The hospitality and tourism industry got hit the hardest by COIVD-19 and it’s still in the path of recovery. Experts expect that it won’t recover completely until 2024. In Saudi Arabia, since the lockdown measures were loosened and the number of people vaccinated increased, life came back to restaurants, events, and sports venues. Hence the country is back on track to achieve its 2030 vision. Saudi's Vision 2030 looks to diversify Saudi Arabia's economy away from oil and focusing more on other sectors including increasing direct foreign investment, tourism, and the number of locals in the workforce.
The hospitality industry is one of the pillars of 2030 Vision, with an aim that it would contribute 10% of the country’s GDP by 2030 from the current stand of 3%. The industry has been experiencing the fastest growth in the region, with expectations to grow more exponentially in the coming years. The increasing number of tourists driven by religious tourism and the world-class events that Saudi held in the last few years led to an increased demand and rapid growth in the hotel industry. Saudi Arabia accounts for 6 of 11 largest hotel projects in the world. The hotel market in Saudi Arabia is projected to value more than USD 24 billion by the end of 2025, with over 163 hotel projects with 72,617 rooms opening their doors in the coming years across the kingdom. It’s worth noting that most of these projects focus on providing luxurious, high-end experience, with Marriott International leading this venture with opening 29 hotels and over 5700 rooms by 2030. This gives an opportunity for business owners to explore a niche segment that focuses on affordable yet high quality accommodation, for people who want to travel with a budget. Airbnb is a good example of a company that targeted that segment and made a huge success.
The big growth on the direct foreign investment that Saudi Arabia had, was mainly driven by giga-projects like the Red Sea Project, Al-Ula, and Almaal. The common denominator of these projects is that it focuses on flourishing tourism. The government has a goal of attracting SAR220 billion in investments to its tourism sector by 2023 and more than SAR500 billion by 2030. As well as increasing the number of visitors to 30 Million by 2030 from around 19 Million in 2019.The Red Sea Project is one the most notable of these ambitious projects. This project is developed over 28,ooo km2 archipelago, it will be an adventurous destination for people who are looking for outdoor activities like scope diving, luxurious cruise trips, hiking, and much more. As Christopher Lund, the director, Head of Hotels in the MENA region said “people want to stay in a destination rather than just stay in a hotel room. This is an overarching trend that we are seeing at the moment.” It’s projected that the Red Sea Project will attract a million visitors annually by 2030. Also, it’s worth noting that the Kingdom started gaining international attention by hosting world-class events such as Formula 1 Grand Prix and considering a joint bid with Italy to host the World Cup in 2030. Anton Bawab, the Head of Operations at the Red Sea Development company pointed out the impact of the Kingdom opening its doors for visitors from all over the world on the hospitality industry. In 2019, when Saudi Arabia opened the E-visa portal, more than 400,000 e-visas were issued. This number is expected to double as the travel restrictions are lifted. Well-known travelers like Drew Binsky and Alexis Alford (also known as Lexie Limitless) from the U.S. and Anton Ptushkin from Russia, have open the eyes of millions of viewers about the reality of Saudi Arabia by their travel vlogs that has been seen by millions of people from across the world. Giga projects and world-class events are only going to drive the number of tourists up, leaving countless opportunities for business owners and entrepreneurs to capitalize on.
COVID-19 has shaped consumers' behaviors in an irreversible way, pushing trends that the industry was reluctant to venture into for a long time. The global health crisis has brought a lot of innovation to the front line that digitizes the way people work, socialize, shop, and pay. Companies had to adapt; it is not an option anymore. Using digital wallets like Apple Pay and STC Pay became the norm, as well as many digital restaurants’ menus, check-in apps for hotels and flights. The demand for food delivery services has also increased and the number of food delivery providers grew rapidly. The technology is here to stay, with future trends that would emerge soon like cloud kitchens. Another change in consumers' behaviors is the importance of trust. Building trust has always been key to retaining customers, however, it’s paramount to approach the trust relationship between businesses and customers in a more holistic way in the post COVID-19 era. Building physical, financial, digital, and emotional trust is paramount for businesses in the hospitality industry to ensure faster recovery. Customers need to trust that the physical space is safe, and they are not putting their health at risk. They also need to trust that their financial concerns are being served, and that they’re financially secure enough to afford leisure activities in a time where the economy could be hit again unexpectedly by another lockdown. With digitization, the threat of identity and information theft is always on the horizon, so customers need to trust that they’re personal and banking information would be always secured. Lastly, customers need to trust that their emotional and social needs could be met, without putting themselves or loved ones in danger. Organizations that understand that shift in consumers’ behaviors are more likely to succeed in the short and long-term future. Suggested image: