Vision 2030 and the evolution of Saudi Arabia’s hospitality sector  

Vision 2030 and the evolution of Saudi Arabia’s hospitality sector  
In 2023, the Kingdom’s travel industry not only met but exceeded expectations, experiencing a staggering 58 percent growth in passenger arrivals. This prompted a substantial recalibration of its Vision 2030 ambitions. Shutterstock
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Updated 28 April 2024

Vision 2030 and the evolution of Saudi Arabia’s hospitality sector  

Vision 2030 and the evolution of Saudi Arabia’s hospitality sector  

RIYADH: As Saudi Arabia embarks on its ambitious journey outlined in Vision 2030, the hospitality industry emerges as a pivotal player in the Kingdom’s economic diversification efforts.  

The sector continues to evolve, with a focus on attracting international visitors and enhancing domestic tourism experiences. 

In 2023, the Kingdom’s travel industry not only met but exceeded expectations, experiencing a staggering 58 percent growth in passenger arrivals. This prompted a substantial recalibration of its Vision 2030 ambitions. 

Last year, Saudi Arabia increased its annual tourism target to 150 million visitors by 2030 after surpassing the original goal of 100 million, seven years ahead of schedule. This achievement was attributed to the country’s ongoing investment in infrastructure, tourism transformation, hospitality, and real estate, aligned with its vision objectives. 

Through capital allocation in the tourism framework, promotion of cultural heritage, and encouragement of innovation in the hospitality sector, the nation aims to unleash the Kingdom’s tourism potential and establish the region as a premier global destination. 

Since Saudi Arabia opened its doors to non-religious tourists for the first time in 2019, the service and accommodation industry has been infused with new life. 

With the announcement of a variety of hotels, resorts, and tourist attractions, the sector is positioning itself to meet the growing demand. 

To achieve this, the Kingdom aims to increase its hotel room inventory by 315,000, projecting a development expenditure of around $37.8 billion by 2030. This expansion will bring the overall inventory to nearly 450,000 rooms. 

David Vely, the vice president of development for the Middle East and Africa at Club Med, emphasized that experts in the field have witnessed firsthand Saudi Arabia’s ongoing efforts and investments to fulfill the criteria needed to meet its destination development and tourism targets. 

He said: “Firstly, world-class infrastructure, including international airports and an advanced highway network, is crucial to facilitate tourist travel. Secondly, a variety of tourist attractions — from historical sites and beautiful beaches to modern entertainment centers — are needed to attract visitors. Thirdly, quality service and memorable experiences, coupled with professional and warm hospitality, are essential to retain tourists and foster positive word-of-mouth.” 

Vely added: “We have observed Saudi Arabia’s ongoing efforts and investments to successfully fulfill these three criteria and are confident in its ability to achieve — and surpass — the ambitious goals of Vision 2030.”   

Alongside investments in tourism infrastructure, which encompass transportation networks, airports, roads, and recreational amenities, initiatives such as NEOM, the Red Sea Project, and Qiddiya are expected to further bolster the nation’s hospitality sector. 

In September, NEOM’s mountains destination, Trojena, revealed plans to host two Marriott hotels — a JW and a W. These establishments are among the numerous international inns set to open at the artificial ski retreat, which is slated to host the Asian Winter Games in 2029. The resort is scheduled to welcome visitors and new residents in late 2026. 

Meanwhile, Red Sea Global, the visionary developer wholly owned by Saudi Arabia’s Public Investment Fund, boasts a portfolio that includes two world-leading destinations announced by Crown Prince Mohammad bin Salman: The Red Sea and AMAALA. 

Collectively, these developments aim to enhance Saudi Arabia’s luxury tourism and hospitality sustainability offerings, with a focus on protecting the natural environment and enhancing it for future generations. 

Emphasizing the importance of environmental awareness in the hospitality sector, Shahbaz Tufail, the executive vice president of DAR Engineering, noted that it is “crucial” to incorporate sustainability into new undertakings. 

“The ongoing development of new entertainment options, as well as aligning value and service propositions to the international travel palette, clearly demonstrates the intent of Vision 2030. To appeal to a broader audience, providers must align with global hospitality and travel trends such as ecotourism, wellness, smart hotels and sustainability,” he said.  

