Within just a few years, Saudi Arabia’s tourism industry has undergone a transformation of significant proportions. The country remained largely closed to foreign visitors until the Kingdom began to issue tourist visas in 2019, primarily serving as a destination for religious pilgrimages and business-related travel. However, the country has not merely opened its doors – it is committing massive investment to the sector in an effort to turn Saudi Arabia into a globally renowned tourist destination. The ambitious drive is part of the government’s broader Vision 2030 programme, a comprehensive roadmap to diversify the economy and transform society.
Sector Goals
Vision 2030 envisages tourism as a key non-oil driver of economic growth, leveraging the Kingdom’s natural wonders and historical landmarks, including eight UNESCO World Heritage sites. The Kingdom is developing globally appealing and technologically advanced entertainment and leisure attractions, as well as significantly expanding its accommodation and hospitality offerings. The government has committed to investing $800bn through 2034 and aims to catalyse private investment of $80bn by 2030. The administration is targeting tourism revenue of $85bn for 2024, up from about $66bn in 2023. With its sights firmly set on establishing itself as a global luxury tourism centre, and with a broad range of expansive and ambitious projects in development, the sector is evolving at a rapid pace, making the country’s tourism industry an intriguing and dynamic source of investment opportunities.
Structure & Oversight
Saudi Arabia’s tourism ecosystem consists of six public entities that work in conjunction to implement the Kingdom’s tourism strategy: the Ministry of Tourism (MoT), the Tourism Development Fund (TDF), the Saudi Tourism Authority (STA), the Saudi Air Connectivity Programme (ACP), the Tourism Development Council (TDC) and the Saudi Red Sea Authority (SRSA). The MoT’s responsibilities include setting regulations and legislation for the development of the sector, attracting investment, developing human capital, issuing licences and creating job opportunities. Meanwhile, the goal of the TDF is to facilitate investor access to high-potential tourism investment opportunities. The fund provides financing, supports the development of technologies and infrastructure that serve the sector, finances training centres and institutions that specialise in tourism, and assists in concluding contracts with financing agencies.
The STA was created to support the growth of the sector by meeting the needs of tourism companies and other stakeholders. Its roles include supervising marketing campaigns, developing tourist packages and products, and promoting travel in Saudi Arabia. The TDC is responsible for coordinating the activities of entities within the tourism ecosystem and ensuring stakeholder alignment in strategic goals. It also works to enable private investment in the sector and evaluates project implementation.
Established in 2021, the ACP works to ease market entry and promote opportunities for air travel partners, with the aim of establishing the country as a global leader in air connectivity. It plans to establish new domestic and international air routes, boost flight frequency, support improvements to airport infrastructure and increase competitiveness. Lastly, the SRSA was created in 2021 for the purpose of regulating the coastal tourism segment. It issues licences and permits, formulates policies and strategies, oversees the preservation of marine life and works to attract investment, as well as to support the growth of marine tourism activities.
Elsewhere, the entertainment sector is helping to generate tourist visits at the Kingdom’s growing portfolio of events and leisure attractions. The entertainment industry is classified as a distinct sector by the Saudi authorities, with the General Entertainment Authority (GEA) responsible for regulating the industry. The entity fosters the growth of companies in the sector, works to attract local and foreign investment, provides a range of entertainment offerings, and issues licences and permits.
Strategy
Under the umbrella of the broader Vision 2030 initiative, Saudi Arabia established the National Tourism Strategy in 2019. Tourism plays a major role in the diversification drive, and as such a vast array of holiday destinations, leisure and entertainment venues, and hotels are under construction, including flagship giga-projects. The strategy has set 2030 targets of welcoming 150m visitors annually, creating 1m jobs, hosting over 37m Hajj and Umrah tourists, and attaining a GDP contribution of 10%, as well as attracting greater investment. It also designates 10 key destinations around the country that are home to particularly significant development projects: Al Baha, Jouf, Eastern Province, Jeddah, Taif, Al Ula, Hail, Al Madinah, Aseer and Riyadh.
