The Saudi Domestic Tourism Edition

Colin here. Saudi Arabia is never far from the geopolitical headlines, often with news about the considerable spend and ambition of its domestic tourism projects. Places like AlUla have seen development from interesting companies like Habitas and Banyan Tree, while the glitzy Red Sea project—completing in 2030, with 8,000 rooms across 50 hotels—will set off intense competition with the likes of the Maldives from Day One.

Data is showing that more Saudis are staying home than crossing borders for vacations. The Central Bank’s numbers tell a compelling story. Point-of-sale transactions rose 42% between June and August 2024, compared to the same period in 2021, and spending in the first three weeks of June this year has already surpassed the entire month of June last year.

Why is this interesting?

Semafor's excellent Gulf newsletter breaks it down:

There was a time when you didn't need a calendar to know it was summer in Saudi Arabia. The streets told you. Riyadh and Jeddah went quiet. This has changed, but not for all. The wealthy are still escaping the heat: Marbella's beach clubs play Abdulmajeed Abdullah (Saudi Arabia's Taylor Swift), the south of France is packed with supercars with Gulf plates, and the crowds at London's Knightsbridge cafés mirror Riyadh's Boulevard.

But for the middle class, staying at home is an option. Many used to visit Bahrain and Egypt for affordable escapes. Now? They go to Abha, where the air is cooler, or Umluj, where islands that were once inaccessible are a short boat ride away from Jeddah's coast. Places that were either off-limits or simply didn't exist are opening up. AlUla, once considered taboo due to its pre-Islamic heritage and restricted access, is now part of the summer circuit.

While part of this is because there are now more options and interesting places to go, some of this seems also driven by economic necessity. Sure, the very wealthy Saudis will decamp to their real estate elsewhere (London, Morocco, etc), but rents are rising: 10 percent year over year, according to Arab News. And contrary to popular perception, not every Saudi is rich. The country has an estimated 34 million people—a far cry from the super wealth of Qatari nationals, who number around 350,000. You do the per capita math!

The result? Saudi Arabia is accidentally discovering what most countries already know: domestic tourism can be just as economically valuable as international tourism, especially when you have 34 million people that want somewhere bearable to go in high summer—the Semafor piece cites cooler cities like Abha and Albaha, in the Sarawat Mountains, as early winners. (CJN)