A new report from BMI Research notes that both religious and non-religious tourism have potential for significant expansion
The tourism sector is one of the most promising parts of the kingdom’s diversification efforts, and its Vision 2030 plans, with international tourism receipts forecast to grow by 5.8 percent per year between 2018 and 2022, according to a new report from BMI Research.
Already, the tourism sector and its indirect effects accounted for 10.2 percent of GDP in 2016, according to statistics from the World Travel and Tourism Council. This figure is slightly above the Middle East’s average of 9.1 percent.
According to BMI, the tourism sector also stands to be a major contributor to job creation, given the government’s aim of increasing the number of jobs in the tourism sector by almost 50 percent to 1.2 million by 2020.
“Compared with the 13.8 million employed as of Q3 2017, and given the indirect job creation resulting from tourism activity, the sector has the potential to become a strong contributor to job creation at a time when the Saudi government is seeking to bring down the unemployment rate for Saudi citizens while reducing reliance on public sector jobs,” the report noted.
Additionally, the report said the religious tourism sector, which already accounts for 40 percent of tourist arrivals in the country, has the potential to significantly expand, as additional accommodations, high-speed railways connecting Mecca and Medina and a metro network in Mecca will allow “the number of pilgrims visiting the country for Hajj to recover, after experiencing multi-year declines.”
“The sector will also benefit from government efforts to encourage religious tourists to perform Umrah,” the report added.
Despite the government’s stated aim of also developing the non-religious tourism sector and a number of steps taken in that direction, the BMI report notes that Saudi Arabia will need to compete with other GCC countries that have much more established tourism sectors such as Bahrain, Oman and the UAE.
“As such, we do not see a near-term impact of non-religious tourism on consumer spending in the country,” the report said. “Over the longer term, we believe that the government’s success on delivering such mega projects, adapting the regulations and therefore attracting foreign tourists will be a crucial test for diversification.”