In May 2024 Gloria Guevara Manzo, chief special adviser at the MoT, announced that an update to the country’s tourism strategy was in the works, with a possible announcement by the end of the year. She elaborated that the revised strategy – the first update since 2019 – would utilise new technologies such as artificial intelligence, and would aim to further leverage the country’s assets, such as culture, heritage and hospitality. As of November 2024 the updated strategy was yet to be unveiled.
Performance
Though the Kingdom’s investment drive in its tourism sector has only been under way for a few years, it is already starting to bear fruit. According to the UN’s World Tourism Barometer report, Saudi Arabia saw significant growth in tourist figures in 2023, reaching 27m international arrivals. This represents an increase of 56% compared with 2019 levels, the largest growth in international arrivals among major tourism destinations. International and domestic tourists combined surpassed 109m in 2023. Saudi Central Bank data showed that tourism spending reached a record high of SR141bn ($37.6bn) in 2023, a year-on-year (y-o-y) increase of 44%. This boom has continued into 2024, with official data recording nearly 60m tourists and expenditure of SR143bn ($38.1bn) in the first half of the year.
A report published in June 2024 by Dubai-based investment banking advisory company Alpen Capital forecasts robust revenue growth in the hospitality industry across the GCC in 2023-28, forecasting a compound annual growth rate (CAGR) ranging from 6.9% to 11% across its member countries. Saudi Arabia’s projected growth is in line with the GCC average of 7.5%, worth $33.6bn thanks to the initiatives put in place under Vision 2030, including e-visa options.
Air Connectivity
Air traffic through the Kingdom has experienced record-breaking increases in passenger numbers, flights and cargo, according to figures published by the General Authority of Civil Aviation. The number of passengers in the first half of 2024 reached 62m, compared to 53m in the same period in 2023, a y-o-y increase of 17%. The number of flights increased to about 446,000, up 12% y-o-y, and air freight volume increased to 606,000 tonnes from 430,000 tonnes, a y-o-y increase of 41%. The country’s air connectivity has also increased significantly, with 163 destinations being served in the first half of 2024, up 23% y-o-y.
The Ramadan holiday period saw a particular spike in travel in 2024, according to analysis from Skyscanner, a UK-based online search aggregator and travel agency. Its data showed that the top five source cities searching for travel options in Saudi Arabia for the period of March 8 to April 13 were Cairo, London, Dubai, Manchester and Riyadh, and the top five destinations were Jeddah, Riyadh, Al Madinah, Dammam and Abha. Ramadan also saw a significant y-o-y increase in Umrah bookings, with a surge in journeys being made from the UAE to the Saudi cities of Makkah and Al Madinah.
International connectivity has been aided by a flurry of new agreements. In March 2024 Saudi Arabia signed over 15 agreements with travel partners and aviation firms, including Trip.com, a Singapore-based travel agency; flynas, a Saudi low-cost airline; Eurowings, a German airline; and the Visit Bahrain, Visit Oman and Qatar Tourism agencies. The partnership with Trip.com, STA’s largest global partnership to date, aims to attract 350,000 tourists to the country over the next year. In addition, the collaboration with flynas has led to a campaign to boost international arrivals to the Kingdom, with the airline launching a new route between Jeddah and Berlin. Similarly, the agreement with Eurowings will see the launch of two new direct routes from Cologne and Berlin to Jeddah at the end of 2024. Within the GCC, campaigns resulting from the STA’s partnerships with Visit Bahrain, Visit Oman and Qatar Tourism aim to collectively showcase the cultural, historical and natural attractions of the wider region.
Visas
Saudi Arabia’s approach to foreign visitors has shifted markedly, and it has introduced visa reforms to reflect this. Visas had previously been mostly restricted to Muslim pilgrims, foreign workers and sports spectators, but the Kingdom opened its doors to tourism in 2019 with the issuance of tourist visas. The initial reforms made citizens from 49 countries eligible for e-visas or visas upon arrival, including the US, Australia, China and several European countries. Within the first 10 days of the new visa system, the country received some 24,000 tourists.
