Tourism & Hospitality | Tuesday 5 December, 2017 4:41 pm |

The story is about how Saudi trying to open up its tourism industry to grow its economy. But being a conservative society, what are some of the challenges in doing so?

 

We are presently observing a monumental shift in the Kingdom of Saudi Arabia, not just in terms of economic diversification, but also through a series of unprecedented social reforms and efforts that are being made to open the traditionally conservative society to an influx of foreign investment and international visitors.

 

Since Crown Prince Mohammed Bin Salman assumed leadership, multiple projects have been announced that address a number of the Kingdom’s strategic objectives simultaneously in line with Vision 2030.  Namely, to diversify the economy, attract foreign investment, create employment opportunities as well as institute moderate reforms to make Saudi society more accessible to the world. 

 

Investment in KSA’s domestic and international tourism sector is viewed as a major driver of potential growth in these areas as the kingdom attempts to diversify its economy out of dependence on petrodollars amid a prolonged dive in oil prices.

 

Euromonitor International has forecasted that government directed investment into developing domestic tourism across the Kingdom could produce a 40% increase in domestic vacations by 2020.  Due to high volumes of domestic movement and the propensity to spend within Saudi Arabia, high levels of investment are being channelled into domestic entertainment in the form of theme parks, shopping and leisure as well as culture and heritage sites.  This includes the building of Al Qiddiya, a massive cultural, sports and entertainment metropolis southwest of Riyadh with state of the art recreational facilities and a Six Flags theme park as well as resorts, hotels and residential units on the coast of the Red Sea. 

 

The investments in the Kingdom’s tourism sector directed by the sovereign wealth fund (PIF) and the Crown Prince Mohammed Bin Salman are demonstrating a serious commitment to shift into a more moderate and open society both economically and socially.  Saudi Arabia’s announcement to convert hundreds of kilometers of Red Sea coastline into an international tourism location governed by laws that reflect international standards will invite luxury travelers from all over the world to the Kingdom.  This project alone expected to create 35,000 jobs and generate USD 4 billion in the economy annually once completed.

 

The main challenge for constructing a robust international tourism sector will be to continue to build and maintain the international community’s confidence in the Kingdom’s commitment to the process which lead to the recent social reforms - allowing women to pursue education or healthcare without getting consent of male guardianship, allowing women to drive and enter sports stadiums.  More regulatory changes that have been discussed in the Noem, Al Qiddiya and the Red Sea luxury resort projects which discuss an implicit or explicit relaxation of social norms are indications of a legitimate change in the leadership’s perspectives towards becoming a more open and inclusive society.

 

Another challenge will be to balance these reforms with engaging in the appropriate dialogue on these subjects with the Kingdom’s conservative base.  A primary feature of KSA’s tourism industry will continue to be the millions of Muslims who travel there for the annual hajj pilgrimage, and respectfully managing exposure to a more moderate social fabric must be taken into account for those visiting the Kingdom.

 

The Future Investment Initiative in late October also demonstrated MBS and the Public Investment Firm’s bold and ambitious outlook into the Kingdom’s future.  A USD 500 billion investment to build the Neom megacity was announced which will be powered entirely by clean energy, be home to state of the art robotics and be an independent zone with its own governmental framework allowing for different social norms as well as taxation, customs and labor laws.

 

 

What does the Kingdom need to do to send the right signal to visitors?

 

 

The Future Investment Initiative conference in Riyadh in late October illustrated that there is need like never before in Saudi Arabia to create a funding ecosystem from a combination of international investments, Public Private Partnerships and private investment to build a diversified modern economy. 

 

In order to establish the confidence of the international community it will be critical to communicate the efforts being made to modernize, enhance security and safety effectively to stakeholders, citizens and tourists who will be interested to come to Saudi Arabia in the wake of huge investments in their tourism sector. 

 

Overall Saudi Arabia has demonstrated a strong commitment to these initiatives to build a more robust domestic and international tourism industry as well as gradually introduce measures to change external perceptions that it is becoming more than a closed and conservative society.  The Kingdom’s leadership is resolved to invest capital on a large scale in collaboration with the international community to bring the world to its doorstep.  This is evidence that Saudi Arabia is committed to these objectives and is driven by necessity to build a innovative, balanced, and open economy that the world can come and see for itself.  While time will ultimately tell the degree to which Vision 2030 can be fully realized, the fact that social reform and economic diversification has been established to this degree foreshadows a hopeful and potentially reliable precedent moving into the future.