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1、THE HOSPITALITYINDUSTRYIN SAUDI ARABIASTATUS AND OUTLOOKCONTENTSThe Key TakeawaysIntroductionDefining the hospitality industryThe hospitality industry in Saudi ArabiaMapping the sub-sectorsGovernance and regulatory landscapeEconomic value of the hospitality industry in Saudi ArabiaThe industrys econ

2、omic contributionsEmployment contributionsInvestment contributionsThe Accommodation and Food Service sectorThe AFSA sectors employment contributionsThe AFSA sectors investment contributionsThe Arts,Entertainment,and Recreation sectorThe AER sectors employment contributionsThe AER sectors invesment c

3、ontributionsLooking AheadReferences030609121516182021222325272829323335STRATEGIC GEARS|THE HOSPITALITY INDUSTRY IN SAUDI ARABIA|02THE KEY TAKEAWAYSSTRATEGIC GEARS|THE HOSPITALITY INDUSTRY IN SAUDI ARABIA|03Despite the hospitality industrys increasing global significance,growing from$4.8 trillion in

4、2023 to an expected$11.7 trillion by 2029,the understanding and measuring of it remains subjective.The hospitality industry,at the most basic level,is a broad category of sectors within the service industry that traditionally provide services to people and partly intersect with tourism.As there is n

5、o universal convention on the subsectors that make up the hospitality industry,countries follow varied classification frameworks to monitor the industrys performance.Driven by diversification efforts,the growth rate of the hospitality industry in the GCC is outpacing the global average,with the form

6、er surpassing its pre-pandemic size.Among countries in the GCC,Saudi Arabia has made the largest rebound,with the hospitality industry in the Kingdom surpassing pre-pandemic GDP and employment contributions by nearly 30%and 37%,respectively.The industry is still expected to grow in the next half of

7、this decade to reach Vision 2030 targets.In Saudi Arabia,the hospitality industry includes the Accommodation and Food Services sector,and the Arts,Entertainment,and Recreation sector,which contributed 1.8%to GDP in 2022.The Accommodation and Food Service sector,which includes businesses like restaur

8、ants and hotels,has a significantly larger economic impact than the Arts,Entertainment and Recreation sector,making up 84%of the industrys contribution to GDP and producing almost 680,000 jobs.THE KEY TAKEAWAYSThis report provides a performance review of Saudi Arabias hospitality sector since the in

9、ception of Vision 2030.It covers three main themes.First,the report defines the sector based on different country frameworks.Second,it provides an overview of the hospitality sector in the GCC region and zooms in on its economic value in Saudi Arabia.And third,the report concludes with recommendatio

10、ns to position the hospitality sector as an important piece in Saudis economic diversification puzzle.Below are the key takeaways.STRATEGIC GEARS|THE HOSPITALITY INDUSTRY IN SAUDI ARABIA|04Saudi Arabia opened its doors to non-religious tourism in 2019,unlocking a growth potential for the Accommodati

11、on and Food Service Activities sector and surpassing Vision 2030s target of 100 million tourists.With the exception of 2020,due to COVID-19,the sectors GDP and employment contributions have registered sustained annual growth,surpassing 2019 levels by 24%and 39%respectively,in 2022.Despite the incons

12、istent year-on-year investment flows,the hospitality industry in Saudi Arabia drew in a net$3.4 billion between 2016 and 2022 afer factoring in the disinvestments in 2017 and during COVID-19.Indeed,while foreign direct investment in the sector suffered in 2019,a promising post-pandemic recovery and

13、amendments to the tourism law are likely to improve investment behavior and returns to the sector.The Arts,Entertainment and Recreation sector has almost doubled in size since the inception of Saudis Vision 2030 and is employing 45%more workers.Projects launched through SEVEN will flow more than$13

14、billion into the sector and are likely to maintain positive contributions to employment and push the sectors economic value closer to 3%of GDP by 2030.The brand that Saudi Arabia is curating has relied on a synchronized effort across policy,business,and marketing functions,but sustaining this requir

15、es a mission-driven approach that links hospitality to its proximal pillars,namely transportation,technology,and security.Reliable transport systems enhance road connectivity and allow people to commute efficiently to hotspot destinations,while digitalization streamlines the hospitality experience f

16、or businesses and visitors alike.More so,as Saudi Arabia ranks among the safest countries in the world,there is an opportunity to further promote it as a safe and inclusive destination given that its perception is a major determinant for domestic and inbound leisure.STRATEGIC GEARS|THE HOSPITALITY I

17、NDUSTRY IN SAUDI ARABIA|05INTRODUCTIONSTRATEGIC GEARS|THE HOSPITALITY INDUSTRY IN SAUDI ARABIA|06The hospitality industry,at the most basic level,is a category of sectors within the service industry that traditionally specialize in providing services to people outside of the home.1 This includes ser

18、vices such as lodging,food and beverage services,and recreational activities.From the COVID-19 pandemic to the fourth industrial revolution and climate change,the global hospitality industry has had to evolve to adapt to ever-increasing disruptions.The industry,however,has proven its dynamism and ma

19、lleability,with recent statistics estimating that the industrys2 size will grow from$4.8 trillion in 2023 to$11.7 trillion by 2029.3In the Gulf Cooperation Council(GCC)region,the hospitality industry has grown remarkably as countries center their diversification strategies around tourism.Driven by e

