Despite the challenges bought about by Covid-19, Saudi Arabia's tourism outlook for the long-run remain's strong as the Saudi government has launched a SR15 billion ($3.9 billion) tourism fund as part of the first phase of its National Tourism Strategy, which aims to develop 38 sites across seven destinations by 2022, a new report revealed.
As part of Vision 2030, the Saudi Arabia government is aiming for the tourism industry to make-up at least 10 per cent of its total GDP, up from 3 per cent currently, according to a report released by by Knight Frank Middle East.
With the international arrivals being curtailed across the kingdom, corporate, leisure and religious tourism has come to all but a standstill since March 15.
Given the current challenges associated with inbound corporate visitation, cities that have historically been centres of business activity have faced challenges attracting hotel guests. Areas which have traditionally received religious visitation have fared no better given that Hajj and Umrah have been reduced in scale significantly this year.
Looking forward, it is reasonable to expect a rise in leisure visitation on a domestic level not only to traditional destinations but also to secondary cities such as Abha, Baha and Al Ahsa. In response to declining revenues, owners are looking to cut costs universally at an unprecedented scale - a trend which is likely to continue into next year.
Taimur Khan, Associate Partner at Knight Frank Middle East, commented: “The Covid-19 pandemic is forecast to have a material impact on Saudi Arabia’s economy, with GDP and employment forecast to decline in 2020 by 7.5 per cent and 9 per cent respectively. This weaker economic backdrop combined with the hike in VAT from 5 per cent to 15 per cent will also mean challenging conditions for Saudi Arabia’s real estate market as both corporates and consumers scale back discretionary spending plans. Overall, the depth of the contraction and rate of recovery will be dependent on the rate at which the global economy and global mobility returns to some form of normality. These factors will underpin demand and activity in the hydrocarbon, travel and tourism and wholesale and retail trade sectors, all of which form significant parts of Saudi Arabia’s economy.” - TradeArabia News Service