In a bid to diversify its petrodollar economy, Saudi Arabia has become a surprise contender for a slice of the Gulf’s tourism pie, and travel to the Kingdom is set to rocket over the coming years.
While the travel and tourism industry globally took a battering last year thanks to the economic downturn; there was one shining star. Thanks to the resilience of the religious tourism market, the industry in Saudi Arabia seems to have survived the storm surprisingly well.
According to a recent report by Business Monitor International, the Kingdom is expected to receive 12.91 million tourists in 2010, a figure which will grow 6.5 percent year on year. And Saudi’s Commission for Tourism & Antiquities (SCTA) has reported that revenue from tourism will increase 4.8 percent this year to reach SR66billion ($17.6bn), rising to SR118billion in 2015.
As the birthplace of Islam and custodian of the Holy Mosques in Makkah and Medina, which hold vital importance for Muslims seeking to undertake Hajj and Umrah pilgrimages, the potential for religious tourism in Saudi is huge. The current numbers still represent only a tiny fraction of the world’s 1.8 billion Muslims.
Around three million Muslims gather in Makkah each year to perform the Hajj, which takes place once a year and is one of the five pillars of Islam. The Saudi government has had to set a strict cap on the number of people allowed in, with visa quotas in place for all countries.
Umrah meanwhile can be undertaken at any time of the year. Ramadan is peak season, and with the Holy month arriving during the summer over the next few years, experts are anticipating demand for pilgrimage travel to rocket in the coming years.
Ziad Bin Mahfouz, CEO of Elaf Group – one of Saudi’s biggest travel and tourism companies, told ATN: “We have positive expectations for this year. Tourism for religious goals has become a vital sector for the Kingdom of Saudi Arabia and we anticipate a rise in the number of Hajj and Umrah pilgrims, with visitors from Egypt and Morocco predicted to account for the largest increases. Given these positive developments we expect our profits for 2010 to surpass last year’s figures.”
Meanwhile agents selling ‘pilgrimage packages’ to Makkah and Medina report a burgeoning demand for religious travel among their clients. Mohammed Al Rais, deputy managing director of Dubai-based Al Rais Travel said Ramadan saw demand peak: “During Ramadan we saw a huge demand from our clients to go to Saudi and we expect to see a lot more demand for the coming years, especially with Ramadan taking place over the summer holiday period. People don’t expect to travel on holiday during Ramadan but they all want to travel to Saudi for a pilgrimage.”
Building up the Industry
In order to try to accommodate the growing numbers of visitors to Saudi Arabia, the government is pouring billions of dollars into overhauling the infrastructure in the Holy Cities, as well as re-instating old heritage areas, and developing brand new tourism projects along the Red Sea coast.
Upcoming projects include the 444km-long Makkah-Madinah rail link, a $6billion system that will ferry pilgrims between the two cities, via Jeddah, in around 30 minutes. The current journey by road can take between four to five hours.
Madinah Airport is also currently undergoing a $2.4billion upgrade – a move that will allow the terminal to handle 12 million passengers a year; a four-fold increase on its current capacity.
Meanwhile, King Abdulaziz International Airport in Jeddah is undergoing expansion which will allow it to handle 30 million passengers by 2012 and 80 million when complete; plus there’s a new monorail system being built in Makkah to link the city centre with holy sites at Mina, Arafat and Muzdalifah, scheduled for completion in 2011.
A recent report by Jones Lang LaSalle stated that the planned developments will increase the potential number of pilgrims visiting the Holy Cities to around 13.75 million by 2019.
Outside of the Holy Cities ambitious plans include a $13 billion ‘tourist city’ in Al-Oqair, south of Al Khobar, on the east coast, which was announced earlier this year.
The luxury experience
One area that still needs serious attention is the hotel stock. According to Jones Lang LaSalle: “most of the existing hotel stock (around 50,000 rooms in Makkah and 20,000 in Madinah) is not of international quality and there is a clear need to increase this supply to accommodate the growing and maturing requirements of pilgrims undertaking Hajj and Umrah.”
International operators are beginning to realise the potential of Saudi’s burgeoning religious tourism market and are lining up to deploy their most prestigious upscale brands to the Holy Cities. Whereas once a pilgrimage might have been all about the sackcloth and ashes, nowadays it’s a rather different story and the industry is witnessing a rising demand for high-end travel.
“At the present time, Saudi is like Dubai was ten years ago – all the demand is for the five-star luxury hotel market,” explains Christophe Landais, managing director of Accor Hospitality Middle East which is pursuing an aggressive expansion plan in Saudi Arabia, with a plan to develop 15 new hotels in the Kingdom over the next five years.
Last month Raffles Hotels & Resorts opened its first Saudi property in the Abraj Al Bait complex, in Makkah – a seven-tower development directly adjoining the Grand Mosque.
