Saudi Arabia’s plans to open up the country and its economy to global tourism are in full swing. In addition to an ambitious agenda of new infrastructure developments, the kingdom has loosened visa restrictions and launched a major international marketing campaign to attract overseas leisure visitors. However, substantial challenges in the short to medium term suggest that the targets for foreign visitors will not be met; a stronger focus on developing domestic tourism may yield greater success and create more viable business opportunities.

Gulf Monitor | Daniel Moshashai & Rachna Uppal | Tourism




Aiming high: Saudi seeking status as global attraction

The kingdom’s move to open its doors to international tourists in September has resulted in a raft of opportunities in hospitality, retail, travel and infrastructure, with a growing number of businesses looking to gain a foothold in this new frontier in the global tourism market.

The developments come as Saudi Arabia, seeking to capitalise on a rising trend of inbound non-religious travellers, launches a strategy to position the country among the world’s top international tourism destinations.



With the aim of securing a 70:30 ratio of non-religious to religious foreign visitors by 2030, the kingdom has developed a tourism plan which is squarely focused on leisure and relaxation. Substantial investment has been earmarked for expanding and diversifying offers in international events, luxury destinations, heritage sites and eco-tourism, and government agencies have announced major agreements with travel agencies, real estate and retail companies as well as major hotel groups. This has created fresh momentum in the construction sector, where approximately 48,000 new rooms – 40% of construction projects in the Middle East – are expected to be added to the supply of tourist accommodation over the next decade.



In tandem, the kingdom is also working to relax visa restrictions and social rules in order to increase tourism activity and attract the largest and broadest cross-section of international tourists. In addition to issuing Umrah pilgrims with extended tourist visas, allowing them to tag on a few extra days to explore more of the country beyond the holy cities of Mecca and Medina recent reforms include allowing foreign non-married couples to book hotel rooms and relaxing clothing requirements for women visiting the kingdom from overseas.

Other policies aimed at capturing western tourists may follow in time. The sale of alcohol is not officially part of plans but anecdotal observations of hotel bars being constructed in Riyadh suggest that the substance may be made available on a limited basis in the future. However, implementing this, and other controversial steps, such as the push earlier this year to permit some businesses to remain open during prayer time, are likely to be tentative and fall short of foreigners’ expectations, since making a blank slate of the kingdom’s long-established norms depends upon the ability of the leadership to garner popular support.

Notable challenges facing tourism development



Targets for foreign tourism in the kingdom are faced with many obstacles which may be overlooked by the authorities. On top of obvious geopolitical risks in the region and the generally negative press surrounding Saudi Arabia, more specific hurdles lie ahead, notably logistical under-capacity, labour shortages and social issues.

While the upsurge in construction is a positive sign that tourism projects are progressing, this is not the first time Saudi Arabia has sought to modernise its infrastructure. Strong government commitment behind megaprojects does not guard involved actors against exposure to inefficient bureaucracy, public fiscal pressures or red tape. The payments system is considered particularly cumbersome and instances of companies not being paid and then suffering damaging cash flow issues are not uncommon. The challenge posed by inefficient bureaucracy is illustrated by the redevelopment of Riyadh’s airport ahead of the G20 and B20 meetings, which has been extremely slow and haphazard.

Servicing the tourism sector at a standard demanded by international tourists will be a significant challenge for the kingdom, despite it having a bigger domestic population than neighbouring states. Although private and public initiatives to train human capital for hospitality exist – for example, the  OYO Skills Institute and Takamul – the dual aims of tripling the number of tourism-related jobs and increasing the percentage of Saudis in them will run counter to each other and require an increase in foreign workers.[1]

The expected influx of overseas leisure tourists has also raised questions about impact and sustainability in Riyadh, notably on the societal level. It should, therefore, not cause surprise that flagship initiatives such as the Red Sea project are located in remote coastal areas away from the local population, raising concerns that the kingdom is implementing some sort of “compound tourism” whereby social and cultural contact can be contained.

Another key social impediment lies in more rural areas dominated by tribes, where political support from community leaders will be necessary but could create some limitations in the development of professional services for tourists as tribes will push to keep commercial control over their territory.  The extent to which nationwide reforms will be enforced in peripheral cities therefore casts a shadow on how uniform and welcoming the Saudi experience will be for foreigners.

Domestic tourism as a promising sector

 Much of the current hype surrounding tourism in Saudi Arabia revolves around opening the country to foreigners and offering luxury or cultural destinations. Ultimately, however, the pool from which Saudi Arabia can draw foreign tourists is finite and will never help reach the mass-tourism targets of the government. This is why public authorities and private companies should give priority to domestic tourism.



In many ways, the current relaxation of rules and massive investments in entertainment[2] are better aligned with the domestic market, which can make businesses thrive if given adequate offers. The extension of Saudi Seasons – a series of festivals across the kingdom and an initiative of the tourism commission – to next year is a useful indicator of the receptiveness of the Saudi public, with 15m visits being recorded for the July 2019 Jeddah season.  In fact, important business can flow from surfing on the current wave of national sentiment and is likely to be supported by authorities as it reinforces their image of statehood. Such opportunities not only lie in entertainment-related ventures like cinemas but also in family-friendly and lower-budget accommodations considering that domestic tourists spend three times less per day than foreigners and travel with extended family members for longer time periods.




As a key tenet of Vision 2030, tourism will remain at the forefront of political and policy priorities. It is a crucial part of diversifying the economy as its development will have many trickle-down effects. However, the plans as they stand too ambitious to be realised in the timeframe allocated, especially considering the focus on foreign tourism. Yet, the sector can definitely tap into a strong domestic indigenous message, hence the accelerated development of domestic tourism is the logical and more practical solution.


Daniel Moshashai is the Regional Analyst for geopolitics and infrastructure at Castlereagh Associates. He specialises in Iran, the GCC and economic diversification in national agendas in the Middle East. Rachna Uppal is the Senior Analyst for Business and Finance at Castlereagh Associates.

[1] The General Entertainment Authority expects $64bn of investments in that area by 2030.
[2] Saudis currently account for 20% of tourism-related jobs according to the Tourism Information and Research Centre.