Additional reforms have since followed; in January 2023 the STA and Ministry of Foreign Affairs launched a 96-hour stopover visa for flynas and Saudia passengers, available free of charge, presenting the Kingdom as a more viable stopover destination for travellers on long-haul flights. In March 2023 visas were made available to all GCC residents; issuances were previously limited to certain professions. In August 2023 the number of nationalities eligible for tourism e-visas was expanded to include an additional eight countries, including Azerbaijan, South Africa and Tajikistan. In total, 66 countries were eligible for tourist e-visas as of October 2024.
Source Markets & Promotion
The Kingdom’s top tourism source markets in 2023 were Bahrain, at 3.4m visitors; Egypt, at 2.6m; Pakistan, at 2.5m; Kuwait, at 2.3m; and Indonesia, at 1.8m. Other GCC markets also provided high numbers of arrivals, with the UAE contributing 1.4m, Qatar 1.1m and Oman 455,000. The most popular reason for travel to Saudi Arabia for international visitors was religious travel, representing 42% of total visits; leisure, at 23%; visiting family and relatives, at 23%; and business, at 7%.
Saudi Arabia has been actively pursuing agreements to broaden its source markets. A new air route was established between Saudi Arabia and China, offering direct flights between Shanghai and Riyadh beginning in April 2024 with an annual capacity of 35,880 inbound seats. New routes connecting Saudi Arabia with Italy have also been created, with flights from Rome to Riyadh commencing in May 2024 and Rome to Jeddah in August 2024.
In May 2024 Saudi Arabia launched Saudi Summer is Next Door, a programme to encourage international tourism over the summer period, offering incentives such as visa assistance, events, free flights for children and tax-free shopping. The initiative covered seven destinations – Aseer, Al Baha, Taif, the Red Sea, Jeddah, Riyadh and Al Ula – and offers over 550 tourism options, and 150 deals and packages. Among the events covered by the initiative were Jeddah Season and Aseer Season, annual summer-long events in their respective cities that offer a range of cultural, artistic and entertainment activities.
Domestic Tourism
Domestic tourism has been growing steadily in recent years, with official figures showing a total of 81.9m domestic tourists in 2023, a 5.2% y-o-y increase, with a CAGR of 11.4% between 2019 and 2023. Domestic tourist spending reached SR114bn ($30.4bn) in 2023, up from SR107bn ($28.5bn) in 2022 and a leap from SR61bn ($16.3bn) in 2019. Locals have been taking advantage of cheaper flight options that have resulted from an increase in flight routes, greater capacity and the addition of new airports. The top destinations for domestic travellers in the first four months of 2024 were Makkah, Riyadh, Jeddah, Al Khobar and Abha, with Al Ula, Tabuk and Hail showing increasing popularity. Data published by travel app Wego shows that domestic flight bookings over the summer period of 2024 increased by 16.6% y-on-y.
The proliferation of events, festivals and leisure attractions – as well as growing interest in diving, snorkelling and other nature-based activities – are helping to drive demand among local tourists. In particular, theme parks have emerged as favoured destinations for leisure and entertainment. In line with Vision 2030, numerous theme parks were under development as of October 2024, notably at the Qiddiya giga-project. The popularity of theme parks is bolstered by modernisation and technologically advanced offerings, with virtual reality and augmented reality of particular note. According to a report published by UK polling company YouGov in March 2024, one in five residents cite visiting theme parks as one of their favourite leisure activities.
Hotels
Saudi Arabia’s hotel supply included more than 453,000 licensed rooms as of December 2024, consisting of more than 373,000 hotel rooms and approximately 70,000 serviced apartments. Makkah features the highest number of rooms in the Kingdom, with more than 250,000; followed by Al Madinah, with 58,800; and Riyadh, with 37,800.
In order to position the country as a major destination for international tourism, expansion plans for the sector include the development of 320,000 new hotel rooms, at an estimated cost of $104bn, by 2030. Data from global real estate consultancy Knight Frank shows that up to 82% of the additional supply would be luxury, upper-upscale or upscale hotels.
