Leading the way: Visitor numbers rise to put the Kingdom top in the region

Foreign arrivals rose dramatically in 2011, making Saudi Arabia the largest travel market in the Middle East and North Africa. Plans to remove restrictions on the movement within the Kingdom of religious visitors from a number of countries, along with major tourism developments in the pipeline, are set to boost the market further. As demand grows, international hotel chains are expanding their presence, including in the middle and lower end of the market that has traditionally been left to local players.


International arrivals grew to 17.3m in 2011, according to the Tourism Information and Research Centre (MAS) of the Saudi Commission for Tourism and Antiquities (SCTA). This was a 60% rise on 2010 and surpassed the previous record, set in 2008 when 14.7m visitors came to the country.

The UN World Tourism Organisation (WTO) attributed the increase to efforts by the authorities to boost tourism’s contribution to the economy. The breakdown given by MAS shows that growth was driven largely by rises in the number of visitors from South Asia and the Middle East (excluding GCC states). Visitor numbers from South Asia rose by 190% on the previous year, largely due to a significant increase in the number of religious visitors.

Arrivals from the Middle East rose by 124%. The number of Jordanian visitors was up more than threefold, with a nearly four-fold increase in the number of Jordanian religious visitors. The largest source market in 2011 for inbound arrivals was Kuwait, accounting for 14.7% of the total, followed by Jordan (9.5%) and the UAE (8.8%). By region, the largest market was the GCC, accounting for 38.7% of all visitors, followed by the Middle East on 22.1% and South Asia on 22%. The other major regional markets accounted for less than 5% each.

Religious Travellers

Growth was driven in particular by a 44% increase in the number of religious travellers and pilgrims, accounting for over 2m more visitors than the previous year, and a 178% increase in the number of people visiting friends and relatives, which accounted for more than 2m extra arrivals. Of all inbound tourists, 6.99m, or 40% of the total, visited for religious purposes in 2011.

The growth in religious arrivals appears to be related in part to a 45% increase in the number of Umrah pilgrims, after the authorities issued around 1m additional Umrah visas in 2011 compared to 2010. Some 2.93m pilgrims completed the Haj in 2011, of which 1.93m came from outside the Kingdom.

On The Up

The rise in visitor numbers moved the country from being the second-largest tourism market in the Arab Middle East (not including the Maghreb countries) in 2010 to the largest in 2011, ahead of Egypt on 9.5m (where numbers were significantly down due to political upheaval, though arrival numbers in Saudi Arabia in 2011 were also comfortably ahead of Egypt’s 2010 figure of 14.05m) and Dubai on 8.13m. The Kingdom accounted for 31% of the regional total, up from 18% in 2009.

However, spend per visitor was lower than in other regional markets, and receipts grew less strongly. Total international tourism receipts were $8.46bn in 2011, according to the WTO, up 26% year-on-year (y-o-y). This accounted for 18% of regional spend, ranking Saudi Arabia third, just behind Dubai on 21.1% and Egypt on 19%. The average spend per foreign arrival was $747 in 2011. Visitors for religious purposes were the highest spenders of all, averaging outlays of $1164 per person, followed by business and professional visitors on $825.

While overnight visitor arrival numbers rose strongly in 2011, they fell back in the first quarter of 2012 by 17%, to 2.72m. This was driven by drops in the number of visitors from some key GCC states (arrivals from Kuwait, the UAE and Qatar were down 40%, 33% and 25%, respectively) and South Asia (down by 11%), and – in terms of purpose of visit – by falls in religious and business arrivals (down 37% and 30%, respectively). However, tourist nights spent in the Kingdom were down by just 1%, as visitors stayed longer on average and spending rose by 33%, on the back of a 35% increase in expenditure on accommodation and a 94% rise in shopping outlay. Some 63.6% of visitors travelled to the Kingdom by air in 2011, while 36.4% used land transport.

Domestic Tourism

The SCTA’s long-term goal is to increase the total number of tourists, comprising both arrivals and domestic travellers, to 88m by 2020, compared to just under 40m in 2011.

