The Public Investment Fund (PIF) said it was in the process of forming a company that will channel investments into developing the industry and enhance the Kingdom’s appeal as a tourism destination.
The PIF, which is overseeing the country’s shift to a more diversified economy, announced the launch of the Entertainment Investment Company with plans to expand the scope of the sector in line with Vision 2030.
“At the moment, many Saudis head to the likes of Dubai, where there are a lot of entertainment complexes and more things to do,” said Jason Tuvey, an economist at London-based Capital Economics.
The new company will focus on building local capacity and generating new employment opportunities that target the Kingdom’s young population.
The Entertainment Investment Company is expected to serve more than 50 million visitors annually, contributing around SR8 billion to the economy.
An initial sum of SR10 billion has been set aside to develop entertainment destinations across the country and provide incentives for the sector with a view to localizing large amounts of spending on entertainment outside the Kingdom.
With tourism arrivals expected to increase by 12.8 percent to reach 22.6 million in 2017, the Saudi government is keen to bring its entertainment offering in line with growth forecasts.
An ambitious plan to transform a 200-kilometer stretch of Red Sea coastline into luxury hotels and resorts is among a series of development projects in the pipeline to attract tourists and expand the Kingdom’s hospitality offering.
The project, which will include hotels, residential units and an airport, as well as a seaport and other transport links, spans 13,000 square miles, including 50 untouched islands off the Red Sea coast.
“Many Saudis currently get on a plane to go from Riyadh to Dubai, so I don’t see any reason why they wouldn’t get on a plane to go to the Red Sea coast,” Tuvey said.
At present, the majority of the Kingdom’s international visitors are religious tourists, with few overseas visitors coming for entertainment purposes.
Projects like this could help to diversify the country’s appeal and tap into new source markets.
At the launch last month, Saudi Arabia’s Minister of Culture and Information Dr. Awad bin Saleh Al-Awad described the project as “an international tourist destination” and a “great addition to the development and renaissance projects in our country.”
Due for completion in 2022, the first phase of the Red Sea project is set to come online in the third quarter of 2019, making a $4 billion contribution to the economy.
According to the World Travel & Tourism Council, in 2016 the total contribution of travel and tourism to the economy amounted to SR244.6 billion, accounting for 10.2 percent of GDP, and is projected to rise to SR412 billion (11.1 percent of GDP) by 2027.