The UK-based property consultancy Knight Frank’s middle east unit has published a report which suggests that despite the challenges introduced by the pandemic, Saudi Arabia’s tourism outlook for the long-run remain’s strong.
The report states that the Saudi government has announced a $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.
As part of its vision 2030, the Saudi Arabian government is striving for the tourism industry to contribute towards at least 10 percent of its total GDP from the current share of 3 percent.
Given the current challenges associated with the pandemic induced travel restrictions, cities that have historically been centers of business activity have faced challenges attracting hotel guests. Areas that have traditionally received religious visitation have fared no better given that Hajj and Umrah have been reduced in scale significantly this year.
But looking forward, it is fair 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 to happen in the near future.
In response to declining revenues, owners are looking to cut costs universally at an unprecedented scale – a trend that is likely to continue into next year.
Taimur Khan, an 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 percent and 9 percent respectively. This weaker economic backdrop combined with the hike in VAT from 5 percent to 15 percent 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 return 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.”
Thank you very much for choosing GCC Business News to be an important part of your professional life. You will receive a confirmation e-mail. Please check SPAM or UPDATES folder
