Industries in Depth

Could Saudi Arabia become a holiday destination?

General view from a plane window shows muslims as they pray at the Grand mosque during the annual Haj pilgrimage, in Mecca, Saudi Arabia September 2, 2017. REUTERS/Suhaib Salem - RC1328550010

With The Red Sea Islands being developed, Saudi Arabia is hoping to bring more tourism in. Image: REUTERS/Suhaib Salem

John McKenna
Senior Writer, Forum Agenda
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Saudi Arabia is putting vast sums of money behind its ambitions to nearly quadruple the number of visitors to its holy sites by 2030.

It is spending $26.6 billion to expand the Grand Mosque in Mecca in order to accommodate more pilgrims during the haj week, plus another $3.6 billion on a hotel nearby that with 10,000 rooms would be the world’s largest.

When associated projects such as the Mecca-Medina rail link are included, it is estimated that Saudi Arabia is spending $80 billion on Mecca alone.

The Grand Mosque in Mecca is undergoing a $26.6 billion expansion. Image: REUTERS/Suhaib Salem

Further funds are being spent restoring and improving historical and religious sites across the country, as the government aims to more than double the number of Saudi heritage sites registered with UNESCO by 2030.

Life after oil

The spending on Saudi Arabia’s religious and historical sites is part of a drive by the country’s leaders to wean the country off its dependency on oil.

Saudi Arabia is, with Russia, the world’s joint largest oil and gas producer.

With oil prices remaining depressed, the Saudi Arabian economy is suffering – its GDP shrank by 0.5% in the first quarter of this year, caused by the oil and gas sector contracting by 2.4% in the same period.

Memories of the 1980s oil glut which put Saudi Arabia heavily in debt have combined with a realization that the oil and gas sector may never again be what it once was.

Renewable energy and the rise of electric vehicles point to a future where oil and gas use at best stagnates, and where prices may be in long-term decline.

Image: Economist.com

Vision 2030

To wean the country off its oil addiction, Saudi Arabia’s Crown Prince Mohammed bin Salman bin Abdulaziz last year launched a roadmap for diversifying the country’s economy, called Vision 2030.

It includes plans to invest in infrastructure, education and a variety of business sectors outside of oil and gas.

A large portion of the plan will be funded by next year’s sale of less than 5% of state-run oil company Saudi Aramco – widely predicted to be the largest IPO in history, valuing the company at around $2 trillion.

One of the non-oil and gas sectors identified for growth in the Vision 2030 plans is tourism.

Image: WION

The country already welcomes 8 million visitors per year, the overwhelming majority of whom are pilgrims visiting Islam’s holy sites of Mecca and Medina – 1.75 million in just five days during this year’s haj pilgrimage.

Saudi Arabia’s leaders want to nearly double the annual number of pilgrims to 15 million by 2020. By 2030 it wants to welcome 30 million Umrah visitors every year.

Muslims pray at the Grand Mosque during the annual Haj pilgrimage in Mecca. Image: REUTERS/Suhaib Salem

Tourist attraction

And it is not just religious tourists that Saudi Arabia is hoping to attract.

It is also developing islands on its Red Sea coast to create a tourist resort the size of Belgium.

Work across the 50 islands will include the building of luxury hotels, an airport, new roads and a port. Construction is due to begin in 2019, with the first phase of the development opening in 2022.

The Red Sea Islands will be developed as a “private area” with laws that match “international best practice”.

The Kingdom’s authorities have yet to confirm whether this means the resort will be subject to Saudi Arabia’s conservative laws, which ban alcohol and enforce modest dress.

As part of its bid to attract religious and recreational visitors alike, Vision 2030 also sets out plans to relax visa regulations.

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Industries in DepthUrban Transformation
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