As a cornerstone of the sector’s development, both Vely and Tufail further stressed the importance of training and education in attracting and retaining talent within the hospitality field. 

In order for this to happen, the industry needs to offer competitive compensation and benefits packages to attract skilled professionals into hospitality, and invest in training programs to develop new talent and up-skill existing team members, as noted by Ramine Benham, vice president of development at Minor Hotel EMEA. 

“Collaboration with educational institutions to offer internships and graduate training programs, as well as vocational training programs can also help in providing a pipeline of future talent. By implementing these measures, the hospitality industry will be able to ensure that they employ the best talent and furthermore retain these loyal individual,” he added.  

The nation has already begun to take strides in this direction, with the announcement of multiple programs and initiatives.  

In September of last year, the country’s Minister of Tourism, Ahmed Al-Khateeb, declared the opening of the Riyadh School for Tourism and Hospitality during the 2023 UN Tourism “World Tourism Day” celebrations in Riyadh. 

Inaugurating the launch, Al-Khateeb said: “This school is a gift from the Kingdom of Saudi Arabia to the world because it will be open to everyone to enjoy the best training in tourism and hospitality.”  

This initiative aims to revolutionize industry education by attracting the brightest minds and leveraging cutting-edge technologies in an innovative facility.  

Similarly, in April, a partnership was announced between the Kingdom’s Ministry of Tourism and UN Tourism for the launch of a six-month training program tailored for institutions in Saudi Arabia specializing in the sector. 

TedQual, a certification system designed by the body to evaluate a series of universally applicable criteria, will help further enhance the quality and training of relevant organizations in Saudi Arabia. 

The UN-backed tourism education scheme is poised to elevate the training of Saudi workers, enabling them to deliver the best international standards in the Kingdom. 

As the nation gears up to host Expo 2030 in its capital, talent retention becomes imperative to meet the anticipated surge in hotel occupancy rates, with both international and domestic travelers seeking accommodation during the bustling period. 

Furthermore, the forum represents a transformative opportunity for Saudi Arabia’s hospitality sector, driving growth and investment.  

“Investors are drawn to opportunities in hotel development and resort projects due to the sector’s potential for substantial returns on investment,” Vely said.  

“Moreover, a thriving hospitality industry enhances the country’s overall attractiveness as an investment destination, strengthening confidence among foreign investors and contributing to the country’s economic growth and diversification efforts,” he added.  

To support the sector’s growth, investment, and attractiveness, Riyadh is poised to host the Future Hospitality Summit, which will focus on the future of successful hotel and destination development in the Kingdom as part of the event’s agenda. 

The forum, scheduled to take place from April 29 to May 1, will discuss key factors affecting tourism development and explore strategies for overcoming potential challenges to ensure government targets are met. 

Airbus cuts key targets and takes hefty Space charge

Airbus cuts key targets and takes hefty Space charge
Updated 25 June 2024

Airbus cuts key targets and takes hefty Space charge

Airbus cuts key targets and takes hefty Space charge

PARIS: Airbus softened key industrial and financial targets and took a hefty €900-million ($965 million) charge for its troubled space activities as Europe’s largest aerospace group sought a clean slate approach to supply disruptions and commercial risks, according to Reuters.

Yielding to growing skepticism among suppliers over its plans for jet output, Airbus lowered its widely watched forecast for deliveries this year to around 770 jets from around 800.

It also tempered plans to raise output of its best-selling A320neo family, by delaying the date at which it expects to reach a record production speed of 75 jets a month to 2027 from 2026. That compares with an estimated 50 jets a month now.

As a result of the lower delivery forecasts, which imply annual growth of 5 percent instead of 9 percent, Airbus lowered its main financial targets for 2024.

It now expects underlying operating income of around 5.5 billion euros, instead of a range of 6.5 billion to 7 billion, and free cashflow of 3.5 billion instead of 4 billion.

“We are facing headwinds right now; we have to bite the bullet,” Airbus CEO Guillaume Faury told analysts.

The downward revision in industrial forecasts comes weeks after Reuters first reported that Airbus was facing a new set of output delays as it grapples with increased parts shortages.

