Unpacking the Hajj dividend for Saudi Arabia’s travel and hospitality industries

Special Unpacking the Hajj dividend for Saudi Arabia’s travel and hospitality industries
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With pandemic restrictions imposed in 2020 fully lifted, a very large number of people were able to participate in Hajj this year, creating increased business opportunities for travel agencies, airlines and the hospitality industry in the Kingdom and the wider Gulf region. (SPA)
Special Unpacking the Hajj dividend for Saudi Arabia’s travel and hospitality industries
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With pandemic restrictions imposed in 2020 fully lifted, a very large number of people were able to participate in Hajj this year, creating increased business opportunities for travel agencies, airlines and the hospitality industry in the Kingdom and the wider Gulf region. (SPA)
Special Unpacking the Hajj dividend for Saudi Arabia’s travel and hospitality industries
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With pandemic restrictions imposed in 2020 fully lifted, a very large number of people were able to participate in Hajj this year, creating increased business opportunities for travel agencies, airlines and the hospitality industry in the Kingdom and the wider Gulf region. (SPA)
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Updated 01 July 2023
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Unpacking the Hajj dividend for Saudi Arabia’s travel and hospitality industries

Unpacking the Hajj dividend for Saudi Arabia’s travel and hospitality industries
  • When COVID-19 restrictions were imposed in 2020, just 10,000 pilgrims were permitted to travel to Makkah
  • With controls now lifted, 1.6 million people were free to take part, generating welcome business for airlines and hotels

DUBAI: Three years after the COVID-19 pandemic forced Saudi Arabia to impose strict travel restrictions, this year’s Hajj has given a palpable boost to the regional economy, with an estimated 1.6 million Muslims from around the world converging on Islam’s holiest sites.

The annual pilgrimage began on Sunday with the ritual of Tawaf Al-Qudum, when pilgrims dressed in white robes walk in a circle around the Kaaba, the stone structure at the center of Masjid Al-Haram, or the Grand Mosque, the most important mosque and holiest site in Islam.

With pandemic restrictions imposed in 2020 fully lifted, a very large number of people were able to participate in Hajj this year, creating increased business opportunities for travel agencies, airlines and the hospitality industry in the Kingdom and the wider Gulf region.




With the coronavirus emergency over, the annual pilgrimage is essentially back to normal. (SPA)

The number of pilgrims is significantly higher this year compared with the period during the pandemic. Only 10,000 people were permitted to participate in 2020, and about 59,000 in 2021, because of social-distancing rules.

Last year capacity was greatly increased but still capped at 1 million pilgrims. During that time authorities also imposed an age cap of 65 to protect older people, who were considered more vulnerable to the most severe symptoms associated with COVID-19.

Now, thanks to the success of the vaccines developed to combat the coronavirus and the lifting of travel bans and other restrictions, the annual pilgrimage is essentially back to normal and the Hajj economy is enjoying something of a post-pandemic rebound.

Through the combined efforts of the Kingdom’s flag carrier, Saudia, and budget airline flyadeal, more than 600,000 pilgrims were transported from domestic terminals to Hajj sites, Saudia Group said.




Saudia, the Kingdom’s flag carrier, and budget airline flyadeal combined transported more than 600,000 pilgrims from local airports to the holy sites this Hajj season. (SPA /File Photo)

The firm, which also operates Saudia Private Aviation in addition to Saudia and flyadeal, said it provided more than 1.2 million seats on its fleet of 164 aircraft, transporting pilgrims to and from more than 100 regular and 14 seasonal destinations, including Jeddah, Riyadh, Dammam, Madinah, Taif and Yanbu.

Just before Eid Al-Adha, the UAE’s flag carrier, Emirates, also added extra flights to cater to an increase in travelers. Ten flights to and from Jeddah, all operated using Boeing 777 aircraft, were added to accommodate Hajj pilgrims until July 7.

