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Saudi’s tourism sector has seen a strong 1Q 2024 despite rising geopolitical tensions, Tourism Minister Ahmed Al Khateeb told Bloomberg TV in an interview ({watch: runtime: 12:31}). “We have seen a double digit growth in the first quarter of the year compared with the first quarter last year,” he said on the booming sector despite heightened escalations in the region. “The escalations in the region are not good for everyone, therefore Saudi…is stepping in this situation and trying to contain the situation with its neighbors,” he said.
Crossing fingers for a short-lived conflict: “The tension in the region is very serious, we hope it is for the short term,” Al Khateeb said. “We are monitoring the situation closely, to make sure that 2Q and the short term will not be impacted. However, in the medium and long term, we are very optimistic,” he said.
Robust growth in 2023: “Last year was a very strong year for the Kingdom. We were the highest growing country among all G20 countries with 56% y-o-y growth [in tourist arrivals],” he said. Half of arrivals were religious trips, while the remainder came here to engage in business, sports, leisure and hospitality, the minister said.
REMEMBER- The ministry recently doubled its target for 2030, hoping now to be host to 150 mn tourist trips after it hit its target last year ahead of schedule. The new 2030 target sees 80 mn by domestic travelers and 70 mn by international travelers.
Tourism is seeing the government spending big: The government is injecting some USD 800 bn into the sector under plans to build new future destinations, including Neom, The Red Sea, Diriyah and Qiddiyah among others, he said. The private sector, supported by the Tourism Development Fund, is pouring investments to build new hotels, he added.
Incentives for foreign investors in the sector: “We are trying to make Saudi Arabia the easiest and most cost-efficient [in which] to do business,” Al Khateeb said. He said the government is providing incentives such as access to land, debt, funding, and easing regulations to lure in investors who are “seeking a good return, with a low-risk commitment from the government”.
REMEMBER- The ministry unveiled a new tourism investment program last month to facilitate doing business and attracting local and foreign investors. The Tourism Investment Enablers Program (TIEP) includes regulatory reforms for tourism licensing depending on type and scale of operations and reduced fees. It aims to lure in investments of up to SAR 42 bn (c. USD 11 bn) with inflows of SAR 16 bn to GDP by 2030.
An alcohol ban is not driving tourists away: “Alcohol is important but we decided not to offer it, and so far people are coming, they are exploring Saudi and coming for business, coming for leisure, coming for religious reasons,” he said when asked about whether serving alcohol would be a game changer for the Kingdom’s tourism. “They have not complained, they are enjoying other offerings like the food, retail, hospitality, the culture, and I hope this will continue,” he said. “Out of the 1.4-1.5 bn travelers [visiting the Gulf], I’m very sure we will find, at least in the mid-term, 70 mn people who will travel without asking for alcohol,” he said.
BACKGROUND- Saudi opened in January its first alcohol shop in over 70 years exclusively for non-Muslim diplomats, signaling relaxed restrictions to make the Kingdom a more tourist-friendly destination. The government said the move came under efforts to counter the illegal trade of alcohol. Pundits expect officials to allow a slow rollout to select hotels.