Industry sources said Airbus concluded it had exhausted its spare margin for deliveries after falling short in the first five months and then starting June on a weak note — with barely half the month’s anticipated total having been delivered so far.

The aerospace industry has been struggling to rehire workers and stabilize supplies after the pandemic left many suppliers with weak balance sheets.

Engine Shortages

As the no.1 plane producer, Airbus has borne the brunt of the problem as rival Boeing faces regulatory curbs and an internal crisis, but some experts and suppliers — including engine makers — have long voiced doubts about its plans, saying they were too ambitious.

One senior supply chain executive questioned on Monday whether the latest reductions went far enough.

Faury appeared to turn the tables, however, saying supplies of engines for its best-selling A320-family of narrow-body jets had deteriorated “significantly” in recent months.

The shortfall, he said, affects both engine makers for the A320neo narrow-body family, which competes with the Boeing 737 MAX and accounts for most of Airbus’ cash and profits.

Faury said engine makers would have to “face the consequences” of any delays, apparently referring to penalties.

RTX subsidiary Pratt & Whitney declined comment. French-US venture CFM International, co-owned by GE Aerospace and France’s Safran, said: “The supply chain environment remains challenging, and we are working to accelerate (engine) deliveries to meet demand from (Airbus).”

On larger jets, Faury said Rolls-Royce engines for the A330neo were behind schedule but not those for the A350.

Faury also told reporters that an uncertain outlook for the industrial commitments of aerostructures maker Spirit Aerosystems had contributed to the downward revision.

He declined to comment on the timing of a widely expected deal to acquire Spirit assets related to the A350 and A220 jet programs as part of a carve-up of the supplier with Boeing , which sources have said they expect in days or weeks.

Boeing is nearing a deal to buy back Spirit after its former subsidiary made substantial progress in separate talks with Airbus over a transatlantic breakup of the struggling supplier, Reuters reported last week.

The Wall Street Journal reported on Monday that Boeing has proposed funding its acquisition of the supplier with stock rather than cash after the companies were closing in on an all-cash deal this weekend when Boeing switched the offer.

Spirit said it remains “focused on providing the best quality products for our customers.”

Shortages of seats and cabin parts are another “very difficult situation,” Faury said.

Christian Scherer, who took over as head of the planemaking division in January, told German newspaper Hamburger Abendblatt in an interview published on Saturday that engines, landing gear and cabin components are key problem areas.

In Canada, workers who produce components for some Airbus and Boeing landing gear at a Safran factory near Montreal have been striking for nearly four weeks. Safran said it was continuing to supply landing gear as planned. 

Oil Updates – crude steady, US consumer price data in focus

Oil Updates – crude steady, US consumer price data in focus
Updated 25 June 2024

Oil Updates – crude steady, US consumer price data in focus

Oil Updates – crude steady, US consumer price data in focus

SINGAPORE: Oil prices were little changed on Tuesday after rising in the previous session helped by expectations of increased fuel demand this summer, but investors were cautious ahead of US consumer price data, according to Reuters.

Brent futures for August settlement eased 5 cents to $85.96 a barrel as of 8:40 a.m. Saudi time after gaining 0.9 percent on Monday, while US crude futures were down 3 cents at $81.60 a barrel after climbing 1.1 percent a day earlier.

Both benchmarks rose about 3 percent last week, marking two straight weeks of gains.

Gasoline demand is rising and oil and fuel stockpiles have declined as the US, the world’s biggest oil consumer, enters the peak summer consumption period.

US crude oil stockpiles are expected to have fallen by 3 million barrels in the week to June 21, a preliminary Reuters poll showed on Monday. Gasoline stocks were also expected to have declined, while distillate inventories likely rose last week.

“The surge in oil prices was triggered by an optimistic demand outlook and reduced US inventories. With the Northern Hemisphere entering a hot summer and the upcoming hurricane season, demand is expected to continue increasing in the coming months,” said independent market analyst Tina Teng.

Still, investors are cautious about the potential for further oil price increases on concerns that high interest rates will limit growth in fuel consumption by curtailing the economy.

The release of the personal consumption expenditures index, the Fed’s preferred measure of price gains, on Friday is expected to provide more clues to the outlook for rates. Delays to an interest rate cut would keep the cost of borrowing higher for longer.