These extra Hajj flights were in addition to Emirates’ existing scheduled services to Saudi Arabia and were available to all travelers holding a valid Hajj visa. All passengers over the age of 12 were required to be vaccinated against COVID-19.

Emirates said there had been an increase in bookings for Hajj travel from Pakistan, India, Bangladesh, Indonesia, Thailand, Senegal, Ivory Coast, Mauritius and South Africa. The airline also added 34 flights to popular vacation destinations during the six-day Eid Al-Adha holiday.

Meanwhile, hotels in Makkah were fully booked as hundreds of thousands of Muslims descended on the holy city for Hajj.

“The hotel occupancy rates in Makkah have reached 100 percent, such as at the Novotel Thakher Makkah Hotel,” Abdul Aziz Al-Aboudi, the CEO of Thakher Development Company, a real estate firm that focuses on the hospitality sector, told Arab News.

“This substantial increase in occupancy comes in contrast to the 80 percent rate observed during the last Ramadan.”




Hotels in Makkah were fully booked as hundreds of thousands of Muslims from the 2.5 million pilgrims who descended on the holy city for Hajj. (SPA)

In 2022, the occupancy rate was 60 percent, he added.

According to global property consultancy CBRE, occupancy levels in Makkah and Madinah increased by 21.2 percent and 18.5 percent respectively during the first quarter of 2023 compared with the same period the previous year. It attributed this increase to the lifting of travel restrictions and the beginning of Ramadan.

Al-Aboudi said the increase in visitor numbers had generated new business opportunities for the construction and real estate industries. His own company recently opened the Park Inn by Radisson and has obtained the necessary Hajj license for its operation, he added.

The annual pilgrimage is also a source of income for smaller businesses, including those who provide lodgings, transport and gifts. The increased footfall this year has meant higher prices.

IN NUMBERS

10,000 Pilgrims permitted to perform Hajj under pandemic rules in 2020.

59,000 Number of pilgrims permitted in 2021 after easing of travel bans.

1 million Cap on the number of pilgrims performing Hajj in 2022.

1.6 million Estimated turnout for the Hajj pilgrimage in 2023.

According to official data for 2019, the Kingdom generated approximately $12 billion in income from the 2.5 million pilgrims who came to Makkah and Madinah for Hajj that year, and the 19 million who visited for Umrah, another Islamic pilgrimage that can be undertaken at any time of the year.

“Religious tourism is the backbone of Saudi Arabia’s tourism and it will play a wider role in the future as well,” Turab Saleem, head of hospitality, tourism and leisure consultancy at Knight Frank, told Arab News.

“Madinah is increasing its inventory from 18,000 hotel rooms at present to 125,000 by 2030. Makkah as well is increasing its occupancy. Makkah will have more rooms than any other city in the entire Middle East, including Dubai. Both Makkah and Madinah will also play a key role in elevating religious tourism to a new level.”




Madinah's shopping centers and hotels are once again seeing a surge in customers since the lifting of pandemic restrictions. (SPA)

Hajj, underlines Saleem, plays a key role in Saudi Arabia’s tourism market.

He also points out how the economy for an increase in hotel rooms is not as challenging is the need to enhance the infrastructure to cater to the increase in Hajj pilgrims and expansion this year of the Hajj economy.

“Saudi is also observing how religious tourism can convert into leisure tourism,” he added.

“If someone or a family comes for a short tour then they can also take a trip to the Red Sea, AlUla or Riyadh.”

Airlines will also play a big role, adds Saleem. The new airline Saudi Arabia is launching, Riyadh Air will travel to over 212 destinations globally.

“It will do wonders for the country in terms of tourism, both religious and leisure,” he said.




Places as far as Jizan are expected to benefit from an influx of visitors as the Kingdom's religious tourism program goes in full swing. (SPA)

According to TV news channel Al Arabiya, in the weeks prior to Eid Al-Adha, Saudi authorities unveiled their largest-ever operational plan for Hajj season, for which they employed a record-breaking 14,000 staff and more than 8,000 volunteers, who were deployed on the ground to provide assistance for pilgrims.

Abdulrahman Al-Sudais, president of the General Presidency for the Affairs of the Two Holy Mosques, said: “The operational plan for this year’s Hajj season is the largest in the history of the presidency, after the end of the coronavirus pandemic and the announcement of the return of Hajj pilgrims in the millions, as per an integrated system of services prepared by the wise leadership.”

Since Vision 2030, the Kingdom’s development and diversification plan, was launched by Crown Prince Mohammed bin Salman in 2016, Saudi authorities have spent billions of dollars on efforts to make Hajj, the world’s biggest religious gathering, more secure, more accessible, and an easier and more streamlined experience.

Another aim of Vision 2030 is to increase Hajj and Umrah capacity to 30 million pilgrims each year, to the benefit not only of the local economy but to international businesses operating in Saudi Arabia.

Performing Hajj can cost upward of $5,000 a person. It is one of the Five Pillars of Islam and every Muslim who is physically able and can afford it is obliged to participate at least once in their life.

 


Closing bell: Saudi main index slips 21 points to 11,056 

Closing bell: Saudi main index slips 21 points to 11,056 
Updated 7 sec ago
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Closing bell: Saudi main index slips 21 points to 11,056 

Closing bell: Saudi main index slips 21 points to 11,056 

RIYADH: Saudi Arabia’s Tadawul All Share Index slipped on Thursday, losing 20.98 points, or 0.19 percent, to close at 11,055.96. 

The total trading turnover of the benchmark index was SR6.26 billion ($1.67 billion) as 98 of the listed stocks advanced, while 114 retreated.  

The Kingdom’s parallel market Nomu rose 58.5 points, or 0.26 percent, to close at 22,690.31. This jump came as 32 of the listed stocks advanced while 19 retreated. 

Similarly, the MSCI Tadawul Index dropped 4.85 points, or 0.34 percent, to 1,415.67. 

The best-performing stock of the day was Etihad Atheeb Telecommunication Co. The company’s share price surged 9.97 percent to SR128. 

Other top performers include The Co. for Cooperative Insurance and Saudi Pharmaceutical Industries and Medical Appliances Corp., whose share prices soared 6.06 percent and 5.53 percent to SR126 and SR35.30, respectively. 

The worst performer was Sinad Holding Co. The firm’s share price dropped 3.61 percent to SR11.74. 

Others to see falls were Almunajem Foods Co. and National Agricultural Development Co., whose share prices dropped 3.04 percent and 2.76 percent to SR70.20 and SR47.50, respectively. 

On the announcements front, International Human Resources Co. has announced the approval of the board of directors to move to the primary market. 

According to a statement to Tadawul, the move to the main market is subject to the approval of the Saudi Stock Exchange. It is also conditional on fulfilling all requirements stipulated in the listing rules. 

On another note, Allianz SE notified Allianz Saudi Fransi Cooperative Insurance Co. of its decision to sell all its shares in the firm that it indirectly holds through its three subsidiaries. 

Allianz Europe BV, Allianz France SA. and Allianz MENA Holding represent 51 percent of the company’s share capital to Abu Dhabi National Insurance Co. 

 A bourse filing revealed that the three subsidiaries entered into a legally binding sale and purchase agreement with ADNIC, in which the firm will acquire the sale shares at a total price of SR499 million. 

Meanwhile, Saudi AZM for Communication and Information Technology Co. has disclosed its annual financial results for the period ending on June 30. 

According to a bourse filing, the firm’s net profit reached SR23.96 million, reflecting a 325.52 increase compared to the SR19.09 million recorded in the previous year. 


