By Mahmoud Abdulhadi, Deputy Minister of Tourism Destinations Enablement
Saudi Arabia is swiftly emerging as one of the most dynamic and rapidly growing tourism destinations globally. The Kingdom's vision to transform its tourism industry is not merely about increasing visitor numbers; it represents a cornerstone of a broader strategy aimed at diversifying the economy, creating jobs, and enhancing cultural exchange. As this transformation unfolds, Saudi Arabia’s tourism sector is becoming a hotspot for investors looking to capitalize on a market filled with opportunity and growth potential.
In the first half of 2024 alone, Saudi Arabia welcomed an impressive 60 million tourists, contributing SR143 billion (USD 38.1 billion) in spending, according to preliminary data. This surge builds on the Kingdom’s achievement of attracting over 100 million tourists in 2023—seven years ahead of the original target—solidifying Saudi Arabia's status as a premier global destination. These milestones align with the broader goals of the National Tourism Strategy, which aims to attract over 150 million tourists by 2030. The anticipated growth in both international and domestic tourism is set to elevate tourism’s contribution to 10% of the total GDP by 2030, with employment in the sector projected to rise from approximately 650,000 jobs in 2019 to 1.6 million by the end of the decade.
To support and accelerate this remarkable growth, Saudi Arabia has introduced the Tourism Investment Enablers Program (TIEP), with the Hospitality Investment Enablers (HIE) initiative serving as a critical component. These programs are designed to streamline the investment process, making it more accessible and cost-effective for both international and local investors to tap into Saudi Arabia’s burgeoning tourism potential. Specifically, the HIE initiative focuses on significantly increasing accommodation capacity in key tourism areas by catalyzing private investments of up to SAR 42 billion (USD 11.17 billion). This initiative is projected to drive an annual GDP increase of SAR 16 billion (USD 4 billion) by 2030 and create 120,000 new jobs, directly contributing to national employment goals and the broader economic diversification agenda.
Investors participating in the HIE and TIEP programs will benefit from a range of financial incentives, including corporate income tax exemptions for the first five years of operation, municipality tax relief, and VAT reductions on room nights. Additionally, the total fiscal reforms have resulted in significant reduction in total annual government fees, decreasing them by 75% comparing to 2021, further enhancing the financial viability of tourism projects. This reduction in fees, combined with access to government-owned land under favorable terms—such as extended grace periods for leasing fees, which can last up to 20 years—makes entering the Saudi tourism market even more attractive. To further ease the financial burden during the initial stages of project development, a Capital Expenditure (CAPEX) grant is also available. By reducing market entry barriers and enhancing the feasibility of hospitality projects, these programs strategically elevate the investment potential of Saudi Arabia's tourism sector, making it increasingly competitive and attractive on the global stage.
Saudi Arabia’s strategic location at the crossroads of three continents enhances its appeal as a global tourism hub. With 40% of the world reachable within six hours by air, the Kingdom is uniquely positioned to attract a diverse range of visitors. Strengthening economic ties with Asian countries has been a priority, and improved air connectivity between major Asian cities and Saudi Arabia has significantly boosted tourism flows. In 2023, Saudi Arabia welcomed over 20.9 million tourists from Asia, who collectively spent more than SAR 96.59 billion (USD 25.69 billion). This influx underscores the confidence Asian investors have in Saudi Arabia’s tourism market, highlighting the lucrative opportunities for further investment.
Beyond its strategic initiatives and geographical advantages, Saudi Arabia offers diverse investment opportunities across its tourism sector. From its eight UNESCO World Heritage sites to groundbreaking developments like the Red Sea Project, the Kingdom’s unique geographical features—ranging from lush green mountains in the south to pristine coastlines—offer unmatched experiences for tourists and compelling prospects for investors.
As Saudi Arabia continues its ascent as a leading tourism and investment destination, the Kingdom presents a compelling case for investment. With robust infrastructure, a strategic location, and a steadfast commitment to sustainable growth, Saudi Arabia promises high returns and long-term success for those willing to join this transformative journey. The Kingdom’s tourism sector stands as a gateway to unparalleled investment opportunities, inviting investors worldwide to partake in the continued growth and success of this dynamic and ever-expanding market.