20、ndeavors like introducing a unified tourist visa and hosting major cultural and sporting events4,the GCC is positioning itself as a pioneer in the global tourism and hospitality arena.5 Increased government spending on infrastructure projects as well as the prioritizations of digitalization and sust

21、ainable tourism have moreover helped the hospitality industry in the region adapt to the dynamic global landscape.As a testament to that,the industry has grown at a compounded annual growth rate of 2.7%since 2017 to reach$28.9 billion in 2022,with Saudi Arabia accounting for nearly 70%of the regions

22、 market.6Saudi Arabias large market share aligns with the Kingdoms Vision 2030.Since the inception of the Vision,the hospitality industry has continued to evolve and focus on atracting international visitors and enhancing experiences of domestic tourism.In 2023,the Kingdom increased its annual touri

23、sm target from 100 million to 150 million by 2030 afer surpassing the original target seven years ahead of schedule.7The countrys investment in infrastructure and its promotion of cultural heritage and innovation in the hospitality sector have fast-tracked a transformation,which can be traced back t

24、o 2019,when the Kingdom opened its doors to non-religious tourists,infusing new growth potential to the service and accommodation sectors.8INTRODUCTIONSTRATEGIC GEARS|THE HOSPITALITY INDUSTRY IN SAUDI ARABIA|07This report provides a performance review of Saudi Arabias hospitality sector since the in

25、ception of Vision 2030.It is structured into three main themes.First,the report defines the sector according to different country frameworks.Second,it provides an overview of the hospitality sector in the GCC region and zooms in on its economic value in Saudi Arabia.And third,the report concludes wi

26、th internationally accepted recommendations that anchor a sustainable hospitality sector in a comprehensive policy that recognizes healthy labor and environmental practices.STRATEGIC GEARS|THE HOSPITALITY INDUSTRY IN SAUDI ARABIA|08DEFININGTHE HOSPITALITYINDUSTRYSTRATEGIC GEARS|THE HOSPITALITY INDUS

27、TRY IN SAUDI ARABIA|09Despite the industrys increasing global significance,the understanding and measuring of it remains elusive and subjective.One common misconception surrounding the hospitality industry is its interchangeability with tourism.As some literature notes that while hospitality enterpr

28、ises produce many of the goods and services comprising tourism,these are rather only provided to locals and excludes tourists.9The hospitality industry is thus simultaneously more and less than the tourism industry;more because it includes goods and services provided to non-tourists,and less because

29、 the tourism industry comprises many non-hospitality businesses.10 Still,hospitality plays an important role in shaping the experiences of guests within the tourism industry,ensuring that visitors are not just provided with physical amenities,but also a pleasant and inclusive environment throughout

30、their visit.Beyond this immediate function,hospitality can be considered a school of thought influenced by the culture of the host country,whereby its application brings positive imprints to the broader service ecosystem that improves guest experiences perceptions.11It is important to note that ther

31、e is no universal conventional on the subsectors that make up the hospitality industry.Individual countries can adopt different classification frameworks for the industrys sub-sectors.In the European context,for instance,the hospitality sector comprises two sub-sectors:Accommodation and Food Service

32、 Activities,which includes hotels,short-stay accommodation,camping grounds and other accommodation,and Food and Beverage Service Activities,which include restaurants and mobile food service activities,beverage serving activities,and event catering.12DEFININGTHE HOSPITALITYINDUSTRYSTRATEGIC GEARS|THE

33、 HOSPITALITY INDUSTRY IN SAUDI ARABIA|10In the United Kingdom,the classification adopted is also relatively broad,including Accommodation and Food Service activities as well as Event Management,which includes convention and trade show organizers,and Cultural and Recreational activities,which include

34、s amusement and recreation activities.14In the United States,a broader classification is adopted.The U.S.Bureau of Labor Statistics classifies Leisure and Hospitality as one“supersector”consisting of two sectors:Arts,Entertainment and Recreation;and Accommodation and Food Services.13 The Arts,Entert

35、ainment and Recreation sector comprises three sub-sectors:Performing Arts,Spectator Sports,and Related Industries;Museums,Historical Sites,and Similar Institutions;and Amusement,Gambling,and Recreation Industries.Meanwhile,the Accommodation and Food Services sector comprises just two sub-sectors:Acc

36、ommodation and Food Services.And while some countries have well-defined understandings of the hospitality industry as a distinct economic activity,that is not the case for all.In the Saudi Arabian context,“hospitality”is not recognized as a standalone unit in official government statistics,but it do

37、es follow the United States nomenclature of classifying the hospitality industry as a function of the accommodation,food and beverage,and entertainment and recreation sectors.STRATEGIC GEARS|THE HOSPITALITY INDUSTRY IN SAUDI ARABIA|11THE HOSPITALITYINDUSTRYIN SAUDI ARABIASTRATEGIC GEARS|THE HOSPITAL

38、ITY INDUSTRY IN SAUDI ARABIA|12OUR HABITAS ALULASaudi Arabia has signed itself up for a formidable mandate:positioning the Kingdom as a global tourism and hospitality destination.Some of its Vision 2030 targets include hosting 150 million tourists,creating 1.6 million jobs,and pushing the economic c

39、ontribution of the AER sector to 3%of GDP.The journey towards these milestones has thus far required extensive financial and political resources,including giga investment projects and structural policy reforms to create suitable conditions for a prime hospitality brand to flourish.One of Saudis late