Oil was also supported by continued Ukrainian attacks on Russian oil infrastructure that could cut crude and fuel supply. On June 21, Ukrainian drones hit four refineries, including the Ilsky refinery, one of the main fuel producers in southern Russia.

The EU adopted a package of sanctions against Russia over its war in Ukraine that will see 27 vessels, including ones run by Russian state-owned shipping firm Sovcomflot, added to its list of sanctioned entities.

“Adding to this, the market remains on edge ahead of elections in Iran later this week. A more hard-line president could result in more direct confrontations with the US, Israel and Saudi Arabia,” ANZ Research analysts said in a note. 

Saudi airline flynas named Best Low-Cost Airline in the Middle East for 7th consecutive year

Saudi airline flynas named Best Low-Cost Airline in the Middle East for 7th consecutive year
Updated 24 min 22 sec ago

Saudi airline flynas named Best Low-Cost Airline in the Middle East for 7th consecutive year

Saudi airline flynas named Best Low-Cost Airline in the Middle East for 7th consecutive year

RIYADH: Saudi Arabia’s flynas has been named the Best Low-Cost Airline in the Middle East for the seventh time in a row by a leading industry body.

The carrier was also ranked in the top three low-cost airlines in the world by the International Skytrax Organization, the global authority for assessing airline performance. 

In another success for the Kingdom, Saudia was named the 20th best airline in the world, rising three places from its 2023 ranking. 

Qatar Airlines reclaimed the top spot in the list, having slipped to second last year behind Singapore Airlines.

Bander Al-Mohanna, CEO of flynas, received the gong for the firm’s Middle East ranking during the annual Skytrax Awards ceremony held in London. 

“Consolidating our position among the top four in the low-cost aviation sector worldwide and being named the Best LCC in the Middle East for the seventh time in a row, according to Skytrax awards, is a success in the name of the Kingdom of Saudi Arabia,” Al-Mohanna said 

“The Kingdom is at the forefront of the world's countries in various fields, especially in the travel, tourism, and aviation sectors, which have received significant attention and goals of Saudi Vision 2030,” he added. 

Al-Mohanna attributed the achievement to the enduring loyalty of their guests, the dedication of their team, and the tremendous support that all Saudi companies enjoy from the government.

“Scooping the award for the seventh time in a row reflects flynas’ persistent commitment to excellence in products and services within the expansion and growth plan we launched under the slogan ‘We Connect the World to the Kingdom,’” he added. 

Al-Mohanna explained that this aligns with the objectives of the National Civil Aviation Strategy, which aims to enable national air carriers to connect the Kingdom with 250 international destinations, accommodate 330 million passengers, and host 100 million tourists yearly by 2030.  

He also noted that it supports the objectives of the Pilgrims Experience Program to facilitate access to the Two Holy Mosques. 

Skytrax Awards are decided yearly by passenger votes through comprehensive surveys and are among the most coveted awards in the aviation industry worldwide. 

Flynas connects more than 70 domestic and international destinations with over 1,500 weekly flights, aiming to reach 165 destinations, in line with the objectives of Saudi Vision 2030.

World Bank approves $700m financing for Egypt

World Bank approves $700m financing for Egypt
Updated 24 June 2024

World Bank approves $700m financing for Egypt

World Bank approves $700m financing for Egypt

CAIRO: The World Bank has approved $700 million in financing to support Egypt’s private sector, economic resilience and green growth.

The Development Policy Financing operation is designed to help Egypt address short-term economic challenges while advancing structural reforms to spur private sector growth.

It also aims to hasten Egypt’s green transition, including by scaling up renewable energy and increasing efficiency in the electricity, water and sanitation sectors.

Egypt’s minister of international cooperation, Rania Al-Mashat, said: “The government of Egypt is undertaking ambitious economic and structural reforms aimed at creating a more competitive, green and private sector-led economy.

“Through this budget support instrument, the DPF with the World Bank helps advance policy reforms on three of its top national priorities: Building macro-fiscal resilience, enhancing economic competitiveness and improving the business environment, and supporting the green transition.

“Our longstanding partnership with the World Bank underpins the realization of Egypt’s development and reform efforts.”

The DPF is the first in a series of three operations.

