Saudi Arabia’s Vision 2030 holds big opportunity for tourism, hospitality

Over the past few years, Saudi Arabia has witnessed a significant number of signings of mega projects, in line with its ambitious Saudi Vision 2030. Recognizing the volume of projects announced in the country, PKF hospitality group recently held one of its spotlight events in Riyadh.

According to PKF, most projects announced thus far are valued at well over $100 billion each and are part of Saudi Vision 2030. NEOM, the Red Sea Project, Diriyah Gate and Qiddiya are among the latest ambitious megaprojects announced. Seeking to reduce its reliance on oil and utilize the Kingdom’s strategic position, Vision 2030 focuses on tourism, health infrastructure and education, besides improving the country’s overall image. Amore than $800 billion is expected to be spent on this plan.

In November 2021, nine global luxury hotel brands signed hotel management agreements to operate resorts in the first phase of development at The Red Sea Project. The Red Sea Development Co., the developer of the regenerative tourism project on the country’s west coast, signed hotel deals with Edition Hotels, St. Regis Hotels & Resorts, Fairmont Hotel & Resorts, Raffles Hotels & Resorts, SLS Hotels & Residences, Grand Hyatt, InterContinental Hotels & Resorts, Six Senses and Jumeirah Hotels & Resorts. The agreement covered nine of the 16 properties under development.

The first phase of development is scheduled to be completed by the end of the year, which will see 16 hotels offering 3,000 rooms across five islands and two inland sites. Around 12 of these properties are anticipated to open by the year’s end.

NEOM, a region in northwest Saudi Arabia on the Red Sea, is being built from the ground up as a “living laboratory.” In October 2022, the project announced Ennismore as its inaugural partner for Trojena.

The initial focus of Vision 2030 is to create a product that will woo local travelers who currently don’t travel much within the country. The millions of pilgrims visiting the holy sites in the country are the next main target area, followed by international travelers.

While there have been questions regarding how the projects will be finished on time to meet the Vision 2030 deadline, considering the sheer size of the projects, many projects have broken ground and already are in the process of development.

“I also think that some may not be seen completed on time. It is a simple fact that knows how materials and, in the end, staff to run these places are not in high supply. Yet, some we’ll see completed on time, no doubt,” said Nils Heckscher, head of Africa, also overseeing PKF’s Middle East operations.

One of the first projects on that list will be Trojena, the megacity and the official host location of the Asian Winter Games 2029. While there had been concerns about the desert heat during the games, the region, in fact, receives snow during winter and is about 10 degrees cooler than the rest of the country. The mega city is between the Red Sea and the Mountains and will include a tech city, a seaside destination, an international seaport and residential, retail and office space. Trojena will offer year-round outdoor skiing and adventure sports and is slated to be completed in 2026. Ennismore and GHM have signed deals to open three hotels (25Hours, Morgans Originals and The Chedi Trojena) at the mega city.

Sustainability is a top priority for these projects. Construction and clearing of land, in some cases of the indigenous population as well, is not necessarily based on the same principles.

“It is heartening to see public-private partnerships that have a strong focus on ESG principles and that intend to build in a sustainable manner; source local materials as well as design and employ locals who will be trained and given ample opportunity to advance. These are fundamental building blocks in creating great and sustainable destinations,” Heckscher said.

Once these projects are completed, they will create a transformed country and citizens. The country represents the biggest opportunity for hospitality and tourism, which is expected to continue for at least five more years, PKF said.