40、st initiatives to build a sustainable hospitality industry involves nurturing a domestic human capital that aligns with the market.In September 2023,Saudis Minister of Tourism announced the opening of the Riyadh School for Tourism and Hospitality,which cost over$1 billion and is expected to welcome

41、its first cohort in 2027 in its campus in Qiddiya,an entertainment megaproject in Riyadh.As noted by a Saudi tourism and hospitality professional,“hospitality can already be found within the Saudi culture,but there is a need to invest in professional training and creating professionals in order to c

42、ope with the sectors expected growth.”15 In this vein,Saudi announced a partnership between its Ministry of Tourism and UN Tourism for the launch of a training program tailored for hospitality institutions,with the aim of elevating the skills of Saudis hospitality workforce to deliver high-quality s

43、ervices to their guests.16THE HOSPITALITY INDUSTRYIN SAUDI ARABIASTRATEGIC GEARS|THE HOSPITALITY INDUSTRY IN SAUDI ARABIA|13The Kingdom also launched the Quality of Life program to expand and diversify sports,culture and entertainment opportunities in the country.Under the program,the Kingdom aims t

44、o inject$64 billion into the entertainment industry across sectors like sports,culture and heritage,and entertainment.17 The program is triggering expansions in the Kingdoms Food and Beverage(F&B)sector;18 from local startups to international chains,the number of F&B establishments is increasing in

45、major and smaller cities alike,and sectoral revenues are projected to reach$16.3 Billion in 2025.19More so,the Kingdom is set to raise the number of accommodations by adding 854,000 new rooms to its existing 400,000 by 2030.This expansion will include projects by global industry leaders including th

46、e Hilton,Fairmont and the Four Seasons.20The Quality of Lifes role in the entertainment sector comes afer the establishment of Saudi Entertainment Ventures(SEVEN)in 2017.Backed by the Public Investment Fund,SEVEN is set to enhance and develop the Kingdoms entertainment ecosystem by investing$13.3 bi

47、llion,with international partners,to develop 150 entertainment destinations by 2030.The Saudi entertainment industry has atracted global household names like Six Flags and Dragon Ball,which are set to open in Qiddiya.It has also atracted regional entertainment brands like VOX and Magic Planet,both o

48、f which have already begun operating in the Kingdom.21 These projects,developments,and changes not only align with Vision 2030,but also place Saudi Arabia as a leader within leisure and hospitality.STRATEGIC GEARS|THE HOSPITALITY INDUSTRY IN SAUDI ARABIA|14MAPPING THE SUB-SECTORSSaudi Arabias hospit

49、ality industry includes two major sectors:the Accommodation and Food Services sector,and the Arts,Entertainment,and Recreation sector.The Accommodation and Food Services sector includes two sub-sectors:Accommodation,and Food and Beverage Service Activities.The Arts,Entertainment,and Recreation secto

50、r includes three sub-sectors:Creative,arts,and entertainment activities;libraries,museums,and other cultural activities;and sports activities and amusement and recreation activities.A summary of this mapping can be found below:In 2022,the hospitality industrys contribution to Saudi Arabias GDP was 1

51、.8%,of which 84%came from the Accommodation and Food Service Activities sector(1.5%of GDP),and 16%from the Arts,Entertainment and Recreation sector(0.28%of GDP)(Figure 5).As such,the Accommodation and Food Service Activities sector is significantly larger than the Arts,Entertainment and Recreation s

52、ector,having a much larger socioeconomic role.Figure 1:Constituents of Saudi Arabias Hospitality Industry,by contribution as of 2022(%)Source:Gastat,National Accounts.Statistical releases,2024.Creative,arts and entertainment activitiesLibraries,archives,museums and othercultural activitiesSports act

53、ivities and amusementand recreation activitiesAccommodationFood and Beverage Service ActivitiesAccommodationand Food ServicesArts,Entertainmentand RecreationSUBSECTORSSECTORSAccommodationand Food ServiceActivitiesArts,Entertainmentand Recreation16%84%STRATEGIC GEARS|THE HOSPITALITY INDUSTRY IN SAUDI

54、 ARABIA|15The hospitality industry in Saudi is primarily governed by three respective bodies:the Ministry of Tourism,the Ministry of Municipality and Rural Affairs(MOMRA),and the General Entertainment Authority.The regulation and licensing of temporary accommodation facilities is administered by the

55、 Ministry of Tourism,based on the Tourism Law and the Tourism Accommodation Facility Regulations.22 The Ministry defines thirteen different types of tourism accommodation facilities that investors can obtain licenses for,these include:hotels,resorts,serviced apartments,camping facilities,and tempora

56、ry accommodation facilities,among other types.Before starting the license application procedures,investors are required to fulfill a number of prerequisites these include meeting a one-star requirement for star-rated tourism accommodation,meeting the economy category requirements for non-star graded

57、 accommodations,and meeting universal accessibility requirements for all types of accommodation.Investors are also required to obtain a valid license from the Ministry of Municipalities and Housing,a valid permit from Civil Defense,and the approval of the Ministry of Environment,Water and Agricultur

58、e,as well as the National Center for Vegetation Development.Once prerequisites are fulfilled,they are able to apply for the License online through the Ministrys Tourism Activities Licensing Portal.23 Classification issuance,license renewal,and license ownership transfer can also be done through the

59、Licensing Portal.GOVERNANCEAND REGULATORYLANDSCAPESTRATEGIC GEARS|THE HOSPITALITY INDUSTRY IN SAUDI ARABIA|16It issues the licenses required for amusement parks and entertainment centers,the permits required to organize events and hold shows,and the licenses necessary to manage talent and facilities

