Saudi Arabia - Travel, Tourism, and EntertainmentSaudi Arabia - Travel and Tourism

Overview
The Tourism sector is a priority industry identified in Saudi Arabia's Vision 2030 economic diversification plan. Saudi Arabia already has a competitive advantage over its GCC peers in religious tourism. The SAG began issuing tourist visas in September 2019. Saudi Arabia’s diverse terrain offers a wide variety of scenery, while its captivating history, rich culture and significance for Islam make it one of the most visited countries in the world. There are more than 4,000 registered archaeological sites across the Kingdom, as well as the UNESCO World Heritage sites.
($ billion)

The tourism sector (including indirect effects) already accounted for 9.4 percent of GDP in 2017 according to the World Travel and Tourism Council, above the Middle East's average of 8.9 percent. With its varied geography and young population, Saudi Arabia shows huge potential for non-Hajj related tourism and entertainment in the region.  Nearly 60 percent of Saudi Arabia’s 32 million-plus population is under the age of 30 with a considerable appetite for entertainment, culture and sports. Saudis make approximately 9.6 million leisure trips abroad each year, spending around 80 percent of their entertainment budget whilst they are away. This amounts to around $5.6 billion per year, a sizeable sum reflecting the recreational needs of the modern society.

With Saudi Arabia holding jurisdiction over the two holy mosques in Islam, in Mecca and Medina, religious tourism is already well developed in the country, accounting for roughly 40 percent of tourist arrivals to the country. The Ministry of Hajj has been renamed as the Ministry of Hajj and Umrah, an indication of a new focus on religious tourism. Umrah, also known as the lesser pilgrimage, is seen as a potentially lucrative opportunity for the Kingdom, which hosted around eight million Umrah pilgrims from around the world last year. Saudi Arabia wants to increase that number to 15 million by 2020.

The United States Department of Commerce’s National Travel and Tourism Office, in its last statistical reporting (June 2015) noted that in 2014, 275,770 citizens traveled to the United States on holiday.  The Travel and Tourism Office also confirms in its 2014 Middle East report, that the majority of travelers from the Kingdom and the Middle East region visit the Mid-Atlantic States with New York being the number one destination in the United States.  A full statistical analysis is available at the following link: http://tinet.ita.doc.gov/outreachpages/download_data_table/2015_Middle_East_Market_Profile.pdf

Leading Sub-Sectors
Tourism
The Saudi Commission for Tourism and National Heritage (SCTH) is the government arm entrusted with developing and strengthening the country’s tourism sector and preserving its antiquities. The SCTH has been tasked with developing touristic destinations and events with an increased investment targets, raise awareness of national heritage sites, and develop tourism services. As part of its ambitious socio-economic reform agenda and to expand entertainment options for its citizens and visitors, the SAG established the General Entertainment Authority (GEA) in 2016 and made it responsible for entertainment-related activities in the Kingdom and for laying out plans and programs for the development of the entertainment industry.
Saudi Arabia’s tourism sector has witnessed massive growth marked by a boom in inbound international visitors and a significant increase in domestic tourism. In 2017, Saudi Arabia received more than 18.6 million inbound visitors from around the world while domestic trips reached to 47.4 million in 2017.

Saudi Arabia currently ranks among the top 20 countries in the world in terms of total GDP contribution, with tourism contributing $64.2 billion to the economy in 2017. This is expected to further rise by 4.8 percent per annum, to $110 billion constituting 11.1 percent of GDP by 2027.

Saudi Arabia is investing in developing Saudi tourism infrastructure starting with the opening a new international airport in Jeddah that will be able to handle 100 million passengers.

Saudi Arabia is also promoting private investments in the country through the Kafalah program and land-lease extensions. The Kafalah program will guarantee tourism projects receive loans of up to $400 million for all tourism related projects such as hotels, resorts, amusement parks, and cinemas whilst the land-lease extension initiative will grant ventures with expected investment of more than $5.33 million an extension of the land lease period to 50 years, instead of the original 15 or 20.

