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Thu 31 Jan 2019 04:02 PM

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Saudi Arabia forecast to see continued tourism growth

New Savills research says Gulf kingdom is dramatically increasing its hotel offering, including notable interest from international hotel groups

Saudi Arabia forecast to see continued tourism growth
Cars drive along the New Corniche seafront development in Jeddah. (Getty Images)

Saudi Arabia will see continued growth in the hotel sector across the Kingdom of Saudi Arabia, fuelled by increasing demand from tourists, according to Savills, the real estate services provider.

Its new research indicates that with a 13 percent increase in number of hotel rooms during 2017 and an extra 48,000 being constructed, Saudi Arabia is dramatically increasing its hotel offering, including notable interest from international hotel groups.

According to the report, recent tourism growth in Saudi Arabia has been driven by three key demand pools – leisure, pilgrim and corporate visitors.

Travel and tourism accounts for 9.4 percent of Saudi Arabia’s total GDP, with traveller expenditure growing by 10.5 percent annually to $14.8 billion, Savills said.

As the country diversifies its economy, in line with the Vision 2030 plans, international arrivals are due to increase on average by 4 percent per annum, it added, citing the World Travel and Tourism Council (WTTC), reaching figures of 22.1 million by 2025.

“The diversification of Saudi Arabia’s economy has provided a boost for employment and its GDP outlook. Major hotel groups are driving construction trends across the country as they aim to meet the demands of an ever-increasing number of domestic tourists and international visitors. We think this trend is likely to continue for many years ahead, as both private and public capital is invested into the tourist infrastructure,” said David O’Hara, Savills’ head of Saudi Arabia.

This is being supported by government initiatives to meet the needs of this surge in visitor arrivals.

Vision 2030 has set aside $64 billion to invest in culture, leisure and entertainment projects over the next decade, which will significantly add to the attractiveness of the country as a touristic destination, according to Savills.

The Public Investment Fund backing of the Red Sea Development project will complete in 2022 and is forecast to attract an estimated one million visitors per year.

Additionally, Amaala, a new ultra-luxury tourism megaproject is earmarked for completion in 2028 and will also boost the hotel offering for both domestic and international visitors.

Savills noted that over the past three years, major brands have contributed increased investment into Saudi Arabia. Marriott International has opened two Aloft hotels in the country (in Riyadh and Dhahran), Rocco Forte Hotels opened the Assila Hotel in Jeddah and in 2018, while both Hilton and Swiss-Belhotel International opened three hotels each. There is also interest from other large groups such as Accor and InterContinental.

Savills said Hajj and Umrah visitor numbers are expected to reach 30 million by 2030, with 30-day visa extensions contributing to an increase in length of stay from overseas visitors.

Savills also said it foresees continuing upward trends towards corporate traveller demand, as the country grows alternative industries away from its traditional oil-based economy.

Underpinning the visitor demand is investment into transportation infrastructure.

O’Hara added: “Improving the transport network for domestic and international travellers is vital for the sustainable growth of tourism in the kingdom. As such, we expect heavy investment into the connectivity infrastructure to support the implementation of Vision 2030.”

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