60、 as well as the accreditation certificates for crowd management and control,and the sale and booking of tickets.The Authority has an electronic system through which applicants can submit applications according to approved templates.Prior to applying,applicants must obtain all necessary permissions a

61、nd licenses from relevant authorities for the activity theyre holding.The license issued by the Authority will be based on the information provided by the applicant,that includes the type of entertainment activity,the start and end dates of the licenses,as well as any other information deemed necess

62、ary by the Authority.27The entertainment and recreation sector in the Kingdom is governed by the General Entertainment Authority(GEA).The authority regulates events,entertainment facilities and support activities within the Kingdom.Recent changes to the Tourism Law,which came into effect in March 20

63、23,changed the process through which foreign hotel operators can enter the Saudi Arabian market,restructuring the boundaries of the Kingdoms accommodation industry and potentially encouraging more fully-local investment.Prior to amendments to the Tourism Law,foreign operators ofen entered the Saudi

64、market through management arrangements with KSA-based hotel owners,with many offering“off-shore”management consulting services to Saudi-based hotels;this was largely due to the lack of a well-structured regulatory framework.24 Amendments to the Law,however,now necessitate that any foreign hotel oper

65、ators desiring to operate in Saudi,whether through a physical or off-shore presence,must obtain the licensing detailed above afer obtaining a foreign investment license from the Ministry of Investment and a commercial registration certificate from the Ministry of Commerce.25The Kingdoms Ministry of

66、Municipality and Rural Affairs(MOMRA)is responsible for the regulation of all food and beverage establishments along the food supply chain.Having developed a set of rules,regulations and technical requirements for the F&B sector,the Ministry ensures that food establishments are maintained up to thei

67、r standard,as are their machinery.It also maintains the food safety of establishments as well as employees hygiene.Saudis Food and Drug Administration also plays a role in food safety,assessing all national F&B establishments against a set of food safety requirements.26STRATEGIC GEARS|THE HOSPITALIT

68、Y INDUSTRY IN SAUDI ARABIA|17ECONOMIC VALUEOF THE HOSPITALITYINDUSTRY IN SAUDI ARABIASTRATEGIC GEARS|THE HOSPITALITY INDUSTRY IN SAUDI ARABIA|18OUR HABITAS ALULADespite having made significant recovery in 2021 and 2022 from the sharp declines in overall economic activity in 2020 due to COVID-19 impl

69、ications,countries in the GCC region have begun to experience yet another drop in economic activity,leading to lower GDP growth,and in the case of Kuwait,a decline in GDP(Figure 2).This economic contraction can be atributed to a weakened global economy,caused by ongoing inflationary pressures,weak t

70、rade growth and elevated geopolitical uncertainty28;tighter financial constraints,due to supply chain disruptions and inflation29;and decreased hydrocarbon GDP,in part due to production cuts by the Organization of the Petroleum Exporting Countries(OPEC+).30 Despite increased interest rates,the non-o

71、il sector in the region has shown remarkable resilience as domestic demand continues to rise;this has allowed GCC countries to contain the effects of hydrocarbon GDP loss and embark on their diversification strategies.ECONOMIC VALUEOF THE HOSPITALITYINDUSTRY IN SAUDI ARABIASaudiKuwaitUAEQatarBahrain

72、Oman%10%8%6%4%2%0%2-%4-%6-201920202021202220232024eFigure 2:Real GDPGrowth in GCCCountries(2019-2023)Source:IMF.World EconomicOutlook April 2024.Gastat.National Accounts.Statistical releases,2024STRATEGIC GEARS|THE HOSPITALITY INDUSTRY IN SAUDI ARABIA|19THE INDUSTRYS ECONOMIC CONTRIBUTIONS In 2022,t

73、he hospitality industrys contribution to global GDP rose to 7.6%,the highest it had reached since 2019,when it had contributed over 10%(Figure 3).31 This points to the industry making progress towards pre-pandemic levels,but not yet recovering.That,however,is not the case in the GCC region,where pre

74、-pandemic levels in the industry have been surpassed in most countries since the initial decline in 2020.This can be atributed to GCC policies,described above,that have successfully placed hospitality at the center of their diversification efforts.The Kingdoms dedication to the hospitality industry

75、since 2019 has led to strong GDP returns.Saudi has not only recovered from the decline triggered by the pandemic,but it has also surpassed pre-pandemic GDP contributions by nearly 30%,more than any other country in the GCC(Figure 4).Figure 3:HospitalityShare of GlobalGDP(2015-2023)Source:World Trave

76、l andTourism Council,EconomicImpact Research201820192020202120152016201720222023%12%10%8%6%4%2%0STRATEGIC GEARS|THE HOSPITALITY INDUSTRY IN SAUDI ARABIA|2020182019202020212015SaudiKuwaitUAEQatarBahrainOman20162017202220,00018,00016,00014,00012,00010,0008,0006,0004,0002,0000$millionSource:Gastat.Nati

77、onal Accounts.Statistical releases,2024.;UAE Stat.National Accounts.ISIC.;Qatari planning and Statistics Authority.Statistical Releases.38th issue.;Oman,National Centre for Statistics and information.National Accounts.;Kuwait Central Statistical Bureau.Statistical Bulletins.;World travel and Tourism