It will advance key reforms, including strengthening governance for state-owned enterprises, empowering the the Egyptian Competition Authority, ensuring accuracy in payroll taxes, scaling up renewable energy and launching a voluntary carbon credit market regulatory framework.

In March, the World Bank Group announced a three-year $6 billion program to support Egypt.

“Creating good, sustainable jobs and building resilience to climate change are critical for the current and future prosperity of Egypt’s citizens — especially the poor and vulnerable,” said Stephane Guimbert, World Bank country director for Egypt, Yemen and Djibouti.

“Reforms supported by this operation are an important step toward a more sustainable, inclusive economy,” he added.

Egypt’s Ministry of International Cooperation said that the DPF is aligned with the World Bank and Egypt’s Country Partnership Framework for FY2023-FY2027.

The framework is based on research by the World Bank Group on Egypt, including the Country Private Sector Diagnostic and the Country Climate and Development Report.

Of the $700 million in the DPF, $200 million is contingent on complementary financing from development partners.

The ministry added that the DPF aligns with Egypt’s development priorities and national strategies, including the Sustainable Development Strategy Vision 2030, the State Ownership Policy, the National Climate Change Strategy 2050, and the Nexus of Water, Food and Energy.

Saudi Arabia launches world’s largest renewable energy geographic survey

Saudi Arabia launches world’s largest renewable energy geographic survey
Updated 24 June 2024

Saudi Arabia launches world’s largest renewable energy geographic survey

Saudi Arabia launches world’s largest renewable energy geographic survey

RIYADH: The world’s largest renewable energy survey will take place in Saudi Arabia, it has been announced – with the installation of 1,200 measuring stations.

The Kingdom’s Energy Minister Prince Abdulaziz Al-Saud inaugurated the Geographic Survey Project for Renewable Energy, stating that it is unprecedented in its scope and aims to pinpoint optimal sites for  solar and wind power initiatives across the Kingdom, according to an official release. 

The minister highlighted the project’s global significance, stating that no other country has undertaken a geographic survey of this magnitude. 

The undertaking, part of the National Renewable Energy Program, will conduct an extensive geographic survey covering over 850,000 sq. km, with contracts awarded to Saudi companies. 

This area, excluding populated regions, sand dunes, and airspace restrictions, is equivalent to the combined landmasses of the UK and France or Germany and Spain. 

The survey will identify the best locations for renewable energy development based on resource availability and strategic priorities.

The initiative will contribute to achieving the Kingdom’s goal of having renewable power sources make up about 50 percent of the energy mix for electricity production by 2030. 

It will also support the nation’s Liquid Fuel Displacement Program, which aims to displace 1 million barrels per day of liquid fuels across utilities, industry, and agriculture sectors by 2030.

Starting in 2024, Saudi Arabia plans to launch new renewable energy projects with an annual capacity of 20 gigawatts, aiming to reach between 100 and 130 GW by 2030, depending on electricity demand. 

The project’s initial phase will involve deploying stations across the designated areas to gather comprehensive data. 

These stations will then be relocated to identified sites for permanent installation, providing continuous data collection. 

Solar energy measurement stations will record Direct Normal Irradiance, Global Horizontal Irradiance, Diffuse Horizontal Irradiance, dust and pollutant levels, albedo, ambient temperature, rainfall, humidity, and atmospheric pressure. 

Wind energy stations will measure wind speed, direction, temperature, pressure, and humidity at heights up to 120 meters. 

Data collection will employ the latest technologies and adhere to global quality standards. 

A platform by the ministry will monitor, record, and transmit the information, using artificial intelligence to assess and rank sites for renewable energy projects. 

The minister noted that the accuracy and continuous updating of the project’s data make it financeable in accordance with the requirements of relevant local and international institutions.

He added that this will contribute significantly to the immediate allocation of land lots for renewable energy projects and expedite initiative announcement and execution, after coordination with relevant authorities.

The undertaking aims to reduce the current 18 to 24-month waiting period for data acquisition, minimizing risks and enhancing investment attractiveness in the renewable energy sector, he added. 

The minister further stated that this project reaffirms Saudi Arabia’s commitment to its ambitious renewable energy targets, including producing and exporting eco-friendly energy and clean hydrogen.