Saudi Arabia wants to be top tourism destination for Muslim travelers
Saudi Arabia wants to be top tourism destination for Muslim travelers
It comes amid a massive push to develop the Kingdom’s Red Sea coastline and maximize tourism spending among the millions of Muslims who already visit the Kingdom each year as part of Hajj and Umrah.
“We want to beat Dubai, Malaysia and Turkey to the top spot,” said a senior official at the Saudi Commission for Tourism and National Heritage (SCNH) in an interview on the sidelines of the World Travel Market in London.
“We have different projects in the pipeline and we are developing our pilgrimage sites. We are opening up our historical sites, we have five UNESCO sites and we are aiming to have 10 by 2020.
“We have everything in Saudi. Our history gives us competitive advantage. We have a beautiful natural landscape and thousands of years of Islamic and pre-Islamic history. We are open to all,” said the spokesman.
“For Muslims, we have the advantage that everything is already halal here.”
Saudi Arabia is planning to develop hundreds of kilometers of its Red Sea coastline as a global tourism destination and has enlisted the help of Virgin Group chief Richard Branson to advise on the ambitious project, which is a key plank of ongoing economic reforms.
The Kingdom is in the “final stages” of ratifying its much-anticipated tourist visas, which would grant unrestricted leisure travel in the country, the spokesman confirmed.
“We expect the tourist visa to be in issuance within six months.”
Currently Saudi Arabia issues two-week visas for those on business, pilgrimage or visiting resident family members — but they can be difficult to obtain. A specific visa for tourists would open up the country to foreign visitors and allow access to destinations beyond the holy sites of Makkah and Madinah.
The tourism official said that the Saudi government is working on ratifying tourist visas for visitors from 165 countries, including 66 Muslim countries.
He said the Kingdom would welcome all nationalities, all religions and female visitors.
“For women, they may not need to wear a headdress but it is thought an abaya will be necessary. The details of the new regulations will be confirmed with the coming months.”
He added, “Many people will be surprised by the heritage and landscapes that Saudi has. We have skiing, diving and beautiful beaches stretching across two seas.”
Dr. Yazeed Al-Shammari, founder of Arabian Nights, a major KSA tour operator, told Arab News he was looking forward to the new tourist visa “widening and developing” his business.
“People are very curious about Saudi Arabia because we have been closed for so long. Some people think that all we’ve got is sand and camels but the reality is we have much more variety and texture than that. I’ve already had many enquiries from European agents.”
Caroline Bremner, head of travel and tourism at Euromonitor, said:
“It will be interesting to see what Saudi does now as previously the focus was only on the Hajj. Saudi Arabia is a beautiful country with a lot to offer. There have been developments lately that make the country seem more attractive to visitors, such as allowing women to drive.
“As KSA opens up it will need to be very clear on what’s allowed and what’s not, so that visitors feel reassured of what the laws and customs are in Saudi, particularly after cases of tourist jailings in Dubai.
“It will also need to pay attention to the quality of its hotels and tourist experiences as it enters the world as an emerging tourist destination.”
Gulf companies challenged by debt and rising interest rates
- Debt restructurings on the rise, but below crisis levels
- Central Bank of the UAE has raised interest rates four times since last March
There has been an uptick in recent months in heavily-borrowed companies in the Gulf seeking to restructure their debts with lenders. Although the pressure on companies is not comparable to levels witnessed in the region following the 2008 global financial crisis, rising interest rates will eventually begin to have a greater impact, say experts.
Speaking exclusively to Arab news, Matthew Wilde, a partner at consultancy PwC in Dubai, said: “We do expect that interest rate increases will gradually start to impact companies over the next 12 months, but to date the impact of hedging and the runoff of older fixed rate deals has meant the impact is fairly muted so far.”
The Central Bank of the UAE has raised interest rates four times since the start of last year, in line with action taken by the US Federal Reserve. The Fed has signalled that it will raise interest rates at least twice more before the end of the year.
Wilde added that there had been a little more pressure on company balance sheets of late, although “this shouldn’t be overplayed”.
Nevertheless, just last week, Stanford Marine Group — majority owned by a fund managed by private equity firm Abraaj Group — was reported by the New York Times to be in talks with banks to restructure a $325 million Islamic loan. The newspaper cited a Reuters report that relied on “banking sources”.
The Dubai-based oil and gas services firm, which has struggled as a result of the downturn in the hydrocarbons market since 2014, has reportedly asked banks to consider extending the maturity of its debt and restructuring repayments, after it breached certain loan covenants.
A fund managed by Abraaj owns 51 percent of Stanford Marine, with the remaining stake held by Abu Dhabi-based investment firm Waha Capital. Abraaj declined to comment.
Dubai-based theme parks operator DXB Entertainments struck a deal last month with creditors to restructure 4.2 billion dirhams ($1.1 billion) of borrowings, with visitor numbers to attractions such as Legoland Dubai and Bollywood Parks Dubai struggling to meet visitor targets.
Earlier this month, Reuters reported that Sharjah-based Gulf General Investment Company was in talks with banks to restructure loan and credit facilities after defaulting on a payment linked to 2.1 billion dirhams of debt at the end of last year.
Dubai International Capital, according to a Bloomberg report from December, has restructured its debt for the second time, reaching an agreement with banks to roll over a loan of about $1 billion. At the height of the emirate’s boom years, DIC amassed assets worth about $13 billion, including the owner of London’s Madame Tussauds waxworks museum, as well as stakes in Sony and Daimler. The firm was later forced to sell most of these assets and reschedule $2.5 billion of debt after the global financial crisis.
Wilde told Arab News: “We have seen an increasing number of listed companies restructuring or planning to restructure their capital recently — including using tools such as capital reductions and raising capital by using quasi equity instruments such as perpetual bonds.”
This has happened across the region and PwC expected this to accelerate a little as companies “respond to legislative pressures and become more familiar with the options available to fix their problems,” said Wilde.
He added that the trend was being driven by oil prices remaining below historical highs, soft economic conditions, and continued caution in the UAE’s banking sector.
On the debt restructuring side, Wilde said there had been a “reasonably steady flow of cases of debts being restructured”.
However, the volume of firms seeking to renegotiate debt remains small compared to the level of restructurings witnessed in the aftermath of Dubai’s debt crisis.
Several big name firms in the emirate were caught out by the onset of the global financial crisis, which saw the emirate’s booming economy and real estate market go into reverse.
State-owned conglomerate Dubai World, whose companies included real-estate firm Nakheel and ports operator DP World, stunned global markets in November 2009 when it asked creditors for a six-month standstill on its obligations. Dubai World restructured around $25 billion of debt in 2011, followed by a $15 billion restructuring deal in 2015.
“We would not expect it to become (comparable to 2008-9) so barring some form of sharp external impetus such as global political instability or a protectionist trade war,” said Wilde.
Nor did he see the introduction of VAT as particularly driving this trend, but rather as just one more factor impacting some already strained sectors (e.g. some sub sectors of retail) “which were already pressured by other macro factors.”