The country’s top-five hotel operators are all planning on adding supply in the coming years, with Radisson Hotel Group planning to add nearly 2000 more rooms to its capacity of just over 5000. IHG Hotels & Resorts and Accor are aiming for expansion as well, with the former adding about 9000 rooms to its existing 14,000, and the latter adding about 9500 to its nearly 16,000. Meanwhile, Hilton Worldwide and Marriott International are both targeting vast expansions; Marriott plans to add nearly 16,000 rooms to its supply of about 10,300, whereas Hilton is aiming to add about 16,400 to its existing 6000.
In April 2024 Saudi real estate company Cayan Group signed an agreement with Hilton to develop a 201-key Hampton by Hilton hotel within the NEOM giga-project. Scheduled to open in 2025, the hotel will be the second Hampton within NEOM. Similarly, Marriott International also signed an agreement in April 2024 for a second hotel within NEOM, marking its seventh collaboration with the giga-project. The Ritz-Carlton Reserve establishment will be a 60-villa ultra-luxury complex located in the Trojena mountain resort. In addition, in May 2024 another Ritz-Carlton Reserve estate was launched on Ummahat Island in the Red Sea, the first of its brand in the Middle East. In September 2024 Zannier Hotels announced that it was working within NEOM to develop an eco-resort in Zardun, one of the destinations within Magna. In addition, in September 2024 the country announced the cancellation of fees for commercial activity licences for hotels, hotel apartments and residential resorts as part of efforts to boost investment.
Giga-Projects
The scale of Saudi Arabia’s drive to transform its tourism industry is exemplified by its enormous flagship giga-projects, a range of attractions and experiences being developed to establish the Kingdom as global tourist destination. “As tourism demand rises, there is a growing opportunity to enhance infrastructure and services that cater to a diverse range of visitors,” Wajdy Al Ghabban, CEO of Catrion, told OBG. “Balancing expansion with quality service delivery will be essential for sustaining longterm growth and boosting economic impact.”
The Public Investment Fund, the country’s sovereign wealth fund, owns four tourism giga-projects: NEOM, Qiddiya, Diriyah and Red Sea Global. NEOM is a sprawling urban area covering 26,500 sq km. Designed to align with Vision 2030’s principles of sustainability, technological innovation and quality of life, NEOM is intended to be a smart city that operates on a zero-carbon approach. It consists of five regions, three of which are to be tourist destinations: Magna, Sindalah and Trojena.
Magna is to be a luxury coastal development, consisting of 12 locations along a 120-km stretch of the Gulf of Aqaba shoreline. Intended as a destination for eco-tourism, Magna will focus on the conservation and cultivation of flora and fauna, and will aim to leverage the area’s natural attractions. In addition, it will be located within a nature reserve, where 95% of the land is reserved for wildlife. Upon completion, it will consist of 15 luxury hotels, 1600 rooms, suites and apartments, and over 2500 premium residences, in total covering 406 sq km.
Sindalah is described as NEOM’s first luxury island and yacht club destination. The Kingdom aims for Sindalah to be a global yachting centre that will cover 840,000 sq metres and consist of three hotels with 440 rooms, as well as 218 serviced apartments. Its geographic location means that it is well-positioned to serve European, Saudi and GCC yachting communities, providing access to a 86-berth marina and 75 offshore buoys for super yachts.
Trojena will serve as NEOM’s mountain destination, offering alpine and adventure sports due to its subzero winter temperatures and moderate year-round climate. As well as 36 km of planned ski slopes, it will include a 3000-seat mountainside amphitheatre, and over 3620 hotel rooms and serviced apartments, offering over 100 indoor and outdoor activities and three months of winter snow skiing. The destination is expected to welcome 700,000 annual tourists by 2030. Ennismore, Minor Hotels, Marriott International and Raffles Hotels & Resorts have all signed agreements to establish hotels at Trojena.
