Saudi hospitality sector worth US$18.1bn by 2016
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A rise in the number of pilgrims visiting the Kingdom for Hajj and Umrah, are boosting domestic tourism growth, with Saudi residents making 22.5 million overnight trips per annum.
Tourism receipts for Hajj and Umrah currently account for around 3% of GDP and, according to tourism officials, the country gained a reported US$16.5bn from tourism in 2012, representing a 10% increase on the previous year.
The region also accounts for the bulk of international tourist arrivals, at 46% according to an October 2012 GCC Hospitality Industry Report from Alpen Capital, representing a 50% year-on-year increase against 2011 figures.
“The Kingdom is investing heavily in the infrastructure as expansion plans for the new US$7bn Jeddah airport project move ahead, with the airport projecting annual passenger volume of up to 80 million passengers within the next two decades,” said Mark Walsh, portfolio director, Reed Travel Exhibitions.
In addition, Riyadh is also experiencing increased demand from business travellers. Saudi government investment into key infrastructure projects including airport expansion, railways and roads, is pegged at around US$80bn between now and 2022, with investment into major tourism initiatives forecast to grow at a CAGR of 6.9%.
According to the report, tourist arrivals are expected to grow at a CAGR of 4.0% between 2012 and 2022, driven by strong growth across all sectors, with occupancies set to jump from 67.5% in 2011 to 74.2% by 2016 and a US$30 increases in ADR to US$258.4.
“In tandem demand for hotel rooms means that aggressive development and expansion plans for a number of major international hotel groups is also on the short-term agenda. InterContinental Hotels Group has said that Saudi Arabia is one of the markets representing the most opportunity for its Middle East business to grow in 2013, with two new properties set to open in Riyadh this year, and a total of eight hotels by 2018,” said Walsh.