Boeing to lead sustainability wave in Saudi aviation industry: top official

Boeing to lead sustainability wave in Saudi aviation industry: top official
Updated 8 min 39 sec ago
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Boeing to lead sustainability wave in Saudi aviation industry: top official

Boeing to lead sustainability wave in Saudi aviation industry: top official

JEDDAH: Boeing is working with Saudi airline companies to implement advanced aircraft and engine technologies that align with global sustainability goals, according to a senior executive of the US-based aerospace company. 

Speaking to Arab News, Randy Heisey, managing director of commercial marketing in Africa and the Middle East region at Boeing, said that the future of flying would incorporate the latest digital design, test and production tools, airframe, propulsion and systems technology, keeping in mind the global sustainability goals.   

He added that different power and energy solutions will apply across diverse market segments and aircraft sizes.    

“We continue to advance the safety and viability of other renewable energy sources and their use on the aircraft, including electric, hydrogen and other sources of energy which may come to fruition,” said Heisey.   

Highlighting some of the critical partnerships and collaborations Boeing has established with Saudi airline companies, he said that the airplane manufacturer enjoys a strong and long-standing relationship with the Kingdom, founded on a partnership back in 1945.   

“Since then, Boeing has developed and expanded relationships in the Saudi commercial and other aviation sectors. Our investments have helped strengthen and grow the local aerospace sector, creating jobs and driving innovation for mutual benefit,” he said. 

Heisey added that they have over 2,000 people employed in the Kingdom today by various Boeing entities and joint ventures in Saudi Arabia.  

Based in Riyadh, Boeing Saudi Arabia is primarily run by the Kingdom’s employees, including its leadership. The company supports all programs in the country, including Boeing Defense, Space & Security, Boeing Commercial Airplanes and Boeing Global Services.  

“To support the development of Saudi-led aerospace and defense capabilities in the Kingdom, we stand to partner with the Kingdom as it diversifies and grows the economy here,” said Heisey. 

As Saudi Arabia spreads its wings in the aviation sector, Boeing is working with established and emerging companies to drive the industry. 

Heisey pointed out that his company supports the growth and operations of its airline partners, focusing on their needs and how they can best succeed in their endeavors.   

“As was demonstrated earlier this year with the purchase that was consummated by both Saudia and the new exciting airline Riyadh Air to commit to up to 121 new 787 Dreamliner aircraft, which will deliver not only great efficiency and sustainable operations but an unparalleled passenger experience,” he said. 

Moreover, Saudi Arabia’s strategic location at the crossroads of major continents has significantly contributed to its status as a global aviation hub.  

The Kingdom’s well-developed aviation infrastructure, geographic position and substantial economic policies have fostered aviation connectivity, making it a crucial transit point for travelers and a center for air cargo transportation. 

The Saudi government has invested in expanding the capacity of airports in cities like Jeddah and Madinah to handle the increasing number of Umrah pilgrims, which includes the construction of new terminals and runways. 

 “That has been a part of helping the commercial aviation industry in the Kingdom grow and prosper, and the Vision 2030 initiatives will be the foundation, which will be accelerated going forward,” said Heisey.  

He added: “So, we see bright prospects given the geography and the emphasis put on the diversification of tourism in Saudi Arabia, which will only lead to more and more benefits for the airlines here.” 

While discussing the company’s upcoming projects, the Boeing executive said: “We’re participating actively in the fleet renewal with our leading technology products, and those will enable the Saudi airlines to effectively compete against others, not only in this region but globally.”    

Moreover, the aviation industry worldwide has been under increasing scrutiny due to its contribution to carbon emissions.  

Meeting environmental targets and regulations and developing more sustainable aviation technologies have emerged as significant challenges. 

Boeing is working closely with its partners to help Saudi airline companies to counter the problems. 

“Boeing has four key approaches we are taking to address this big challenge for the civil aviation industry,” said Heisey while explaining that the strategy’s first pillar is fleet renewal. 

The fleet renewal includes bringing in new generations of airplanes that provide efficiency and reduced emissions of anywhere between 15 percent and 40 percent over the generations preceding them. 

