Sustaining Saudi Arabia
Saudi Arabia's Supreme Commission for Tourism (SCT) has recently launched the first in a series of initiatives that it hopes will drive tourism growth while at the same time helping to improve international understanding of the country, the Arabic culture, and the Islamic faith
With the World Tourism Organisation predicting that tourism in the Middle East will see an annual growth rate of around 7% over the next 20 years, the Kingdom of Saudi Arabia (KSA) is determined to get a piece of the action. Since the 1970s, the development plans in the kingdom have aimed at diversifying the country's sources of income and decreasing its dependence on oil. Now, with the volatility of oil prices, the kingdom has turned its attention to supporting and developing its tourism industry into one of the most important sectors in the Saudi economy.
“The tourism sector represents a vital source that can play an important role in increasing the contribution of non-oil producing sectors to the GDP (gross domestic product) and diversifying the Saudi economic structure,” explained HRH Prince Sultan bin Salman bin Abdulaziz Al Saud, secretary general of the Supreme Commission for Tourism (SCT), at a press conference at the Arabian Travel Market (ATM) in Dubai last month.
Unlike Dubai, which has jumped feet first into the creation of its tourism infrastructure, Saudi Arabia is taking a more measured approach, concentrating on the future sustainability of its tourism industry. “It is important to develop a strategy based on the ethics and values of the Islamic faith, that is compatible with the Saudi society, and is economically, socially, culturally and environmentally feasible and sustainable,” says Prince Sultan.
“This is a very wide vision and we anticipate that we can expect inbound tourist numbers to reach 13.1 million by 2020 and we have spent half a billion Riyals ($133 million) on this initiative. The National Tourism Development Strategy is a comprehensive and strategic project with well-defined and clear guidelines for developing tourism in the country over the next 20 years,” he adds.
The last four years have seen significant investment in the kingdom's tourism infrastructure, with the opening of new hotels, resorts and tourist apartments. The number of tourists visiting the kingdom rose by nearly 13.2% during the first three quarters of 2005, with preliminary figures from the Ministry of Tourism (MoT) indicating that between January and September, there were 4.844 million visitors.
In March, the SCT set about revising all existing tourism-related regulations in the country in order to make a unified general tourism law, and at ATM the organisation set out a further series of initiatives aimed at driving leisure tourism forward.
Following Saudi Arabia's recent admission into the World Trade Organisation, the SCT is working to build the tour operators industry in the kingdom, which Prince Sultan calls “the cornerstone of the tourism industry worldwide”.
From June, the SCT will issue special tour guide permits to qualified nationals wishing to work as national- or regional-level tour guides, or as guides at specific tourist sites. In addition, as of May, the SCT, in partnership with other government agencies, began the process of certifying travel agents, giving 18 approved companies the power to issue tourist visas and facilitate inbound international tourism to the country.
“The objective is to make it as easy as possible for people to come to Saudi. We're not only trying to boost tourism into the kingdom for income, but also because we need to improve the understanding of the kingdom outside of Saudi. We want to show people the picture of the kingdom that they don't usually see,” explains Prince Sultan. “This new system will represent a quality leap in attracting tourists to the kingdom anytime throughout the year for tourism purposes.”
Also at ATM, Prince Sultan announced that a study had recently been commissioned to standardise the rating system in the accommodations sector in order to conform to the five-star classification system used worldwide. The new system, which is to be implemented in co-operation with the Ministry of Commerce and Industry, will come into effect by the end of next year. “These changes will contribute to improving the organisation of tourism activity, bringing the kingdom in line with the highest international standards and therefore meeting the needs of tourists to receive the best possible service,” he explains. “The lodging sector is one of the most important tourism assets that the kingdom has.”
Indeed, international hotel chains continue to announce Saudi expansion plans and hotels in the country's main markets feel confident for the future. “So far, there has been a considerable increase in business compared to last year and there is high demand for hotel facilities,” says John Yohannan, assistant director of sales at the InterContinental Riyadh. “The new visa procedures introduced by the SCT will certainly accelerate the boom in both business and leisure tourism in the country. Needless to say, Saudi Arabia as a whole is a market with very high growth potential.”
Riyadh has certainly benefited from the increase in arrivals it saw in 2005, and although the majority of international inbound travellers visited the city on business, in its first year, the Riyadh Festival succeeded in generating a small increase in the number of leisure travellers visiting the city. “Riyadh has a lot of places of interest for tourists. There are the ruins of Dir'aiyah, the kingdom's first capital, the Masmak fortress in the centre of the city, the camel market, the souks and the zoo, for instance,” says Yohannan. “Our main market continues to be business travellers from the UAE, Europe, the Americas and the Far East. Compared to last year, these markets have seen a positive growth as investment opportunities are increasing rapidly. The market is likely to continue to expand year on year,” he adds.
With the city's high volume of inbound business travel, Rezidor SAS has chosen Riyadh as one of the first locations for its mid-tier business brand, Park Inn. Due to open in 2007, the Park Inn Olaya Riyadh will feature 212 guest rooms and one all-day dining restaurant. “Riyadh is an excellent choice for the Park Inn brand; it is the capital city, an influential business hub, and is one of the world's fastest-growing cities, attracting a variety of corporate travellers,” says Jean-Marc Busato, vice president of Rezidor Middle East.
