Awakening the sleeping giant: How Saudi Arabia plans to attract more foreign tourists

The kingdom is seeking high-spending visitors from markets such as China, Europe and India as it ramps up infrastructure

The Unesco World Heritage Site of AlUla in Saudi Arabia is gearing up to become a major global tourist attraction. Photo: Film AlUla
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Saudi Arabia plans to become a travel hot spot, ploughing $800 billion in tourism investments to develop the sector and setting a revised target of attracting 150 million visitors by the end of the decade. But a key part of that effort is luring international travellers to explore the lesser-discovered country.

The kingdom is focusing on high-spending travellers from China, India and Europe, rather than mass volumes, to avoid the pitfalls of overtourism facing mature markets.

It is developing tourism giga-projects with cultural and natural attractions, establishing a new airline in Riyadh, building a new massive airport in the capital and adding up to 250,000 hotel rooms by 2030.

The National spoke to airlines, tourism project developers and hoteliers to trace the progress of Saudi Arabia's ambitious plans.

The 'wings of Vision 2030'

Jeddah-based Saudia airline dubs itself the 'wings of Vision 2030' as it aims to carry more visitors into the kingdom in line with the country's economic diversification plan.

The scope of planned growth in tourism means there is room for Saudia to expand and for the creation of new airline Riyadh Air that is scheduled to debut next year, Arved Von Zur Muehlen, Saudia's chief commercial officer, told The National.

"The potential we see in Saudi Arabia, for Saudis flying out but also guests coming in, definitely justifies growth, and even a second airline, and it brings Riyadh as the capital of the kingdom on the map," he said.

The two airlines are in talks on ways to co-operate within the boundaries of competition rules.

"We don't see it as a decremental competitor, but rather an addition to master the demand that we see in the country," he said.

With a population of more than 30 million people and 29 airports, Saudi Arabia has a strong domestic travel market and is trying to grow the number of inbound foreign travellers into the country.

Saudia's old business model of flying Saudis out of the country and bringing in pilgrims has "changed dramatically", with a bigger focus now on boosting transfer traffic through Jeddah and attracting more leisure, corporate and events travellers.

There will be no "harsh segmentation" in the next few years of limiting Saudia's growth to its Jeddah hub, while Riyadh Air grows in the Saudi capital, he said.

"Some segments fly more via Riyadh and others might fly more via Jeddah, so it will be kind of fluid ... But we will stay in Riyadh for quite some time and together with Riyadh Air we will plan that," he said.

"In three to five years, when we've reached a saturation point, then maybe we will shift more from Riyadh into Jeddah. But in the next three to four years, depending on market development, we will both grow in Riyadh because it's such a big market that it deserves more."

Saudia will also provide feeder traffic to Riyadh Air, opening up "enormous connectivities", he said.

Saudia currently operates 145 Boeing and Airbus aircraft, with plans to expand its fleet by 50 per cent by 2030.

Its network is split into around one-third domestic and regional. and two-thirds international routes, according to Mr Muehlen.

The airline is targeting to carry 50 million passengers by 2030, up from 30 million in 2023, he said.

In 2024, it expects to carry 10 per cent to 15 per cent more passengers than last year, on strong demand and new types of travellers into its Jeddah hub.

"We have built the Jeddah hub so we are now getting segments we have not got before, so now we bring more international travellers in," he said.

He pointed to the popularity of the stopover visa that allows travellers to stay in the kingdom for up to 96 hours, perhaps to perform the Umrah pilgrimage before visiting other cities like Jeddah and Riyadh.

The 'sleeping giant'

Asked about how achievable Saudia's growth targets are by 2030, Mr Muehlen said that "the market is "very strong, we're very bullish" in terms of outbound and inbound tourism, domestic travel and transit traffic.

"It is still a sleeping giant," he said.

"We are all working together very hard, the airline and the Saudi Tourism Authority, to attract more travellers into the country."

Saudia is expanding its international route network and anticipates growth potential in the US and Africa, Mr Muehlen said. It already operates flights to Los Angeles, New York and Washington. In Africa, it flies to 14 destinations, including Cairo, Johannesburg and Nairobi, according to its website.

It also seeks to boost its operations in Europe with increased frequencies to existing destinations and fill the gaps in its network in Scandinavian countries following its partnership with Swedish airline SAS, Mr Muehlen said.

"We have started talking with all of our travel agents to educate our joint customers that they can fly us from London to Bangkok or from London to Islamabad or from Paris to Karachi ... we see that this is really picking up very well," he said.

Transit specialist Emirates carried 51.9 million passengers in its last fiscal year ending March, while Qatar Airways carried 19 million in the first six months of its fiscal year ending September 2023. Etihad Airways carried 14 million passengers in 2023.

"We want to grow transit traffic but you will not see the same numbers as in Abu Dhabi or Doha because we have this strong home market. If we have this transfer share of 25 to 30 per cent that would be enough for us," he said, without revealing the current share.

High-spending visitors

Saudi Arabia is currently focused on attracting affluent, high-spending tourists, rather than on mass volumes of travellers, according to Saudi Tourism Minister Ahmed Al Khateeb.

"We want to focus on countries where the GDP [gross domestic product] per capita is higher than others and that are within six hours flight in a strategic geographic location," he told the Qatar Economic Forum in Doha last week.

"China is a target, Europe is a target, the emerging middle class in India is a target ... We have plans to attract these target markets for various reasons, to visit family and friends, perform religious duties or enjoy sports and leisure activities and conferences.”