The government has identified several projects aimed at expanding and establishing the tourism sector.  Neom is a $500 billion mega city planned for Tabuk province that is set to be world’s first private zone spanning 26,500 square kilometers.  The UNESCO World Heritage site of Al Ula located in Madinah province is to undergo transformative development so visitors can have access to the ancient ruins at Mada’in Saleh, a UNESCO world heritage site and a relic of the same ancient civilization that built the better-known city of Petra in Jordan. In July 2017, the SAG revealed plans to develop resorts on some 50 islands off the Kingdom’s Red Sea coast as the Public Investment Fund (PIF) will make initial investments around $4 billion and seek partnerships with international investors and hoteliers. Moreover, the PIF created the Red Sea Development Company (TRSDC) as a closed joint-stock wholly owned company.  The company will create a special economic zone with its own regulatory framework, visas on entry, relaxed social norms, and improved business regulations. It was planned for completion by the end of 2022.

In 2017,  the PIF announced it will lead the redevelopment of Jeddah’s waterfront corniche, creating a unique tourist, residential and commercial destination, to become the “New Jeddah Downtown”. The project, which will contribute $4.8 billion of investment over 10 years as well as 36,000 new jobs, aims to create a distinctive and attractive environment to support Jeddah’s ambition of becoming one of the world’s top 100 cities. The project will include spaces for entertainment, shopping, and commercial activities, which are accessible for both residents and visitors. In July 2018, the SAG started issuing a number of tenders to deliver more than 12,000 housing units to accommodate 58,000 new residents, entertainment and retail projects, offices and hospitality properties.

Construction work has begun on a $2 billion heritage tourism project at Souq Okaz City in Taif, Saudi Arabia. The scheme includes heritage centers, museums, recreational areas and a convention center. In the first phase, a new suburb with housing facilities for about 750,000 people, and an international airport able to handle five million passengers a year, will be constructed. The plan also includes setting up the King Abdul Aziz City for Science and Technology as well as Taif University and an industrial city. In total 18 main projects have been reserved for the private sector and five for the public sector.

The Farasan Islands in Jazan province, an archipelago of 84 coral islands in the Red Sea, are being developed into a marine sanctuary eco-tourism destination. Jabal Sawda near Abha in the Asir Region is also being geared to receive tourists. The site is situated on a high plateau that receives more rainfall than the rest of the country and contains the country's highest peaks, which rise to almost 3,000 meters. Finally, Al Uqair, on the Saudi eastern coast, is being developed to offer waterfront activities that target domestic tourists. These projects will no doubt be the first of many unprecedented initiatives that are to transform Saudi Arabia into a global touristic hub of the highest caliber and offer significant business opportunities for small and medium enterprises and foreign investments.

Entertainment
There are a number of stakeholders working on the entertainment sector in Saudi Arabia. These include GEA, SCTH, the General Culture Authority, and the General Commission for Audiovisual Media (GCAM), which is tasked with licensing the newly reinstated cinemas. In December 2017, the Kingdom decided to lift the 35-year ban on cinemas which has opened up opportunities for international and regional companies to help develop the domestic entertainment industry.

The Development and Investment Entertainment Company (DIEC), a subsidiary company of GEA, was launched by the PIF in January 2018 with an initial capital of $2.6 billion. The company signed an agreement with U.S.-based AMC Theaters in April 2018 to operate AMC cinemas in the Kingdom. DIEC jointly with AMC expects to open a total of 50-100 cinemas in approximately 25 Saudi Arabian cities by the year 2030.

GEA has indicated that this sector needs $71.2 billion to build the suitable infrastructure for entertainment across the Kingdom. In addition to AMC Theaters, GEA has signed contracts with Six Flags, National Geographic, Cirque Du Soleil, and IMG Artists, to operate entertainment venues throughout the Kingdom.