With 1100km of Red Sea coastline and backed by the Hejaz mountain range, the Western Region is one of the kingdom's most popular destinations for tourists as well as pilgrims. Used for centuries as the gateway to the holy cities of Mecca and Madinah, the port of Jeddah is now a thriving city. The coastal boulevard, the Corniche, is lined with fine residences and luxury hotels, while amusement parks and funfairs cater to families.
“The Red Sea is a great natural resource for the country in terms of the tourism it will attract. We will target this type of tourism at the European market with a big marketing push over the next year, mainly in the cities of Berlin and London,” says Prince Sultan. “The coral reefs of the Red Sea are among the world's finest, and the reef close to Jeddah is acknowledged to be second only to Australia's Great Barrier Reef. The kingdom has enormous potential as a diving tourism destination.”
Last year, the SCT worked with international consultants to prepare a long-term plan for tourism development projects on the Red Sea coast and islands, and over the past year, the InterContinental Jeddah has seen growing interest in the area as a leisure destination. “We had a very good summer on the Red Sea west coast,” says Erik Weinmann, director of sales and marketing at the hotel. “Jeddah already has strong international brand representation, but it will still see more hotel rooms coming into the market as the economy continues to grow. More openings will lead to increased competition, but there is also a positive growth in demand. The government is pushing for tourism and the market is starting to follow,” he says.
The kingdom's east coast is also the site of further tourism developments. In Al Khobar, for instance, traditionally an area popular with the domestic tourist market, the City Fanar project is still under development. Built around a 300,000m² man-made lagoon, the mixed-used development will feature hotels, entertainment, shopping, dining and marinas.
In addition, Le Gulf Meridien in Al Khobar has launched a programme to promote the Eastern province as a tourist destination within Saudi Arabia as well as in other GCC countries. “Our main market is Saudi Arabia, which is contributing 59% of room business and after that other GCC countries contribute 15%. The UK market is growing compared to previous years for the region, contributing 12% and the US and Asia-Pacific markets are also growing compared to last year,” says Mohamed Osman, director of sales and marketing at the hotel.
“We have had to face increased pressures on yield management, and there will be many new properties coming on line in the next two to four years as a result of the major development in the Eastern Province. By late 2007, for example, five new, branded, five-star properties are scheduled to open,” Osman continues.
The Holy cities of Mecca and Madinah remain Saudi Arabia's fastest growing hotel markets. With around two million people every year travelling to Mecca for Hajj, and a further 400,000 people visiting the city for Umrah, hotels in both cities experience extreme highs and lows in occupancy figures each year, and hotels are now looking to new markets to fill the off-peak season.
“We invest a lot of money year after year on the organisation and preparations for Hajj. With the new tourist visa system, we will still have no tourism during the six-week Hajj period other than for religious purposes, but we hope to be able to get a lot of visitors throughout the rest of the year. We are very keen to attract people during the country's slower periods,” confirms SCT’s Prince Sultan.
The rate of hotel development in Saudi Arabia is probably at its highest in Mecca, according to Anthony Peter Slewka Armfelt, director of business development for Accor Hotels, which has a number of new openings planned in the kingdom in coming years, including the Sofitel Zam Zam Towers. The development, which is due to open in 2007, is to be one of the largest in the city. A 34-storey property with 1,240 residential suites, Zam Zam Towers is located 100m from the Ka'aba.
“Mecca is without a doubt the fastest growing market in Saudi Arabia, and indeed one of the fastest growing in this whole region,” says Armfelt. “Zam Zam Towers is part of the seven-tower Al Beit development, and will also include a convention centre, shopping mall and several restaurants. It is a very exciting project — well located and very innovative,” he adds.
The property will offer suites ranging from studio apartments for up to four people, through to two-bedroom royal suites for families of six. While Accor will manage all of the establishment's hotel services, more than 1000 of the suites will be marketed under a system called Sokouk Al-Intifa'a, which is similar to the timeshare concept. “This system allows members to return to the same apartment each year. There is also the flexibility to exchange their booking for another time of year, or to let friends and family use it, or they can invest with Accor and make a premium,” explains Armfelt. “A percentage of the total inventory will also be marketed by Accor, with competitive hotel rates linked to the market demands,” he adds.
In addition to its hotel developments in the kingdom, in February 2005 it was announced that Accor would also work with the SCT to set up three hotel schools in Saudi. The colleges, which will be located in Jeddah, Riyadh and Al Khobar, will teach courses in areas such as hotel management and are intended to help tackle the issue of Saudisation in the hospitality sector.
“When I was appointed to establish SCT, the aim was to make tourism part of the economy and to invent opportunities for employment. 60% of the Saudi population is aged 21 years or under and they will benefit from the new opportunities that will be afforded by the development of the tourism sector,” says Prince Sultan. “We are also participating with King Saud University for a heritage college and there is a big programme of co-operation with embassies abroad, as well as with hotels and airlines.”
The SCT is confident that its carefully-planned, sustainable growth strategy for the tourism industry will not only create jobs for the local population but will also significantly diversify the economy, enabling the kingdom to boost its income from tourism, which stood at 3.8 million Riyals ($1 million) in 2004, to reach 5.2 million Riyals ($1.4 million) by 2020.