The strategy for the sector’s development rests in part on persuading Saudi nationals to holiday at home more. Saudis made 15.28m tourist trips abroad – not including day trips – in 2011, 71% of which were for leisure purposes. Domestic tourism is key for the development of the leisure segment in particular, as the Kingdom is largely closed to leisure tourists from outside the Gulf. MAS figures show that Saudis took 22.5m domestic overnight tourism trips in 2011, slightly down on 22.8m the year before (and well down from 32m in 2009), amounting to 110m nights spent (down from 117m in 2010).

The most popular destination for domestic tourists in 2011 was Makkah Province, accounting for 45.1% of trips, followed by Medina Province, on 13.8%. By city, the most visited was Jeddah, followed by Makkah, Medina, Dammam and Taif. The largest category of domestic trips by purpose in 2011 was leisure, accounting for 45.4% of the total (compared to just 0.6% for foreign arrivals), followed by religious travels (23%), and visiting friends and relatives (22%). Jeddah was the most popular destination for leisure trips, followed by Taif, a popular summer getaway because of its elevation and cooler temperatures. The great majority of domestic tourism trips – 81.5% – were made by car, while 6.6% were made by air. The average length of stay was 4.9 nights.

While the number of trips and nights spent fell yo-y, expenditure rose. Total domestic tourism spend was SR35.6bn ($9.5bn), up from SR31.3bn ($8.3bn) in 2010. Accommodation expenses accounted for 25.5% of the total, followed by shopping on 24.9% and food and beverages on 19%. Domestic overnight trips fell by 4% y-o-y in the first quarter of 2012 to 4.9m, pulled down by a 48% y-o-y fall in leisure and holiday trips, though this was mitigated by significant growth in all other categories. Total nights spent increased by 10% and spending rose by 22%, with outlays on accommodation up 21%.

Tourism accounted for 3.6% of GDP in 2010, according to the SCTA, down from 4% the previous year. The sector contributed 7.5% of non-oil GDP and 12.3% of private sector GDP. Transport services accounted for the largest share of tourism GDP in 2010, at 35%, followed by food services on 34.8% and accommodation services on 22.9%.

Regulation & Promotion

The sector is regulated by the SCTA, which is also responsible for tourism promotion. It took over regulation of the accommodation segment in 2008 and subsequently changed the hotel classification system to the international star-based standard. The Kingdom is also establishing regional tourism boards, to be headed by provincial governors, which will take the lead in local development of the sector.

In addition, the SCTA is working to encourage the formation of industry associations that could take on some regulatory and promotional responsibilities, and proposals have been submitted for the establishment of professional groupings for accommodation, travel agencies and tour guides.


An important regulatory area for the industry that that the SCTA does not have control of but is lobbying to change is the visa system. Currently, there is no such thing as a tourism visa for the Kingdom – limited numbers of tourist visas were issued for group visits under a trial project but this was discontinued in 2010, having been in place for around a year. However, other changes facilitating access to Saudi Arabia have taken place or are under way, including the creation of a business visa two years ago. The SCTA is also pushing for the creation of a conference and events visa that would eliminate the need for a local sponsor (see analysis).

In another important development, changes are to be made to the visa system for Umrah pilgrims from 64 countries, removing restrictions on their travel in the Kingdom. This has been approved and will be implemented in 2013, Abdullah Al Jehani, the vice-president for tourism at the SCTA, told OBG. Umrah pilgrims are currently limited to visiting Makkah, Medina and Jeddah, but under the new regulations pilgrims from the designated countries will be permitted to travel throughout Saudi Arabia. Given that around 5.5m people make the pilgrimage annually, this could have a substantial impact, in particular on tourist destinations near pilgrimage sites, such as the mountain resort of Taif.


Of international arrivals in 2011, 41% stayed in hotels, 19% in furnished apartments and 31% in private accommodation. The most popular form of accommodation for domestic trips was furnished apartments (partly as they often represent better value for families travelling), accounting for around 42% of all domestic overnight trips, followed by hotels with 26%. These were especially popular among leisure travellers, twice as many of whom (5.7m) stayed in apartments as in hotels.

The number of starred hotels in the country stood at 951 in 2011. Of these, more than half – 521, or 55% of starred hotels – were in Makkah Province, where demand is relatively high due to the Haj and Umrah pilgrimages, for which Makkah City is the main destination, and because the province hosts Saudi Arabia’s second-largest city, Jeddah. A further 159 hotels, or 17% of the total, were in Medina Province, while 60 (6%) were in the province of the country’s capital and largest city, Riyadh.

