tourists.

Basil M.K. Al-Gha­layini is the chair­man and CEO of BMG Fi­nan­cial Group.

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