Saudi Arabia’s government has launched new plans that will help develop the kingdom into a primary destination for tourism.

1. Hospitality Market in
Saudi Arabia Poised
for Significant Growth
DR. EHSAN BAYAT

2. Hospitality Market in Saudi Arabia
Poised for Significant Growth
 As Saudi Arabia gears up for gains in its real estate market in 2018, the
kingdom has largely turned its attention to the hospitality sector.
Currently, developers have more than 40,000 rooms in development
across dozens of different projects. In fact, Saudi Arabia has more hotels
under construction than any other country throughout the Middle East
and North Africa. Recently, the kingdom also held its inaugural Saudi
Arabia Hotel Investment Conference (SHIC) under the theme “Focus on
the Future.”

3. Exciting Potential for Hospitality
Growth in Saudi Arabia
 Held at the Riyadh Marriott Hotel, SHIC attracted hundreds of investors, hotel operators,
owners, and developers committed to the growth of the hospitality industry in the kingdom.
During the event, attendees learned about the expanding opportunities for investing in
hospitality-based real estate in Saudi Arabia. The event included a keynote address called
“The Future of Saudi Tourism-Transitioning to Tomorrow” presented by the president of the
Saudi Commission for Tourism & National Heritage and the chairperson of the Global
United Center for Research and Analysis. The event framed hospitality expansion in terms of
the government’s Vision 2030 initiative and its goals for larger economic development.
 At present, the value of hospitality investment projects in Saudi Arabia totals nearly $2
billion. This value will likely climb in the years to come as the government executes plans to
bolster tourism throughout Saudi Arabia. Several new opportunities for public-private
hospitality partnerships have arisen recently, and similar initiatives are planned for the
future. Much of the current development pipeline focuses on the kingdom’s Holy Cities
since religious tourism is expected to grow to about 30 million people by 2025. At the same
time, independent investors are also beginning to pay attention to non-religious sites,
especially culturally important cities and sites of significant archaeological importance.

4. Marriott International Emerges as
Leader in Hospitality Growth
 One of the drivers of hospitality expansion in Saudi Arabia is Marriott International, a
leading hotel company that has operated in the kingdom for more than 40 years. The
company operates nearly two dozen hotels throughout the Middle East and affirmed
its commitment to Vision 2030 during SHIC. The president and managing director of
the Middle East and Africa division of Marriott International spoke at the conference
about the company’s plans to contribute to the economic development of the
kingdom. A key part of this strategy is the Tahseen program, which provides hospitality
career opportunities for young professionals to fast-track them on a route toward
hotel leadership. The program, run in coordination with Cornell University, provides
exposure to different hotel departments and then allows individuals to specialize in a
specific department.
 This training program will create new economic opportunities for Saudi nationals,
while also ensuring that there is a pool of talented and committed professionals to
take up leadership of new hotels in the future. Marriott International alone has more
than 5,700 rooms under construction in Saudi Arabia across 29 new hotels. While
Riyadh is the biggest market for the hospitality giant, the company is also planning to
expand to King Abdullah Economic City, Half Moon Bay, Jubail, Yanbu, and Unaizah.

5. Using Entertainment to Drive Growth
in the Hospitality Sector
 Part of the work to make Saudi Arabia a major tourist destination includes
new investment in the entertainment industry. The kingdom has announced
$64 billion worth of investments in the next 10 years in the entertainment
sector as part of Vision 2030. One of the major components of the plan is a
new “entertainment city” just south of Riyadh that will encompass 334 square
kilometers. The sprawling development will have a Six Flags theme park, a
safari park, and other sports and recreational facilities. Another part of the
plan is the construction of two new malls in Riyadh.
 For investors, there is unique potential in developing new movie theaters in
the kingdom. Saudi Arabia recently lifted a 35-year ban on cinemas, and
professionals estimate that more than 350 theaters will open in the coming
10 to 15 years. Vue International and AMC Entertainment have already
launched plans to build more than 30 multiplexes. These theaters will respect
Saudi cultural norms, with separate viewing areas for families and for single
men.

6. Using Entertainment to Drive Growth
in the Hospitality Sector (cont.)
 Saudi Arabia is also becoming more interested in hosting cultural events. For
example, the country recently hosted its first jazz festival. Altogether, 2,200
different events in the kingdom attracted a total of 8 million visitors last year.
In 2018, about 5,500 events are planned, with an estimated total visitor count
of about 15 million people. To be fair, the majority of these visitors are Saudi
residents, since the kingdom must do much more work to develop its
reputation as a prime international destination for major events.
 People interested in investing in Saudi real estate should still have realistic
expectations. Despite all the signs pointing to explosive growth in the years
to come, hurdles exist. A lack of transparency could prove one of the biggest
challenges for potential investors. However, various regulations and
guidelines will start to become clearer as the kingdom adjusts to this growth.