He added that the second pillar is improving operational efficiency, where fuel consumption and emissions reductions can net around a 10 percent benefit.   

“Of course, renewable energy is another major contributor. Sustainable aviation fuel is a major element of how the industry can make progress in this area, but it is not the only element,” reminded Heisey. 

He further said that SAF today could contribute to a reduction in emissions of 80 percent and, in the future, could go to a 100 percent reduction in emissions.  

“The fourth element is one that we are actively pursuing: research and development in advanced technologies,” said the executive.  

Boeing has been leading the aviation space by partnering with the Saudi industry in driving a new fleet, facilitating the flying machines to operate with SAF, and providing its knowledge about other fuels to the industry, including those who are involved in refining and developing new sources of sustainable or alternative fuels.   

It has been working closely with governments, regulatory bodies, airlines, airports, and industry stakeholders to take the Saudi aviation industry to new heights.  

It is also ushering in innovation and adopting sustainable practices to promote the long-term viability of the aviation sector. 


Islamic banks set to flourish in GCC: Moody’s

Islamic banks set to flourish in GCC: Moody’s
Updated 28 September 2023
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Islamic banks set to flourish in GCC: Moody’s

Islamic banks set to flourish in GCC: Moody’s

RIYADH: Against the backdrop of Gulf Cooperation Council countries’ economic diversification efforts, Islamic banks are poised to outperform their conventional counterparts in profit margins, as per a recent report by Moody’s Investors Service.

Fueled by stable oil prices and steadfast economic agendas, increased business activities within Islamic financial institutions over the next 12 to 18 months are anticipated in the GCC region.

In its latest report, the global credit rating agency forecast that the profitability margins of these Shariah-compliant banks will surpass those of traditional outfits in 2024, largely attributed to their inherent margin advantage.

As the regional economy expands, the asset quality of GCC Islamic banks is expected to remain robust.

Additionally, their strong capital and liquidity positions will better equip them to meet the growing regional demand for Islamic banking services, as outlined in the report.

The stable asset quality is set to be supported by the Islamic banks’ focus on household financing, which is expected to remain strong. Moreover, a large proportion of the banks’ activity is in the retail sector, which is likely to continue with a steady performance.

 “While Islamic banks focus mainly on the retail market, corporate financing remains a significant component of their credit exposure, including to the historically cyclical and confidence-sensitive construction, contracting and real estate sectors,” the report added.

The review stated that Saudi Arabia is set to maintain its dominant position in market penetration while highlighting significant growth potential in other regions.  

Elevated oil prices are rendering valuable ripple effects across the GCC region, resulting in consistent government spending, especially in the Kingdom.  

This will lead to a surge in confidence among businesses, consumers, and investors in non-oil sectors, such as in the UAE, where banks primarily lend, the report indicated.

Meanwhile, Moody’s predicts that inflation across GCC banking markets will remain relative to advanced economies, primarily driven by the substantial subsidies governments provide.

“As of March 2023, the market penetration of Islamic banks in Saudi Arabia, which is 83 percent, and Bahrain, 69 percent, were the highest in the region, while room for growth is more significant in the UAE, with a penetration rate of 28 percent, Qatar, 31 percent, and Oman, 19 percent,” the report stated.


Saudi Aramco acquires stake in MidOcean Energy amid efforts to enter the global LNG business

Saudi Aramco acquires stake in MidOcean Energy amid efforts to enter the global LNG business
Updated 33 min 52 sec ago
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Saudi Aramco acquires stake in MidOcean Energy amid efforts to enter the global LNG business

Saudi Aramco acquires stake in MidOcean Energy amid efforts to enter the global LNG business

RIYADH: Energy giant Saudi Arabian Oil Co. is on track to enter the global liquefied natural gas market thanks to a new agreement. 

The leading intergraded energy and chemicals firm has agreed to acquire a strategic minority stake in MidOcean Energy for $500 million, according to a statement. 

