Saudi Arabia is injecting 15 billion Saudi riyals (Dh14.7bn/US$4bn) into the country’s tourism sector through a new fund.
The Tourism Development Fund will provide a range of equity and debt investment vehicles that tourism businesses can gain access to and has signed agreements with many of the country’s lenders to fund projects and incentivise investment in the sector.
The fund “will play a critical role in developing outstanding tourism experiences and unlocking the full potential of Saudi Arabia as a destination”, said Minister of Tourism Ahmed Al-Khateeb.
The kingdom first opened to international tourists in September last year.
The development of the sector is seen as an important part of Saudi Arabia’s Vision 2030 economic diversification strategy, through which the kingdom plans to boost the private sector’s contribution to 65 per cent of gross domestic product, up from 40 per cent when the strategy was launched four years ago.
The kingdom also intends to increase foreign direct investment from 3.8 per cent to the global average level of 5.7 per cent.
Tourism is expected to contribute more than 10 per cent of the kingdom’s GDP by 2030 – up from 3 per cent currently – and provide one million jobs.
The fund’s launch is part of the first phase of the National Tourism Strategy that focuses on developing 38 sites across seven destinations by 2022.
The fund will be used “to address gaps in the tourism value chain” and will support “flagship mixed-use and hospitality development by leading international operators and investors”, according to a statement announcing its launch.
“The launch of the fund at this time, as the tourism sector faces unprecedented global challenges, is testament to investor and private sector confidence in the long-term outlook for tourism in Saudi Arabia,” Mr Al-Khateeb said.
“The social and economic importance of the sector cannot be understated: it drives growth and diversification, attracts international investment, creates job opportunities and enhances quality of life for millions of Saudis.”
Five board members have been appointed to oversee the fund, which is chaired by Crown Prince Mohammed Bin Salman.
They are Princess Haifa Al Saud, vice minister of strategy and investment at the Saudi Ministry of Tourism; Ihsan Bafakih, governor of the Real Estate General Authority; Stephen Groff, governor of the National Development Fund; Mohammed Al-Omran, a board director at Saudi British Bank, and Mohammed Al-Hokal, a board member of National Commercial Bank.
Saudi Arabia, which placed movement restrictions on cities such as Jeddah and Makkah that had registered an increase in cases, was set to begin easing measures from Sunday, the kingdom's interior minister announced on Saturday.
Tourism has been one of the sectors hardest hit by the coronavirus pandemic, with movement limitations put in place to limit its spread stopping all-but essential travel in most countries.
Earlier this month, however, the World Travel and Tourism Council warned that the global economy could lose about $5.5 trillion (Dh20.2tn) in tourism revenue if such measures remained in place.