78、 Council.Travel and Tourism Economic impact,2023.Bahrain.Figure 4:GDP contribution of the hospitality sector in GCC countries(in USD million)EMPLOYMENT CONTRIBUTIONSSaudi Arabias hospitality industry accommodated more than 700 thousand jobs in 2023,37%larger than in 2019(Figure 5).These numbers are

79、projected to increase as the Kingdom expands its hospitality sector as part of its Vision 2030,with the National Tourism Strategy aiming to generate 1.6 million jobs within the tourism sector.32 Given the overlap between the tourism and hospitality sectors,job creation will naturally spillover to su

80、b-sectors within the hospitality industry,namely accommodation,food and beverage,and entertainment,and support the Kingdoms Saudization efforts within the job market.20182019202020212017201620232022800,000700,000600,000500,000400,000300,000200,000100,000-Number of EmployeesSource:Gastat.Structural B

81、usiness Statistics.Saudi Monshaat Business Atlas.Figure 5:Employment in the Hospitality Industry in Saudi Arabia(2016-2023)STRATEGIC GEARS|THE HOSPITALITY INDUSTRY IN SAUDI ARABIA|21INVESTMENT CONTRIBUTIONSForeign Direct Investment(FDI)represents a primary source of income for Saudi Arabia as it ent

82、ers its post-oil era,with Vision 2030 aiming to push FDIs contribution to GDP from 2.4%in 2023,to 5.7%in 2030.36 Over the last decade,the manufacturing sector has been a leading contributor to FDI,followed by transportation,and construction.Between 2016 and 2022,the hospitality industrys ability to

83、consistently atract investment flows had been fragile,with FDI levels varying significantly year-on-year(Figure 6).Saudi Arabia however faces a perennial employee retention challenge that is characteristic of the hospitality industry.Its seasonality and high turnover rate are well-known traits exper

84、ienced globally,33 regardless of levels of economic development.And while initiatives like the Riyadh School for Tourism and Hospitality are atempting to address this challenge in the long run,the industry is likely to require additional government intervention as demand for hospitality services inc

85、rease.34 One intervention is through labor policy instruments that loosen work contracts for employers and Saudi nationals increasingly seeking jobs in the tourism sector,35 ensuring that contract clauses acknowledge the seasonality nature of the market and the fact that most job entrants are early

86、in their careers and/or furthering their studies.Still,at an aggregate level,the industry drew in a net$3,368 million between 2016 and 2022,afer factoring in the divestments in 2017 and during the peak of Covid-19.In 2022,the hospitality industry represented 0.70%of FDI(compared to 6.37%in 2019)with

87、 the outlook for the coming years being positive following the Ministry of Tourisms Hospitality Investments Enablers program,which seeks to atract$11 billion into the sector and create 120,000 jobs by 2030.37Source:Ministry of Investment,Investments statistics,Foreign Direct investments bulletin,Q1

88、2024.Figure 6:Contribution to FDI from the hospitality industry(2016-2022,USD million)Accommodation and Food Service Activities Arts,entertainment and recreation20182019202020212017201620226005004003002001000-100-200-300-400FDI Inflows($million)1571-2015504-3551-10-508-3162416465STRATEGIC GEARS|THE

89、HOSPITALITY INDUSTRY IN SAUDI ARABIA|22THE ACCOMMODATIONAND FOOD SERVICE SECTORZooming in on the subsectors of the hospitality industry,the Accommodation and Food Service Activities subsector has followed similar trends to the larger hospitality industry,having made significant recovery post-pandemi

90、c in most GCC countries(Figure 7).A surge in tourism in the region,particularly due to the FIFA World Cup 2022 in Qatar and the EXPO 2020 in Dubai,has led to an increase in the sectors economic activity.The 2022 World Cup,for instance,brought 1.18 million tourists to Qatar over the tournaments 28-da

91、y period,representing an average increase of 365%in international visitors during comparable periods in previous years.38As the GCC continues to grow as an entertainment and leisure destination,as does the demand for accommodation and food services.39As of 2022,the region had reached a room capacity

92、 of nearly 855 thousand rooms,170 thousand more rooms than 2017,with most of this increased supply having occurred in Saudi Arabia and the United Arab Emirates.40 Similarly,the food and beverage sector in the GCC continues to grow rapidly,with projections placing its value at$94.5 billion by the end

93、 of 2024.41 A growing population,a surge in tourism,and digital transformation are all propelling demand for the sector forward.42 These factors are all likely to increase the sectors GDP contributions in the region.20182019202020212015SaudiUAEQatarOmanKuwaitBahrain20162017202218,00016,00014,00012,0

94、0010,0008,0006,0004,0002,0000GDP Contribution($million)Sources:Gastat.National Accounts.Statistical releases,2024.;UAE Stat.National Accounts.ISIC.;Qatari planning and Statistics Authority.Statistical Releases.38th issue.;Oman,National Centre for Statistics and information.National Accounts.;Kuwait

95、Central Statistical Bureau.Statistical Bulletins.;World travel and Tourism Council.Travel and Tourism Economic impact,2023.Bahrain.Figure 7:The Accommodation and Food Service Activities subsectors contribution to GDP in GCC countries(2015-2022,in USD)STRATEGIC GEARS|THE HOSPITALITY INDUSTRY IN SAUDI

96、 ARABIA|23Saudi Arabia first opened its doors to non-religious tourists in 2019,making it an opportune moment in time for the A&FSA sector,evidenced in the sectors steep 16%growth between 2018 and 2019.The repercussions of COVID-19 hit the sector particularly hard,as it did the hospitality industry