GEA has also expressed interest in exploring relationships with U.S. companies and individuals who have expertise in conceptualizing, planning, developing and managing entertainment, cultural and tourism destinations. It is particularly interested in city planning and development strategies that integrate tourism and entertainment and in training for its staff. 

In April 2018, the Kingdom laid the foundation stone of Al-Qiddiya project, the new entertainment, sports and cultural destination in Saudi Arabia west of Riyadh with a total area of 334 square kilometers. By 2030, the number of annual visitors to Qiddiya is expected to reach 17 million in the entertainment sector, 12 million in the shopping sector, and two million in the hospitality sector.
Private sector participation in the industry is key within the areas of infrastructure development, event operations, content building and capabilities building. The expansion of this sector will also open up opportunities for the private sector through ancillary services such as food and beverages, retail, logistics, tourism and accommodation.

More than 2,200 event titles were held by the GEA in 2017, attracting 7 million attendees in over 50 towns and cities. The first all-female performer concert took place in Riyadh in 2017, selling out immediately due to large demand.  The GEA has set even higher targets for 2018 and 2019, with plans to produce approximately 5,500 events during those years and is ongoing and continuing to KSA continues to raise the number of events. Fore example the Dakar Race was held in Saudi Arabia this year. Religious Tourism
In 2017, religious tourism attracted more than 8 million Muslim visitors, 1.8 million of whom came for the Hajj. The Ministry of Hajj is tasked with implementing the objective of providing an opportunity for the largest number of Muslims possible to perform Hajj and Umrah. This includes raising the number of Umrah pilgrims from abroad to 15 million by 2020 up from 6.8 million in 2017. According to Vision 2030, this number will be doubled to 30 million by 2030. Despite the growth in religious tourists by more than 70 percent between 2007-2017, the total number of pilgrims in 2017 represented only one percent of Muslim population around the world.

Strong infrastructure projects are under implementation to increase the holy sites' capacity to welcome pilgrims, including additional accommodation, a high-speed railway connecting Mecca, Medina and Jeddah (the Haramine Railways), a metro network in Mecca and the new expansion of the King Abdulaziz International Airport in Jeddah.

Moreover, the PIF announced a number of projects in Mecca and Madinah as part of its plan between 2018-2020. In Mecca, the PIF is investing in two projects: the Roua’a Alharam project and Umm Al-Qura development project.  In Madinah there are two additional projects: the Roua’a Al Madinah project and Dar Al-Hijrah Development project. These projects include building hotels, residential units, commercial spaces in order to increase the capacity of the two holy cities to receive visitors.

Opportunities
There are good opportunities for U.S. companies in the following sub-sectors:

• Consulting in tourism development and management

• Consulting in entertainment development and management

• Consulting in concession development and operations

• Planning, development, and operation of public entertainment, historical, cultural, and traditional attractions

• Events planning, promotion and management

• Cinema design, engineering and construction

• Hotel management

• Building and managing amusement parks

• Training and human resource development

• Preservation and conservation of artifacts and heritages

• Conducting cultural exchanges

Web Resources
The Saudi Commission for Tourism and National Heritage (SCTH) https://www.scth.gov.sa
The General Authority for Entertainment (GAE): https://www.saudi.gov.sa
Ministry of Culture and Information: http://www.mofa.gov.sa
Saudi Arabian Cultural Mission (SACM): http://www.sacm.org/
Public Investment Fund (PIF) www.pif.gov.sa  
Invest Saudi: www.investsaudi.sa
Sources: Jadwa Research; BMI Research; World Travel and Tourism Council: www.wttc.org
For more information on opportunities in this sector, please contact the following Commercial Specialists:
Anwar Shaqhan (Jeddah): Anwar.shaqhan@trade.gov; Khalid Khan (Riyadh): Khalid.Khan@trade.gov; and Tareq Ghazal (Dhahran): Tareq.Ghazal@trade.gov