A recent report from Business Monitor International’s Saudi Arabia Tourism report for Q2 of 2012 revealed that Saudi Arabia’s tourism industry is unique in that despite limitations of strict entrance visa regulations, the industry has strong growth potential. A growth forecast was projected for tourist arrivals to increase by 8% year-on-year (y-o-y) to 14.87 million in 2012. This number of tourist arrivals will grow by an average of 6% y-o-y through to the end of our forecast period in 2016.
As per the report, one of the main drivers for tourism industry is religious tourism. The hospitality sector too looks set to grow in tandem with tourist arrivals. BMI forecasts that there will be about 424,000 hotel rooms in Saudi Arabia by 2016, up from a projected 317,000 in 2012.
Saudi authorities have stated that diversification is the need of the hour from dependence on oil, with the tourism industry as a focal point. Government expenditure has been focused on developing religious tourism and business travel sectors in particular. The government is also keen to develop its domestic tourism market in an effort to capture some of the capital spent by the millions of Saudi citizens that travel abroad each year. Saudi tourists mainly travel to other countries in the Middle East.
Despite efforts to encourage more Saudis to holiday at home, BMI forecast the number of citizens travelling abroad will increase from 10.72 million in 2012 to 13.55 million in 2016. International tourism expenditure is also forecast to increase, reaching US$10.8 billion by the end of the forecast period.