97、at large,slashing economic activity by over 34%.The sector,however,has managed to successfully bounce back in just a years time,surpassing 2019 GDP contributions by over 17%in 2021,and rising even further,by 6%,in 2022.The Quality of Life program has also enabled the expansion of the food service ac

98、tivities subsector by increasing the total number of F&B establishments across the Kingdom;the sector continues to seize the opportunity afforded to it by increased demand and pro-expansion policies,with projections seting its growth at 6%by 2029.43Vision 2030 aims to increase the sectors GDP contri

99、butions even further;with plans to raise the number of accommodations it has,adding 854,000 new rooms to the existing 400,000 by 2030.STRATEGIC GEARS|THE HOSPITALITY INDUSTRY IN SAUDI ARABIA|24THE AFSA SECTORSEMPLOYMENT CONTRIBUTIONSSubstantial investment in leisure and hospitality projects,as a res

100、ult of Vision 2030,has raised the employment contribution of the Accommodation and Food Service Activities sector.Following a plateau between 2018 and 2020,when the sector had employed just under 500 thousand individuals,the sectors employment contributions have increased year by year,plateauing aga

101、in in 2023,at around 680 thousand employees(Figure 8).This plateau is driven by a slight decline,by 3%,in employment in the food services sub-sector(Figure 9).The decline,however,is likely to be temporary considering the sectors growth projections.In fact,Vision 2030s Quality of Life program aims to

102、 increase the number of cafes and restaurants per 1000 individuals by 20%,which is likely to increase the sectors employment contribution by a similar rate.Employment in the accommodation sub-sector,on the other hand,has increased consistently since 2020,when it suffered a sizeable decline,having fa

103、llen by nearly 20%during the pandemic(Figure 10).Major investments in the sub-sectors like the megaprojects planned in the Holy cities and leisure destinations like Red Sea Global and NEOM,will continue to drive the sub-sectors employment contribution upwards,especially since it is estimated to requ

104、ire at least 50,000 additional workers by 2030.44Sources:Gastat.Structural Business Statistics.Monshaat Business Atlas.Sector.Accommodation and Food Service Activities.Figure 8:Employment in the Accommodation and Food Service Activities Sector in Saudi Arabia(2016 2023)201820192020202120172016202320

105、22800,000700,000600,000500,000400,000300,000200,000100,000-Number of EmployeesSTRATEGIC GEARS|THE HOSPITALITY INDUSTRY IN SAUDI ARABIA|25Source:Saudi Monshaat Business Atlas.Sector.Accommodation Figure 9:Employment in the Accommodation Sub-sectorSource:Saudi Monshaat Business Atlas.Sector.Food Servi

106、cesFigure 10:Employment in the Food Services Sub-sector20182019202020212017201620232022700,000600,000500,000400,000300,000200,000100,000-Number of Employees2018201920202021201720162023202280,00070,00060,00050,00040,00030,00020,00010,000-Number of EmployeesSTRATEGIC GEARS|THE HOSPITALITY INDUSTRY IN

107、SAUDI ARABIA|26THE AFSA SECTORSINVESTMENT CONTRIBUTIONSThe Accommodation and Food Service Activities sector drives most of the hospitality industrys FDI.In 2019,FDI in the sector reached an all-time high,having brought in over$550 million,before plummeting to net negative values in 2020 and 2021(Fig

108、ure 11).Global economic decline during the COVID-19 pandemic is a likely explanation for the severe fall in investment in the sector.Still,the sector began recovering in 2022,returning to net positive inflows,having brought in nearly$165 million(Figure 13).Updates to the tourism law,which have eased

109、 local and foreign investment in the sector alike,by introducing a clear regulatory framework,are likely to yield positive investment returns in the sector in the long run.Source:Ministry of investment.Investments Statistics.Foreign Direct investments bulletin,Q1 2024Figure 11:FDI Inflows by the Acc

110、ommodation and Food Service Activities Sector20182019202020212017201620226005004003002001000-100-200-300-400FDI Inflows($million)STRATEGIC GEARS|THE HOSPITALITY INDUSTRY IN SAUDI ARABIA|27THE ARTS,ENTERTAINMENT,AND RECREATION SECTORMany governments in the GCC have realized the value the Arts,Enterta

111、inment and Recreation sector can bring to their diversification strategies.The UAE,Qatar and Saudi Arabias governments especially have demonstrated strong support for the sector through strategic investment in entertainment and cultural endeavors over the last few of years.45 Between the FIFA World

112、Cup 2022 in Qatar,World Expo 2020 in Dubai,and the launch of Qiddiya in Riyadh,the countries are centering mega-projects to boost entertainment returns.The UAE,and Dubai especially,has always been an atractive hub for entertainment and leisure,which has translated into high contributions of the sect

113、or to GDP over the years(Figure 12).Saudi Arabias Vision 2030,however,has brought Saudis entertainment sector to the front line,exceeding the UAEs contributions to GDP for the first time in 2022.In 2022,the Kingdoms entertainment sector contributed over$3 billion to its GDP,whereas the UAEs contribu

114、ted just over$2.5 billion,a testament to growing importance of the sector in the country.This has been especially supported by the Ministry of Cultures efforts to create strategic direction for the arts sector,as well as the General Entertainment Authoritys role in developing the Kingdoms entertainm