Mohammed Arkobi, vice president and managing director of Fairmont Raffles Hotels International — Makkah, said the prime location means the hotel will provide a “unique and one-of-a-kind experience” for pilgrims. The ultra-luxury property features personal butlers and is described as a “new step in the hospitality sector in Saudi Arabia”.
More luxury hotels soon to follow at the complex include the Makkah Clock Royal Tower, a Fairmont Hotel; and Swissotel Makkah, due to open in 2011.
Tightening up on standards
Major efforts have also been made to improve the general experience for the millions of pilgrims that descend on Makkah and Medina every year.
After years of substandard accommodation and shoddy treatment dished out by local tour operators, the authorities have finally clamped down and are now imposing fierce penalties to any Hajj or Umrah operator that breaks the rules or receives complaints against them about the standard of service they provide.
“There are a number of conditions that the operators have to abide by which are set by the governing body,” explains Mohsin Z. Kidwai, general manager – retail, Orient Travel who has been selling Umrah packages from the UAE to the Holy Cities for the last 14 years.
“They have to have a certified doctor to accompany the group; they have to provide all meals, accommodation and transport as part of the package; they have to provide air conditioned buses.”
He adds: “All Hajj and Umrah operators have to pay a guarantee money of 100,000 to 500,0000 AED to the Hajj committee, and if there is one single complaint against them which is found to be valid, their money will not be returned and their licence will be cancelled immediately”
Battling the Red Tape
The major challenge facing the tourism sector in general is the provision of visas – a process which can prove slow and arduous.
Through the current system visit visas for the Hajj will only be issued if the trip is arranged through a registered travel agent in conjunction with a Hajj organiser in Saudi.
The visa difficulties also affect those wanting to operate in the Kingdom itself. Christophe Landais, from Accor describes visa regulations as being one of the biggest barriers for operators looking to expand in Saudi and says it’s imperative the government loosens up its restrictions for the tourism sector.
“We all have to import foreign staff and although we manage more or less it’s one of the biggest difficulties we have.
“Saudi is very bureaucratic,” he adds. “It takes a lot of time [to obtain visas] and it’s very regulated. The way it works is, you have to define in advance how many visas you need and you have to say how many people are coming from Egypt, how many from India, how many from Asia, etc.
“You might select someone not for his nationality but for his competency and then you might have a situation where you have a person from Egypt, but your visa is for India.
“I think the Saudi government has to be less bureaucratic for the hotel industry as a whole. They have to be more flexible on their rules,” says Landais.
This may not happen any time soon. A recent press report stated that the Kingdom has stopped granting visas entirely to people wanting to enter Saudi for tourist reasons alone (20,000 such visas were issued in 2009) – a move that has caused much controversy.
Prince Abdullah Bin Saud, chairman of the consultative committee for organisers of tourist trips said the decision would prove a major hurdle to tourism growth: “Officials in the SCTA should encourage this trend instead of halting tourist visas,” he said.
A leisure destination?
Given the recent visa ruling, it’s certainly no surprise to discover that when it comes to expanding its leisure tourism offering Saudi Arabia is firmly targeting its own domestic market rather than the international market.
Dr Salah K AlBukkayet, vice president – Investment for SCTA explained to ATN: “The reason we are focusing on domestic tourism is because of the fact that we are exporting a lot of tourists with a lot of money.
“The logic would say that when your own people are spending billions outside you should focus on them before you focus on [inviting in] somebody else.”
He added: “The reason Saudi tourists are travelling abroad is because the tourism offering in the country is not acceptable to them both from a quality and a price point of view. So our focus right now over the next three to five years is product development, product development and product development.”
Dr Salah also categorically ruled out the possibility that Saudi would ever open its borders to international tourists in the same way that other Gulf countries have, saying: “For the international market we will not target the same markets that Dubai has – that’s for sure.”
But, that’s not to say there is no market for international travellers taking holidays in Saudi. The SCTA recently launched an ‘Umrah-plus’ strategy which aims to encourage middle and upper income pilgrims to extend their stay and visit other areas of interest in the Kingdom. Key target markets include Malaysia, Egypt, Oman, Morocco and the UAE.
Kidwai from Orient Travel believes this strategy has excellent potential for Saudi: “There are some beautiful places in Saudi Arabia. In the Aseer region for example there is a place called Abha. It’s a bit like Salalah in Oman, beautifully green and in summers the temperature is around 18 degrees.
“There are some local families here in the UAE who want to take their children to a ‘decent’ place. They don’t want Thailand or Malaysia. I have done packages in the past for people for two weeks in Abha and they really enjoyed it. It’s lovely weather, and it’s their own culture and you can get furnished apartments there which during the summer it’s difficult to get elsewhere. Plus you can go and perform Umrah at the same time and combine the two. There are definately places in Saudi that can be developed in a big way and these need to be promoted.”For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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