Saudi Arabia plans to increase the tourism sector's contribution to its GDP from 4.5 per cent currently to 10 per cent by 2030 and "we aim for more than that", the minister said, without specifying a new target.

The kingdom is seeking to attract more Saudi nationals to work in the tourism sector to boost employment among its youth and create more jobs in the private sector.

Saudi Arabia has invested $100 million every year to train 100,000 people annually to work in travel-related jobs in hotels, airports, airlines and as tour guides to showcase their local culture to international visitors, the minister said.

"This will enrich the journey and experience of the visitors to the country, human capital is important," he said.

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GCC collaboration

Gulf countries are also working on joint marketing campaigns to attract more international visitors to the six-nation bloc.

Qatar and Saudi Arabia launched the "Double the Discovery" campaign to promote tourism to the neighbouring countries on a single trip, Saad Al Kharji, chairman of Qatar Tourism, said at the forum.

"We identified a few markets to launch this campaign and we can see how it is picking up ... this is taking us to the benefits of co-operation," he said.

The unified GCC tourist visa, which was announced last year, may come into effect by the end of 2024, he said. The initiative is expected to boost regional tourism to 128.7 million by 2030, up from 39.8 million in 2022.

Tourism giga-projects

Saudi Arabia is investing billions in tourism giga-projects, such as Neom, Diriyah, Qiddiyah and the Unesco World Heritage Site of AlUla, which will be a key part of efforts to attract international visitors.

AlUla, a heritage site with preserved tombs and sandstone outcrops, is expected to contribute about 120 billion Saudi riyals ($32 billion) to the national GDP and create about 38,000 new jobs by 2030.

The ancient oasis city in the north-west of Saudi Arabia aims to attract 291,000 visitors in 2024 and 380,000 in 2025, up from 263,000 last year, in line with its current hotel room stock, Melanie de Souza, executive director of destination marketing at the Royal Commission for AlUla (RCU), told The National.

Of the 263,000 visitors in 2023, 65 per cent were domestic and 35 per cent were international, with plans to increase the number of visitors from abroad to at least 45 per cent of the total this year, she said.

AlUla launched a global marketing campaign, "Forever Revitalising", in February to source markets including the UK, France, Germany, Italy, US, China, India and the GCC.

Plans are also under way to expand the capacity of AlUla International Airport to six million passengers annually, up from 400,000 currently.

The RCU is in talks with more airlines to start operations at the airport, adding to the flights by flydubai, Qatar Airways, Royal Jordanian, Bahrain's Gulf Air, Saudia and budget carrier Flynas, Ms de Souza said.

The idea is to capitalise on the vast global network of super-connectors such as Qatar Airways and others to carry passengers from Europe and the US via their hubs into AlUla, she said.

"We have quite a bit of consultant and corporate traffic and that is really great for airlines because at the front of the aircraft is where they make their profits," she said.

About 65 per cent of plane arrivals to AlUla are charter aircraft and small VIP planes, reflecting efforts to position the site as a boutique, luxury destination attracting high-end visitors.

"For me, it's about attracting the right kind of traffic and the right kind of airline partners," she said.

Asked about the feasibility of meeting targets for more international visitors, she said that Saudi Arabia has gained much more global awareness now than a few years ago amid the kingdom's social and economic transformation.

"The needle has moved quite considerably," she said, adding that AlUla is perceived as a "hot" new destination.

AlUla will have 824 hotel rooms by year-end, which it plans to grow to 1,300 by the end of 2025, 5,500 by 2030 and 8,500 by 2035, according to Ms de Souza.

"This is about growing in line with our room inventory ... there's a real pressure at the moment to accelerate room stock," she said.

"There's going to be serious acceleration: many of our specific hotel sites have been earmarked, contracts signed and we've got the most amazing brands coming in."

Launching next month is Dar Tantora The House Hotel in the old town of AlUla. The Chedi Hegra is scheduled to open in the fourth quarter of 2024 with 33 rooms in the Unesco heritage site of Hegra, eco-lodge The Azulik AlUla Resort is slated for 2027 and two resorts under the Aman Group will open to guests in 2028. These add to existing hotels such as Banyan Tree and Habitas.

It will be easier to broaden the offering to include mid-priced hotels once the luxury segment is established, Ms de Souza said.

"As our accommodation stock grows, so will the more moderately priced stock offerings enter the market. Even now, those who want the glamping experience can have it," she said.

Building more

Saudi Arabia is planning to add 250,000 hotel rooms by 2030, according to Mr Al Khateeb.

US hotel operator Hilton, which operates 19 hotels in Saudi Arabia, has more than 60 properties in the pipeline that will add 17,000 hotel rooms to the kingdom, according to Guy Hutchinson, president of Middle East and Africa at Hilton. The plan is to exceed 100 properties in the coming years.

"Saudi Arabia is very important to us. As a growth market it is the third-largest pipeline for hotel rooms for Hilton globally," Mr Hutchinson told The National.

Saudi Arabia is one of the few markets that has a national strategy around a single industry like tourism and hospitality where funding instruments are available and where government policy, vocational training and infrastructure development are all geared towards the growth of that industry, he said.

About 55 per cent of the Hilton's workforce in the kingdom is made up of Saudi nationals, underscoring the availability of talent there, he added.

Updated: May 19, 2024, 11:08 AM