Knight Frank, in partnership with YouGov, surveyed 498 Saudi-national households and uncovered a critical obstacle in Saudi Arabia’s tourism industry: high costs. Although Saudi nationals travel frequently within the Kingdom, the report found that many are deterred by the expensive nature of travel. This presents a challenge that the Kingdom must overcome to achieve its tourism objectives successfully.
The rapid expansion of hospitality-linked offerings across the country is expected to play a critical role in boosting domestic tourism, which Knight Frank forecasts will form a key part of the future of the Kingdom’s hospitality landscape and is already a thriving industry.
Faisal Durrani, Partner – Head of Middle East Research, Knight Frank, explained: “For domestic tourism to flourish in Saudi Arabia, care and attention must be paid to the development of attractions in secondary and tertiary cities if they are to compete and thrive alongside all the new giga project hospitality offerings. Furthermore, with 28% of Gen Z Saudis highlighting high costs (as a barrier to domestic travel, there remains an opportunity to develop more cost-effective accommodation options.
“Think luxury glamping sites, youth hostels, 3* hotels, which will form just 17% of total hotel room supply by 2030, noting of course cultural sensitivities and adaptations that may be required”.
310,000 hotel rooms, due to be built at a cost of over $110bn, all due to be completed by 2030 in Saudi Arabia
With 100 million visitors expected to pass through the Kingdom’s gateways by 2030, the volume of real estate projects linked to the hospitality, tourism and entertainment sectors is unsurprisingly soaring, says Knight Frank.
The tourism and hospitality sector is quietly being positioned as one of the key lynchpins of future economic growth. Knight Frank is currently tracking in excess of 310,000 hotel rooms, due to be built at a cost of over $110bn, all due to be completed by 2030.
Turab Saleem, Partner – Head of Tourism and Hospitality Advisory at Knight Frank, added: “When it comes to the most popular brand of hotels, as is the case with schools and hospitals, internationally branded and operated hotels are preferred (56%) over local brands (44%) by Saudis and the choice appears to be linked directly to price (33%), followed by location (31%).
“Delivering the vast number of hotel rooms the Kingdom has planned is going to bring with it a number of opportunities. We expect to see the rapid development of several parallel industries that will be forced to evolve to cater to the impending influx of visitors. Clearly there will need to be a significant change in the Kingdom’s physical infrastructure, but in parallel, new national airlines will be needed to be rapidly established. Indeed, some of these changes are already underway – think King Salaman International Airport and the new airline that will be its anchor tenant, RIA.”
Most importantly, however, Knight Frank points out that regulations will need to be developed in Saudi Arabia to manage all aspects of an international and vibrant tourism scene, ranging from hospitality labour to facilitating hospitality investments through streamlined processes.