Makkah Province accounts for an even greater proportion of hotel rooms, at 62.2%, due to its hosting both the Kingdom’s main pilgrimage destination, Makkah City, and its principal leisure and business destination, Jeddah. It is followed by Medina Province with 23.3% of hotel rooms and Riyadh Province with 5.1%. No other province apart from the Eastern Province (5.2%) accounted for more than 1% of the Kingdom’s total supply of hotel rooms.

Star Turn

Five-star establishments accounted for just 8.3% of the total, four-star for 4.6%, three-star for 18.8%, and two-star and below for 68.2%, according to MAS data. However, the distribution of rooms by star category tells a different story, as higher-end hotels tend to be substantially larger. Five-star hotels accounted for 19% of total rooms, four-star establishments for 31.7%, three-star locations for 22.3% and hotels of two or less stars for 27%, out of a total of 157,430 rooms in the Kingdom.

Occupancy rates have been increasing in recent years, from around 51% in the early to mid-2000s to 59% in 2010, rising to 63% in 2011. Occupancy rates in 2011 peaked in the month of September at around 80%, according to figures from MAS. The region with the highest room occupancy was Medina, at 69.8%, followed by the Eastern Province on 67.8%. Among the best performing sub-segments were five-star hotels in Medina City, with an occupancy rate of 80% for the year. In 2011 the total number of furnished apartment establishments in Saudi Arabia stood at 2026, and these contained a total of 86,687 apartments between them.

Foreign hotel companies are prohibited from owning property in the Kingdom, meaning their presence is restricted to franchises and management contracts. Major local investors include Jabal Omar, which is investing $3.2bn in a tourism, shopping and leisure complex in Makkah, including 38 hotels with a total of 13,500 rooms, to be completed within five years. Brands involved will include Hilton, Hyatt, Marriott and Sheraton. In Makkah, local firm Abdul Latif Jameel Real Estate Investment is developing the Jabal Al Kabbah project, an 8000-room and suite hotel cluster whose flagship establishment, the Anjum Hotel, is scheduled to open its doors in 2013.

Human Resources

Direct employment in the tourism industry stood at 491,768 jobs in 2010, according to the SCTA, of which 128,027 (26%) were filled by Saudi nationals. Saudi representation in the sector’s workforce jumped in 2009 to 25.7%, up from the 20-22% of the previous five years. The industry accounted for 6.1% of total employment and 6.9% of private sector employment in 2010.

In an effort to increase Saudiisation in the sector, the authorities from February 2013 effectively increased the minimum wage for Saudis working in hotels by obliging such establishments to pay nationals at least $800 a month if they are to be counted towards Saudiisation quotas. If companies fail to reach these quotas, they face restrictions on the number of expatriate staff they can hire.

Some in the industry complain that it is difficult to recruit qualified nationals, who are also often reluctant to enter the sector. Nevertheless, at 26% the Saudiisation rate is double that of many industries. “Working for high-end international hotels can be very attractive. At present, Saudis in the sector mostly work on reception, but they are gradually moving into other areas,” said Al Jehani.

Traning Efforts

Local training efforts are also likely to boost the availability of skilled staff. The number of tourism training centres has been increasing rapidly, from 10 in 2004 to 36 in 2010, and expansion in the hotel sector is set to drive demand for qualified employees.

“Given the sharp rise in the number of rooms, there will be a rise in demand for skilled workers, both from abroad and from Saudi Arabia,” Jawaid Abdul Hameed, the vice-president of marketing, sales and business development at travel operator Elaf, told OBG. “Hospitality is becoming a major employer, and this increase in manpower will mean more competition and a more skilled workforce.”

Mega Projects

To boost the country’s tourism potential, the SCTA is planning to develop 20 new major tourism projects. The first of these is Al Uqair, a mixed-use tourism and leisure development on the eastern coast. The project will extend along a 30-km stretch of coastline, covering 100 sq km of land, and will be developed over three 10-year stages, starting from 2013. The site was chosen because of its sandy beachfront and calm sea, which is a natural lagoon protected from the open sea and large waves. Facilities in the development will include hotels, second homes, marinas and theme parks.

