Whatever your preconceived notion of Saudi Arabia as a travel destination is, it’s about to be get a major renovation. Imagine Sindalah, for example, a 7-star private-island resort with three ultra-luxe resorts, 38 high-end restaurants and multiple superyacht marinas. Or Qiddiya, a futuristic city of 600,000 people rising from the desert floor, dedicated to esports and gaming. How about Trojena, a space-age ski resort built above the high desert? Or The Red Sea, a vast waterscape of 50 luxury resorts and 8,000 hotel rooms spread across 22 islands in a Maldives-style archipelago—powered entirely by wind and solar energy? Also in the works is The Rig, a $5-billion adventure theme park built on an off-shore oil platform. In addition, Saudi Arabia is positioning itself as a major cruise destination, with Cruise Saudi having recently bought a $300-million ship. Across the Kingdom, new roads, airports, golf courses and cruise terminals are rising from the sand. The map is literally being redrawn in real time.
Then there are all the new hotels, with their thousands of newly built rooms. The world’s most iconic hotel corporations (Ritz-Carlton, Four Seasons, St. Louis City, St. Louis and S. John’s Regis, Fairmont, Marriott, Hilton, Hyatt and InterContinental) are rushing to board. in a structure in process that is spinning faster than anywhere else in the world. Any one of those projects can momentarily pass through the fleeting attention of the industry. But overall, what’s happening in Saudi Arabia simply can’t be ignored.
Indeed, it can be often difficult to visualize the vastness of Saudi Arabia’s physical transformation. Some of the most notable ongoing projects—including Sindalah, the 7-star private island, and Trojena, the improbable desert ski resort—fall within NEOM, a $500-billion built-from-scratch region in northwest Saudi Arabia where the Kingdom is creating new cities, resorts and other developments. At 10,200 square miles and bounded by the Red Sea to the south and the Gulf of Aqaba to the west, it’s roughly the size of Albania.
Funded primarily through the Kingdom’s $700 billion Public Investment Fund (PIF), the NEOM concept was born from Vision 2030, Saudi Arabia’s grand plan to wean itself from its former dependence on oil and diversify its economy. One of the pillars of the task is to reinvent the country as a heavyweight in global tourism. When first announced in 2016, the Kingdom’s tourism goals seemed fanciful: attracting one hundred million domestic and foreign visitors to the country each year and increasing the share of tourism in the economy from around 3% to 10%. Oh, and doing it all in just 14 years.
This aspiration seemed all the more absurd since, in 2016, Saudi Arabia had not yet opened its doors to foreign tourists. At that time, entry into the Kingdom was almost entirely limited to 3 types of people: expatriate workers, business visa holders, and devout pilgrims visiting the holy cities of Mecca and Medina.
Then in 2019, Saudi Arabia announced it would provide e-visas and visas on arrival to visitors from 49 countries, adding the United States. Among other adjustments announced at the time: Female visitors would be exempt from wearing an abaya, the classically required head-to-toe dressing, in public places and would be allowed to do so without a male companion. Tourists would still have to dress modestly and Mecca would remain off-limits to non-Muslims.
Since Saudi Arabia opened up to the foreign market, the speed and free focus of its transformation has surprised even the most seasoned tourism analysts. “We’re seeing incredibly ambitious projects and significant progress,” says Caroline Bremner, director of tourism studies at Euromonitor International. “Billions, even trillions of dollars, are invested in infrastructure and diversifying their economies. » The World Travel & Tourism Council (WTTC) estimates that the Kingdom has already spent $800 billion, not counting the large sums of foreign investment coming in.
Of course, the pandemic has delayed some plans, but instead of lowering their expectations, the Saudis have raised their goal to 150 million annual visitors through 2030. This is where semantics come into play. In the language of tourism, a “visitor” is explained as someone who visits a site within the country, which is very different from what Euromonitor considers an “arrival”, i. e. someone who spends the night. (Other organizations refer to the latter as “tourists. “) Saudi Arabia welcomed more than 24 million foreign arrivals in 2023 and will receive around 37 million by 2030, according to Euromonitor projections. “So if each of those 37 million tourists visits three sites, you get about a hundred million visits,” Bremner says. Then upload your domestic tourists to it and the goals they have set themselves are quite achievable. “
A more significant measure of good luck is the amount foreigners are expected to spend during their stay in Saudi Arabia. Euromonitor predicts that foreign tourists will spend $38 billion in 2030. But the overall economic impact for Saudi Arabia will be much greater if we increase spending by domestic travelers and the ripple effect of a million new jobs in tourism. The WTTC predicts that, through 2032, Saudi Arabia’s tourism sector could contribute around $169 billion to its GDP, or 17. 1% of the total. Saudi economy.
Waterworld: Red Sea Global’s allocation includes several luxury resorts, one of which has overwater bungalows.
