Saudi hospitality sector worth US$18.1 billion by 2016

Published on : Monday, February 18, 2013

atmA rise in the number of pilgrims visiting the Kingdom for Hajj and Umrah, are boosting
domestic tourism growth, with Saudi residents making 22.5 million overnight trips per
annum.

Tourism receipts for Hajj and Umrah currently account for around 3% of GDP and,
according to tourism officials, the country gained a reported US$16.5 billion from
tourism in 2012, representing a 10% increase on the previous year.

The largest hospitality market in the GCC, Saudi Arabia also accounts for the bulk of
international tourist arrivals, at 46% according to an October 2012 GCC Hospitality
Industry Report from Alpen Capital, representing a 50% year-on-year increase against
2011 figures.

“The Kingdom is investing heavily in it’s infrastructure as expansion plans for the new
US$7 billion Jeddah airport project move ahead, with the airport projecting annual
passenger volume of up to 80 million passengers within the next two decades,” said
Mark Walsh, Portfolio Director, Reed Travel Exhibitions, organiser of Arabian Travel
Market .

The Red Sea port of Jeddah is the gateway to Makkah and Medina, a favoured
destination for domestic tourism in the summer, as well as a commercial trading hub for
the west coast of Saudi Arabia.

In addition, Riyadh the capital city and seat of the government, is also experiencing
increased demand from business travelers.

Saudi government investment into key infrastructure projects including airport
expansion, railways and roads, is pegged at around US$80 billion between now and
2022, with investment into major tourism initiatives forecast to grow at a CAGR of 6.9%.

According to the Alpen report, tourist arrivals are expected to grow at a CAGR of 4.0%
between 2012 and 2022, driven by strong growth across all sectors, with occupancies
set to jump from 67.5% in 2011 to 74.2% by 2016 and a US$30 increases in ADR to
US$258.4.

“In tandem demand for hotel rooms means that aggressive development and expansion
plans for a number of major international hotel groups is also on the short-term agenda.
InterContinental Hotels Group has said that Saudi Arabia is one of the markets
representing the most opportunity for its Middle East business to grow in 2013, with two
new properties set to open in Riyadh this year, and a total of eight hotels by 2018,” said
Walsh.

Hotel room supply in the Kingdom is expected to increase at a CAGR of 1.5% between
2011 and 2016, increasing from 243,117 rooms in 2011 to 262,049 in 2016, with 69
properties currently in the planning or construction phase.

“The tourism sector is now the country’s second largest industry, with around 8% of
total jobs, and industry growth presents a huge opportunity for job creation in the local
market, with Takamul [an SCTA affiliate] organising a number of job fairs around the
country and working hand in hand with tourism companies to attract young Saudis
looking to embark on a career in hospitality,” added Walsh.

Held under the patronage of His Highness Sheikh Mohammed Bin Rashid Al Maktoum,
Vice President and Prime Minister of the UAE, Ruler of Dubai and set to celebrate its
20th anniversary, the show has grown to become the largest showcase of its kind in the
region and one of the biggest in the world.

Held under the patronage of His Highness Sheikh Mohammed Bin Rashid Al Maktoum,
Vice President and Prime Minister of the UAE, Ruler of Dubai and set to celebrate its
20th anniversary, the show has grown to become the largest showcase of its kind in the
region and one of the biggest in the world.

New to the 2013 event, ATM is launching the Digital and Technology Day focusing on
online travel developments and showcasing headline speakers from across the industry.

Taking place again this year is the New Frontiers Award, which was created to
recognise outstanding contributions to tourism development in the face of overwhelming
adversity.

Industry Careers Day will wrap up the week providing the opportunity for visitors looking
to make a career move to meet with the exhibitors’ HR contacts looking for their next
recruit.

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