Elsewhere, Qiddiya is described as a destination city based on the pillars of entertainment, sports and arts. Spanning 376 sq km, the city will feature over 400 attractions, including 12 branded theme parks, water parks, golf courses and sports arenas. In addition, it will provide a variety of real estate options to house over 600,000 residents. With an estimated 48m visitors per year, Qiddiya is intended to be a globally recognised entertainment destination.
The Red Sea Project will be a luxury coastal destination covering 28,000 sq km, which upon completion will consist of 90 islands, 50 hotels, 8000 rooms and 1300 luxury residences. The project is surrounded by the world’s fourth-largest barrier reef and, in line with the Vision 2030 focus on sustainability, will prioritise the conservation and protection of the natural environment. Indeed, 75% of the development’s area will be designated for conservation, with the aim of achieving a 30% net positive conservation benefit by 2040 by cultivating biodiversity.
Phase one of the project is progressing, with three of the planned 16 resorts welcoming guests and Red Sea International Airport commencing international operations in April 2024, with two flights per week from Dubai, and more destinations to be announced. Visitor numbers will be limited to 1m per year in order to preserve the local ecosystem. The official target is for the project to contribute $5.3bn to the national economy annually from 2030.
Lastly, Diriyah is the birthplace of modern-day Saudi Arabia and home to At-Turaif, a UNESCO World Heritage Site, as well as the original home of the Al Saud family. The giga-project is a $62.2bn development intended to transform the city into a global tourist destination by providing an experience rooted in Saudi heritage and culture. The project is targeting 27m annual visitors, and it aims to boost its appeal as a tourist destination with the addition of 38 new hotels and resorts, including offerings from Ritz-Carlton, Park Hyatt and Raffles, as well as six museums, 26 cultural attractions and an array of luxury and lifestyle outlets. In addition, the city will host a range of festivals, sports events and concerts.
Sport
Establishing itself as a global destination for sports activities has become a key goal for Saudi Arabia. The Quality of Life Programme, a Vision 2030 realisation programme established in 2018, aims to promote sports, among other sectors, as part of a healthy lifestyle. As such, significant investment is being directed towards the development of sports facilities and venues, including the Sports Boulevard mega-project in Riyadh. The project will provide a range of recreational activities in a 135-km stretch that is set to be the largest linear park in the world.
According to the Ministry of Investment, the sports sector is worth about SR30bn ($8bn), and it is projected to rise to SR84bn ($22bn) by 2030. In addition to constructing sports facilities, the Kingdom is establishing itself as a host of major international sports. It is set to host the 2034 FIFA World Cup across 15 stadiums. Four of these are current stadiums set for refurbishment, whereas the remaining 11 are either under construction or in development. The largest of these will be King Salman International Stadium in Riyadh, with seating capacity of 90,000 people. Other stadiums will be built as parts of the NEOM, Qiddiya and New Murabba projects. The Kingdom has been selected to host the Asian Winter Games in 2029, and it has held the Saudi Arabia Grand Prix Formula 1 racing event every year since 2021. Riyadh Season, launched in 2019, has become a mainstay for major boxing events.
In addition, the e-sports industry is being nurtured as a significant source of revenue as part of the country’s diversification efforts. The National Gaming and E-sports Strategy, announced in 2022, aims to position the country as a global centre for gaming and e-sports, with a target of attracting 10m visitors, creating 39,000 jobs and providing an economic contribution of over SR50bn ($13bn) by 2030.
Outlook
In just a few years, Saudi Arabia has kickstarted its tourism industry with heavy investment and a determination to achieve international recognition. By maintaining its focus on offering a multifaceted portfolio of attractions – from luxury beach resorts to high-tech entertainment cities, sports events and leisure activities – and by leveraging its rich cultural heritage and historical landmarks, the Kingdom continues to broaden its appeal to potential visitors. Improving transport infrastructure, streamlining visa options and increasing air connectivity have all contributed to a boom in visitor numbers. As developments progress and more of the country’s tourism projects come online, the sector is primed to play a key part in achieving the goals of Vision 2030.
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