Reforms in visa policy and the launch of a new airline - Riyadh Air – will support the growth of Saudi Arabia’s tourism sector going forward, AlJazira Capital said in a recent report.

Other initiatives supporting growth include expanding airport infrastructure, plans to increase Hajj and Umrah capacity, rising number of visitors for Saudi seasons, development of tourist sites, and hosting of several entertainment and business events.

“All these factors indicate ample growth opportunities for tourism-related businesses in the coming years in the Kingdom,” the brokerage added.

Tourism activity in the Kingdom has reached at or close to the pre-COVID level in H1 2023 due to the extensive development plan under Vision 2030. The recovery can be gauged by the total number of flights rising 26% year-on-year (YoY) to 403,220 in H1 2023.

In addition, hotel occupancy reached the highest in three years at 80% in the Makkah region during Ramadan, with a sharp increase in Umrah performers. On the other hand, the number of haj pilgrims almost doubled compared to last year.

The report, citing the World Travel & Tourism Council, said Saudi Arabia’s travel and tourism sector is expected to grow at an average of 11% annually over the next decade, making it the fastest-growing destination in the Middle East.

However, AlJazira Capital pointed out that downside risks include delay in implementation of the Vision 2030 initiative, inability to attract tourists amid competition from other countries in the region, the negative impact of economic slowdown or inflation on the sector’s demand and geopolitical crises or pandemics hampering international traffic.

(Editing by Seban Scaria