According to Aramco Upstream President Nasir Al-Naimi, this move aligns well with the company’s goal of becoming a prominent LNG player. 

“We see significant opportunities in this market, which is positioned for structural, long-term growth,” Al-Naimi said. 

He added: “MidOcean Energy is well-equipped to capitalize on rising LNG demand, and this strategic partnership reflects our willingness to work with leading international players to identify and unlock new opportunities at a global level.” 

MidOcean Energy is an LNG firm established and managed by the leading US-based energy sector and infrastructure investor, EIG. 

The agreement cements the relationship between Aramco and EIG, which was part of a consortium that acquired a 49 percent stake in Aramco subsidiary Aramco Oil Pipelines Co. in 2021. 

“We are pleased to be strengthening our strategic partnership with EIG through this acquisition, which marks Aramco’s first international investment in LNG,” said Aramco President and CEO Amin Nasser in the statement. 

He added: “We anticipate strong demand-led growth for LNG as the world continues on its energy transition journey, with gas being a vital fuel and feedstock in various industries.” 

Nasser spoke about how gas is crucial in meeting the world’s rising need for secure, accessible and more sustainable energy. 

“Energy transition informs every investment decision we make, and we believe LNG has a key role to play in enabling an orderly transition that balances society’s twin goals of decarbonization and energy security,” said EIG Chairman and CEO Blair Thomas. 

Completion of the transaction is subject to closing conditions, which include regulatory approvals. 

Moreover, Aramco is also eligible to choose to raise its shareholding and associated rights in MidOcean Energy in the future. 

“We share the conviction that LNG is an integral enabler of the global energy transition, and we believe that the global LNG industry has strong fundamentals for many decades to come,” said MidOcean Energy CEO De la Rey Venter.


UAE-Thailand economic agreement to strengthen bilateral trade, says envoy

UAE-Thailand economic agreement to strengthen bilateral trade, says envoy
Updated 28 September 2023
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UAE-Thailand economic agreement to strengthen bilateral trade, says envoy

UAE-Thailand economic agreement to strengthen bilateral trade, says envoy

RIYADH: Trade and economic relationships between the UAE and Thailand are poised for significant growth as both nations prepare to sign a Comprehensive Economic Partnership Agreement amid ongoing negotiations, according to a senior envoy. 

Sorayut Chasombat, ambassador of Thailand to the UAE, stated during a media briefing that the CEPA is expected to contribute $300 million to the country’s gross domestic product. 

“We want to be a strong partner of the UAE in this region. We recognize the UAE’s role in this part of the world in promoting peace, stability, and prosperity within the region,” said Chasombat during the briefing at the Royal Thai embassy.  

He added: “With the completion of CEPA, it will add at least $300 million to the Thai GDP. It will add at least $250 million to the bilateral trade between the two countries.”  

Negotiations for the free trade CEPA between Thailand and the UAE began in May, and the latest round of negotiations, currently taking place in Bangkok, is scheduled to conclude on Sept. 28. 

The UAE is Thailand’s sixth-largest trading partner globally and holds the first position in the Middle East. Bilateral trade between the two countries reached $11.1 billion in the first seven months of 2023. 

As of July 2023, Thailand exported goods worth $1.81 billion to the UAE, while imports from the Arab nation amounted to $9.3 billion. 

Chasombat also affirmed Thailand’s robust participation in COP28, given the country’s commitment to becoming carbon neutral by 2050 and achieving net-zero emissions by 2065. 

“Thailand is well known for sustainable development. We plan to have strong participation at the upcoming COP28, next year’s World Government Summit, and the World Trade Organization Ministerial Conference. We would give our utmost support to the UAE,” he noted.  

COP28, the UN Climate Change Conference, is scheduled to take place in Dubai from Nov. 30 to Dec. 12 this year. 

Highlighting tourism ties, Chasombat disclosed that the UAE is second only to Saudi Arabia in terms of the number of tourists visiting Thailand.