In October 2012 the SCTA told OBG the authorities were in the final stages of setting up the project company, which will be in charge of managing development. Al Uqair municipality will be a shareholder in the firm, which will have capital of $800m. Other stakeholders will be major institutional investors, including the General Organisation for Social Insurance, pension funds, and the Saudi Hotels and Resorts Company. The Public Investment Fund has committed to covering 25% of the project funding, while the remainder will be covered by shareholders. Salah Al Bukayyet, the vice-president for investment at the SCTA, told OBG that the first facilities at the development should be open by 2016. “We have interest from hotel operators, but we will leave that to the project company. Once it is established, it can start to engage operators,” he said.

Target markets for the project will include the Eastern Province, Qatar, Bahrain and Riyadh. “We believe Riyadh is the potential cash cow for the project. There is a lack of entertainment options in the capital. Furthermore, Al Uqair will be the closest beachfront development to the city, and other beaches get very crowded during the school break,” said Al Bukayyet of its advantages for the capital’s residents. A new motorway in the final stages of development, the Gulf Expressway, will pass by Al Uqair, improving transport links to the site.

In addition to Al Uqair, the authorities are planning to develop another 19 tourism projects, most of them along the Red Sea coast, in addition to schemes in the mountain resort of Taif and the Farasan Islands in the south-west, though these are currently in the early stages of planning.

Heritage, Museums & Antiquities

Saudi Arabia hosts two UN Educational, Scientific and Cultural Organisation-listed World Heritage Sites: the ancient Nabatean city of Madain Saleh in the northwest and the historic city of Dirayah, which was the capital of the first Saudi state, just outside Riyadh. The latter is currently closed for renovation and is due to reopen in two years’ time. To boost tourism to the sites, the authorities have invested in the construction of an airport serving Madain Saleh, and in a number of museums at both.

In addition, there are plans to list a number of other sites, including Al Balad, the old city of Jeddah, according to Ali Al Ghabban, the SCTA’s vice-president for antiquities and museums. The SCTA is also working to launch 11 provincial museums, each based on the same standards as Riyadh’s National Museum (also known as the King Abdulaziz Museum). Construction has begun on five of these, with the first scheduled to open within two years in the province of Asir. There were 94 museums in the Kingdom as of 2011, of which 76 were private.

Village Renovation

Another initiative under way is the rehabilitation of traditional villages, which will act as tourist attractions. The authorities are seeking businesses to invest in this through the creation of public-private firms. “We are using business as a motor. Such projects need to be sustainable as the government cannot fund them indefinitely,” Al Ghabban told OBG.

In some cases local communities will invest in the projects, using government loans. The final stages of the legal process to allow the establishment of such companies are under way.

Seven pilot projects involving local communities are currently being looked at. One example is the village of Al Ghat, which will see the creation of both a heritage hotel consisting of 70 traditional mud houses, and a local museum in the form of a renovated palace. The SCTA is also working on creating a firm to run heritage hotels, the Saudi Heritage Hotel Company, using heritage sites owned by its antiquities and museums wing on a model similar to that used by Spain’s Parador hotel chain.


It is unlikely that the Kingdom will be able to sustain the huge growth in arrivals seen in 2011. However, the removal of internal travel restrictions on large numbers of Umrah visitors and efforts to persuade visitors to stay longer are likely to boost the sector in the medium term. Large-scale investment in hotels could increase competition and bring down prices, which may attract more visitors and persuade a greater number of Saudis to holiday at home, as should the development of big leisure projects.

You have reached the limit of premium articles you can view for free. 

Choose from the options below to purchase print or digital editions of our Reports. You can also purchase a website subscription giving you unlimited access to all of our Reports online for 12 months.

If you have already purchased this Report or have a website subscription, please login to continue.

The Report: Saudi Arabia 2013

Tourism chapter from The Report: Saudi Arabia 2013

Cover of The Report: Saudi Arabia 2013

The Report

This article is from the Tourism chapter of The Report: Saudi Arabia 2013. Explore other chapters from this report.

Covid-19 Economic Impact Assessments

Stay updated on how some of the world’s most promising markets are being affected by the Covid-19 pandemic, and what actions governments and private businesses are taking to mitigate challenges and ensure their long-term growth story continues.

Register now and also receive a complimentary 2-month licence to the OBG Research Terminal.

Register Here×

Product successfully added to shopping cart