115、ent sector.The Kingdoms entertainment sector is likely to continue to grow as Vision 2030s support measures cement into place.The Kingdom plans on raising the sectors GDP contribution to$23 billion,or 3%of GDP,by 2030.It is facilitating that through infrastructure spending and projects launched thro

116、ugh SEVEN.Sources:Gastat.National Accounts.Statistical releases,2024.;UAE Stat.National Accounts.ISIC.;Qatari planning and Statistics Authority.Statistical Releases.38th issue.Figure 12:The Arts,Entertainment and Recreation subsectors contribution to GDP in the GCC(2015-2022,in USD)20182019202020212

117、017201620223500300025002000150010005000GDP Contribution($million)SaudiUAEQatarSTRATEGIC GEARS|THE HOSPITALITY INDUSTRY IN SAUDI ARABIA|28THE AER SECTORSEMPLOYMENT CONTRIBUTIONSEmployment in the Arts,Entertainment and Recreation sector rose significantly between 2020 and 2022(from just over 19 thousa

118、nd to nearly 29 thousand employees),stabilizing in 2023(Figure 13).There is likely another surge in employment considering the governments expansion plans for the sector,which include the creation of 100,000 jobs by 2030.46Two of the sectors subsectors experienced a notable decline in employment bet

119、ween 2016 and 2023.One,in the Creative,Arts and Entertainment Activities subsector,employment fell from over 2,100 employees in 2016,to just over 1,100 employees in 2023(Figure 14).Similarly,employment declined in the Libraries,Archives,Museums and Other Cultural Activities subsector,from nearly 3,2

120、00 employees in 2016,to 520 employees in 2023(Figure 15).This,however,is likely to only be temporary,especially since the Kingdom is actively harnessing its history and culture to build its entertainment and cultural tourism industry.The Saudi Arabian government has taken steps to upgrade its existi

121、ng museums,such as the National Museum and the Masmak Fort Museum in Riyadh,and opening new museums like the Black Gold Museum,the Royal Art Complex Museum,and the Digital Art Museum,among other museums,all of which are expected to launch before 2030.47 The government is also enabling cultural diplo

122、macy and exchange by encouraging artists to nurture appreciation of Saudi art;the Kingdom hosted an art biennale in 2021 in Diriyah,an art festival in Al Ula in 2020,and another art biennale in Diriyah in 2023.48Employment in the Sports Activities,Amusement and Recreation activities sub-sector has r

123、isen by 90%since the inception of Vision 2030 in 2016,reaching just over 25 thousand workers in 2023.Projects like Qiddiya and SEVENs entertainment destinations are likely to maintain the sub-sectors positive contributions to employment on the long run.STRATEGIC GEARS|THE HOSPITALITY INDUSTRY IN SAU

124、DI ARABIA|292018201920202021201720162023202235,00030,00025,00020,00015,00010,0005,000-Number of EmployeesSource:Gastat.National Accounts.Statistical releases,2024.Figure 13:Employment in the Arts,Entertainment and Recreation sector in Saudi Arabia(2016-2023)201820192020202120172016202320223,0002,500

125、2,0001,5001,000500-Number of EmployeesSource:Saudi Monshaat Business Atlas.Sector.Creative,Arts,and EntertainmentFigure 14:Employment in the Creative,Arts,and Entertainment Activities sub-sector(2016-2023)STRATEGIC GEARS|THE HOSPITALITY INDUSTRY IN SAUDI ARABIA|30Source:Saudi Monshaat Business Atlas

126、.Sector.Sports Activities,Amusement and Recreation activities.Figure 16:Employment in Sports Activities,Amusement and Recreation activities sub-sector(2016-2023)2018201920202021201720162023202230,00025,00020,00015,00010,0005,000-Number of EmployeesSource:Saudi Monshaat Business Atlas.Sector.Librarie

127、s,Archives,Museums,and Other Cultural Activities.Figure 15:Employment in Libraries,Archives,Museums,and Other Cultural Activities sub-sector(2016-2023)201820192020202120172016202320223,5003,0002,5002,0001,5001,000500-Number of EmployeesSTRATEGIC GEARS|THE HOSPITALITY INDUSTRY IN SAUDI ARABIA|31THE A

128、ER SECTORSINVESTMENT CONTRIBUTIONSForeign direct investment in the Arts,Entertainment and Recreation sector has maintained increasing net positive inflows since 2019,rising from-$10.21 million in 2019,to$64.85 million in 2022(Figure 17).Investment into the sector is likely to remain increasing as th

129、e sector grows.The launch of gigaprojects,cinemas,and entertainment complexes through SEVEN will flow over$13 billion into the sector,as the development of 21 entertainment destinations(with over 150 atractions)across 14 cities in the Kingdom commences.49The Kingdoms new licensing system,which was l

130、aunched in 2019,has also brought a new degree of ease to holding entertainment and supporting activities,with over 11 thousand permits having been given since the systems commencement.This points towards increasing investment in the sector,a goal of the system,as highlighted by the General Entertain

131、ment Authoritys Chief Operations Officer.50 Increasing income per capita in the Kingdom is also likely to drive upwards demand for the entertainment sector,stimulating investment.512018201920202021201720162022706050403020100-10-20FDI Inflows($million)Source:Ministry of investment.Investments Statist

132、ics.Foreign Direct investments bulletin,Q1 2024Figure 17:FDI Inflows by the Arts,Entertainment and Recreation SectorSTRATEGIC GEARS|THE HOSPITALITY INDUSTRY IN SAUDI ARABIA|32Saudi Arabias journey towards economic diversification has catalyzed disruptions across the economy.For what concerns the tou