“Remember, they’re building this destination on the ledger, necessarily from the ground up, for the foreign market, and they’re bringing in the most productive of the most productive in terms of the quality of the other people they work with,” Bremner says. “I see that they have an idea of all facets of tourism, from the staff to the product, the brand, the service, the connectivity and the sustainability. So it looks like they’re building something for the next century.
Preparing for the future also means recognizing the seismic shift in what the next generations of global travelers will want. Roughly 90% of young Chinese travelers and 70% of Gen Z travelers in the UK, Australia and India say they are looking to discover new destinations, according to data from Skift Research. In that sense, being the new kid on the tourism block is an enormous plus.
“New generations have a lot more information through social media,” Billy Canellas, head of asset management at NEOM, told conference-goers at the Skift Global Forum East in December. “[Younger travelers] are very well educated about the effects of overtourism in traditional destinations,” he added, noting “a clear tendency towards the eco-friendly and sustainable destinations” and an eagerness to learn about a destination’s “culture and the traditions of diversity.”
“The luxury market is becoming more varied and younger, and it’s moving into emerging markets,” says Bremner, noting that the UAE, India, and China are very interested in this demographic. We’ve been given this new luxury traveler, and it’s not the classic older generation of travelers with deep pockets. He is the luxury traveler of the New World, highly digital, very involved with the environment and for whom social impact is important.
“Make no mistake,” says Geoff Freeman, president and CEO of the U. S. Travel Association. According to the U. S. Department of Homeland Security, “What Saudi Arabia is doing is identifying who some of the biggest travelers are, the ones who are willing to spend a lot of cash to travel. “– and asking: How are we going to get them? »
Of course, there are many tactics to deviate from the grand Saudi vision. First, there are huge monetary dangers involved in tackling so many giant projects at the same time, even for a country with bottomless pockets. “Saudis have a public debt of 82% relative to government revenue,” Bremner says, noting that official public debt as a percentage of GDP was 23. 8% in 2023. But this is all relative. The Kingdom’s debt-to-GDP ratio is almost double what it was a decade ago, but it remains low compared to other countries. For example, Switzerland’s public debt is 41% of GDP. The debt of the U. S. and Canadian governments stands at 133. % and 106% of GDP, respectively. The UK’s debt is 98% of GDP.
Bremner’s biggest fear is overcapacity for hotels, which would ultimately drive down costs. “This positioning in luxury is going to erode a little bit, because [the Saudis] are evolving very rapidly. With this supply point, it’s tricky to balance the scales,” he says, adding that Euromonitor International’s most recent style of forecasting predicts that average traveler spending will have already declined through 2030. “Too many hotel rooms that are not occupied will result in decreased expenses. Costs are falling, so it’s a risk.
Sand Dollars: A new Four Seasons is part of Red Sea Global and will feature 149 rooms and suites, a spa and an 18-hole golf course.
In addition, Saudi Arabia has a persistent PR problem among many would-be travelers, especially those from the West. The Kingdom still has strict laws about drinking and severe restrictions for women, not to mention allegations of human rights abuses and attacks against journalists. In 2021, the U.S. officially blamed Saudi Crown Prince Mohammed bin Salman for the 2018 murder of Washington Post journalist Jamal Khashoggi.
But human rights considerations have not stopped multinational corporations from investing in the Kingdom’s grand vision. “For some actors, this will be a very vital issue, if not a general barrier to entry,” Bremner said. “However, we can see that most luxury hotel brands have already moved away from China and the UAE into Saudi Arabia.
At the end of the day, the overseas market doesn’t like anything more than a shiny new destination in an emerging market and right now the Middle East is in a moment. ” “The Middle East is ideally placed,” says Bremner, “as is Turkey, a five-hour flight from Asia and Western Europe. “
Even with the start of the Israel-Hamas war last October, the Middle East remains the fastest-growing tourism region in 2023, with foreign arrivals 23% above pre-pandemic levels, according to the United Nations World Tourism Organization’s Tourism Recovery Tracker. This is 35% above the global average, and the rest of global tourism is still behind 12 numbers compared to 2019 guest volume.
While just over 3 million U. S. tourists visited the region in 2023, accounting for 12. 6% of total U. S. tourists abroad, this represents a large 39% increase from 2019. And while the percentage of U. S. tourists to the Middle East is lower than Europe (40%) and Asia (15. 7%) last year, it’s the only one of the three regions that has noticed an expansion since the pandemic, according to National Travel data.
But Freeman is rarely very concerned about Saudi Arabia’s ability to attract gigantic numbers of American tourists. “I’m concerned that they’re looking to attract high-spending Europeans, Asians and Middle Eastern Europeans who otherwise would have spent their money in the United States,” he says.
After all, Freeman says, foreign tourism is an increasingly competitive game in which one country’s gain is another’s loss: “What makes us think,” he says, “is that other countries now know that this is a global festival to find out who can attract the consumer. “