Ask Skift: Why Is Saudi Arabia Making a Big Investment in Its Tourism Industry?

Saudi Arabia has taken steps in recent years to beef up its tourism industry as part of its Vision 2030 plan, including launching a seasonal campaign named Rethink Summer. The kingdom is also currently home to the largest hotel construction activity in the Middle East.

But the country has long struggled to attract international tourists due to issues that include strict curbs on drinking and severe restrictions for women, as well as allegations of human rights abuses against journalists.

So why is Saudi Arabia making this enormous investment in its tourism industry?

Ask Skift, our artificial intelligence chatbot, listed four reasons why the kingdom is planning to invest more than $1 trillion in the sector over the next decade. Here are those responses plus additional information.

Economic Diversification

Ask Skift Said:

Saudi Arabia plans to triple the contribution of its tourism industry to the economy by 2030. This goal includes attracting 100 million tourists by 2030, an achievement comparable to France’s tourism numbers. This move is part of a broader strategy to diversify the Saudi economy away from its heavy reliance on oil revenue.

What else you need to know:

Despite Saudi Arabia’s grand tourism ambitions, luring travelers away from destinations such as Dubai and Egypt is a tall order. The focus may be on convincing Saudis who usually vacation abroad to frequent the Red Sea resorts.

Saudi Arabia’s efforts to increase visitor numbers include a memorandum of understanding with China-based Trip.com Group. The company and the Saudi Tourism Authority will launch joint marketing campaigns in markets such as Australia, China, Japan and the United Kingdom. Saudi tourism officials are heavily targeting Chinese travelers with a goal of attracting 3.9 million visitors from China annually by 2030.

The Saudi government’s tourism strategy includes significantly beefing up the country’s aviation infrastructure. The country has unveiled plans to build the King Salman International Airport, which is expected to be one of the world’s largest airports. The airport aims to accommodate up to 120 million travelers by 2030 and 185 million by 2050.

Saudi authorities also announced in March the launch of Riyadh Air, a national carrier that will serve more than 100 destinations. The Saudi Press Agency, the country’s official news agency, said the new airline is expected to add $20 billion to the country’s non-oil gross domestic product growth.

The Red Sea Project and Amaala developments are elements of Vision 2030 that John Pagano, CEO of Saudi Arabia-based developer Red Sea Global said would be instrumental in opening up the kingdom to global visitors.

Amaala is expected to house 25 hotels and roughly 900 luxury residential villas, apartments, and estate homes upon its completion in 2027. Meanwhile, the Red Sea Project is expected to contain about 50 hotels and more than 8,000 hotel rooms when it’s finished. Asia Editor Peden Doma Bhutia reported the two projects are expected to create 120,000 jobs — 70,000 direct and 50,000 indirect.

Cultural Showcase

Ask Skift Said:

Saudi Arabia intends to create cultural destinations that showcase its rich heritage, UNESCO sites, and natural attractions like the Red Sea coast and mountains. Plans are even underway to build a Saudi version of the Champs-Élysées boulevard as part of the Diriyah Gate giga-project, emphasizing the country’s aspirations to offer diverse experiences to global travelers.

What else you need to know:

Asia Editor Peden Doma Bhutia reported in May 2022 that Saudi Arabia, a once popular religious destination, was emphasizing leisure tourism with a list of events that would have seemed unimaginable in the kingdom in years past. Saudi officials announced in January they were launching the $3.7 billion Events Investment Fund to develop the country’s culture, tourism, entertainment and sports sectors.

Authorities from the Saudi Tourism Authority went on a tour of China in early 2023 to promote the kingdom’s culture to prospective Chinese visitors. Saudi officials have also emphasized promoting the country’s cultural and heritage sites in India, which became the world’s most populous nation earlier this year.

Travel Agents Association of India President Jyoti Maya said Saudi Arabia promoting its cultural sites would boost visitor numbers to the kingdom, adding that countries rich in heritage and culture appeal to Indian travelers.

Private Sector Involvement

Ask Skift Said:

The establishment of the Saudi Tourism Investment Company (Asfar) by the Public Investment Fund (PIF) aims to support the growth of the country’s tourism sector. Asfar will invest in new tourism projects, develop attractive destinations, and invest in the local tourism value chain. The company will also help the private sector by partnering on investments and creating an attractive environment for local suppliers, contractors, and small and medium-sized enterprises August 2023.

What else you need to know:

Deputy Minister of Investment Attraction Mahmoud Abdulhadi said in May the Saudi government is working with the private sector to double tourism investments in the near future. Saudi Arabia’s efforts to boost its tourism industry got a big boost when Egyptian billionaire Samih Sawiris announced plans to invest in a massive tourism project in the second half of this year on the kingdom’s Red Sea in collaboration with the Saudi private sector.

In addition, the Saudi government passed a law earlier this year approving Airbnb-style rentals, a move Bhutia writes was a step to make the country more accessible to international visitors. However, one hospitality expert said it was uncertain how many Saudis would open their doors to foreign visitors.

Sports Tourism

Ask Skift Said:

Saudi Arabia is investing heavily in sports tourism, having acquired significant stakes in various professional sports ventures including soccer, boxing, auto racing, and golf. These investments aim to attract a global audience and boost tourism.

What else you need to know:

Although Saudi authorities were unsuccessful in their attempts to convince Argentinian football icon and current tourism ambassador Lionel Messi to join Riyadh-based club Al Hilal, the government is still using sports as a key part of its strategy to boost the country’s profile and increase tourism. Saudi Arabia has hosted several major sporting events in recent years, including its first-ever Formula One Grand Prix race in Jeddah in 2021 and the heavyweight boxing championship match between Anthony Joshua and Oleksandr Usyk the following year in the same city.

Saudi officials have said one of the goals of Vision 2030 is to establish the country as a regional hub for prominent sporting events. A report from accounting firm Ernst & Young found that the value of the sporting events industry in Saudi Arabia is expected to rise from $2.1 billion to roughly $3.3 billion by 2024.