133、rism and hospitality industries,the Kingdom has already ushered growth in two forms.One,it built on its global reputation as an Islamic pilgrimage destination and scaled up its capacity to host and serve an ever-growing volume of visitors via its accommodation and restaurant establishments.And two,S

134、audi widened its hospitality portolio by investing north of$77 billion in an entertainment ecosystem,comprising regional and local businesses that provide recreational activities,from culture to sports and cinema.Still,the road ahead remains formidable.The brand image that Saudi Arabia is curating h

135、as relied on a synchronous effort and buy-in across policymaking,business,and marketing functions,which ought to remain steadfast.As the stakes rise moving forward and diversification milestones become more mature,the Kingdom will look to adopt a mission-driven approach that anchors the hospitality

136、industry in a comprehensive policy that recognizes the enabling role of proximal sectors,particularly transport infrastructure,information technology,and security.52Each of these three sectors interacts with an individuals hospitality experience through distinct transmission channels.Acknowledging a

137、nd exploiting this interaction ensures that the tourism and hospitality industries do not grow in isolation,but rather serve the greater domestic economy at a compounding rate.LOOKINGAHEADSTRATEGIC GEARS|THE HOSPITALITY INDUSTRY IN SAUDI ARABIA|33STRATEGIC GEARS|THE HOSPITALITY INDUSTRY IN SAUDI ARA

138、BIA|34An accessible and reliable transportation and road connectivity system,which is a high-ranking demand for local and foreign tourists,53 allows people to commute comfortably and efficiently across hotspot destinations.It would enable a social and environmentally friendly way to boost economic a

139、ctivity by improving and cascading access to business and tourism districts while reducing congestion.Similarly,a symmetrical business-to-business and business-to-client digitization facilitates hospitality and tourism experiences.Both businesses and households would spend less time searching,access

140、ing,and storing information in their mental logs.A streamlined end-to-end digitization is one where individuals do not face logistical barriers to their leisure experience,principally in terms of accessing tourism information and checking in to or paying accommodation,F&B,and recreational establishm

141、ents.Finally,the perception of safety and security among households is globally considered a main determinant for domestic and inbound leisure.54 And as Saudi Arabia was ranked the 12th safest country in the world in 2023,55 there is space among communication experts and destination marketers in the

142、 Kingdom to further promote the country for its brand as a safe and inclusive destination for people to consume a wide cultural and recreational hospitality portolio.Abraham Pizam,What is the hospitality industry and how does it differ from the tourism and travel industries?,International Journal of

143、 Hospitality Management,Volume 28,Issue 2,2009,Pages 183-184,ISSN 0278-4319,htps:/doi.org/10.1016/j.ijhm.2009.01.001(htps:/ defines hospitality as“an industry that focuses on providing consumers with a means to participate in leisure activities,be that staying in a hotel or dining in a restaurant.It

144、 encompasses many industries,the largest of which are accommodation and food and drink services.”“Market size of the hospitality industry worldwide in 2023,with forecasts for 2024 and 2029”,Statista,accessed August 18,2024,htps:/ include the FIFA World Cup in Qatar in 2022 and EXPO 2020 in Dubai.“GC

145、C Hospitality Report,”Alpen Capital,June 11,2024,htps:/ Ibid.“Saudi Arabias Travel&Tourism Breaks All Records,”World Travel&Tourism Council,June 10,2024,htps:/wtc.org/news-article/saudi-arabias-travel-tourism-breaks-all-records Manal Al-Barakati,“Vision 2030 and the Evolution of Saudi Arabias Hospit

146、ality Sector”,Arab News,April 28,2024,htps:/ Pizam,What is the hospitality industry and how does it differ from the tourism and travel industries?,International Journal of Hospitality Management,Volume 28,Issue 2,2009,Pages 183-184,ISSN 0278-4319,htps:/doi.org/10.1016/j.ijhm.2009.01.001(htps:/ to th

147、e UN World Tourism Organization,hospitality exhibits a high degree of overlap with subsectors of tourism.Eurostat,NACE Rev.2,Statistical Classification of Economic Activities in the European Community,accessed August 18,2024,htps:/ec.europa.eu/eurostat/documents/3859598/5902521/KS-RA-07-015-EN.PDF“I

148、ndustries at Glance-Leisure and Hospitality,”U.S.Bureau of Labor Statistics,accessed August 18,2024,htps:/www.bls.gov/iag/tgs/iag70.htm.Ignite Economics,“The Economic Contribution of the UK Hospitality Industry,”UKHospitality,June 6,2023,htps:/ Mohnblat,“Saudi Arabia Unveils$1 Billion Tourism and Ho

149、spitality School in Riyadh,”themedialine,September 28,2023,htps:/themedialine.org/life-lines/saudi-arabia-unveils-1-billion-tourism-and-hospitality-school-in-riyadh/Manal Al-Barakati,“Vision 2030 and the Evolution of Saudi Arabias Hospitality Sector”,Arab News,April 28,2024,htps:/ Narayanan,“Saudi A

150、rabia on the path to global entertainment leadership with Vision 2030,”Arab News,July 19,2024,htps:/ Simon Wright,“Whats next for Saudi Arabias F&B sector?,”Caterer,November 26,2023,htps:/ Nada AlMeddine,“KSA:transformation on an unprecedented scale,”Hospitality News,December 21,2023,htps:/ AlMeddin

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