There were big changes for the travel industry in the Middle East in 2024: Sphere Entertainment announced a location in Abu Dhabi; MGM Resorts announced its own “Sphere” in Dubai; Wynn Resorts got the green light for gaming in Ras Al Khaimah.
In aviation, Riyadh Air placed an order for 60 more aircraft in October as it prepares to take flight in the middle of 2025. More broadly, the GCC unified visa is expected to come into effect next year with the hope of bringing cross-country travel to the Gulf region.
But the most important travel story in the Middle East as we head into 2025?
We’ll be tracking the progress Saudi Arabia makes on its path to Vision 2030, the goal to transform its economy with travel and tourism as a big part of it. Key indicators for us will be the mix of hotel brands Saudi chooses to sign; agreements the government makes to draw in new source markets; and attention placed outside of the mega projects when it comes to tourism.
Luxury vs. Affordability
We reported a key piece of this in May: Saudi Arabia’s Vision 2030 Is Too Expensive For Tourists – And Everyone Knows It.
The core premise was that Saudi is targeting 150 million visitors, with 70 million from outside the country. It can’t get there with only 5-star luxury resorts, especially given the forecast from the Saudi Tourism Authority that 80% of Saudi’s incoming tourism will be non-luxury travelers.
But there’s definitely been a shift since then.
Following the publication of our article, a spokesperson from the Saudi Tourism Authority sent a statement to Skift acknowledging the importance of luxury accommodation but also the range of mid-market choices in the country.
“Luxury hotels and products are a key part of what we are developing in Saudi, and we know that for some of our target audiences, both domestically and internationally, having luxury destination hotels is essential to their experience,” the spokesperson said. “However, our strategy and ambition are much bigger than that, as set out in our national tourism strategy. It is not just about luxury, it’s about building a year-round offering that caters to visitors across all tiers.”
The Saudi Tourism Authority’s CEO Fahd Hamidaddin acknowledged the need for a range of offerings and said just 20% of hotels would be four- and five-stars.
He said: “It’s a fault of our media, our share of voice is going mostly to those flagship 1% projects. I have to say, Skift’s article was a wake-up call. It is a perception people have, and you rightly captured it.”
STA did not respond to recent requests for comment by Skift.
Affordable Projects in the Pipeline
In June, a Saudi developer called Baheej spoke to Skift about its plans to develop affordable tourism options in secondary cities. Baheej is partly owned by the Public Investment Fund, Saudi Arabia’s sovereign wealth fund that is also building the giga-projects.
In October, Saudi’s Ministry of Investment released a report detailing plans for mid-scale and budget tourism developments up and down the Red Sea coast. In the report, the ministry detailed investment opportunities for more than 250 tourism projects.
In November, during the Skift Global Forum East 2024, hotel operators and developers discussed the growing importance of mid-market options in the kingdom and wider region.
In December, the Public Investment Fund (PIF) announced a new company created to develop homegrown hotel brands in Saudi Arabia, including those in the mid-scale category.
One of the country’s largest hotel operators – Accor – confirmed to Skift that it will start announcing more affordable properties in the country soon. Accor’s chairman and CEO, Sebastien Bazin told Skift in November: “When you’re an operator, you respond to requests, whether from investors, the government, or others. So far, the government’s request [in Saudi Arabia] has leaned toward luxury, and I respect that. But soon, you’ll see requests shifting.”
“That shift is about bringing mid-scale hotels to secondary and tertiary cities that need them more than luxury products. Beyond the giga-projects, other areas of Saudi Arabia are where I am focusing on mid-scale offerings.”
Developer Red Sea Global has also confirmed it will be building a new project for the lower end of the market.
CEO John Pagano told Skift last December: “Mid-market has a huge market potential and there are some locations that are better suited to that, closer to larger urban areas. When we move to more mid-scale, we’ll start getting into the three-star (hotel) offerings, different products, different positioning, and different target audiences. It’s about being strategic across the entire Red Sea coast.”
The project will be south of The Red Sea, putting it closer to Saudi’s second major city, Jeddah.
Other Important Storylines to Watch
In addition to Saudi’s ongoing diversification, other important topics we’re keeping track of next year include the expected launch of the unified visa across the Gulf region; the fledging gaming sector in the UAE; and the future direction of state-owned hotel group Jumeirah.
