A leading hotel in Riyadh discusses the tourism sector in Saudi Arabia

In the last two years, more than 84 billion Saudi riyals have been invested in the country’s tourism sector, according to the general manager of a leading five star hotel in Riyadh. Around 11 million people visit the Kingdom each year, primarily for religious tourism. By 2020, that number is expected to soar to 88 million.
The Saudi Commission for Tourism and Antiquities– headed by Saudi Arabia’s first astronaut, Prince Sultan bin Salman– has made a clear commitment to developing its meetings- and event-hosting (MICE) infrastructure.

As young people come to dominate the employment scene, prudent planning means that the government can achieve rapid economic growth by diversifying its tourism sphere and incorporating the cosmopolitan know-how of its fledgling workforce.

All indicators for Saudi Arabia point towards an economy flexible in reacting to economic variables at global, regional, and local levels. The best evidence for its successive achievements can be seen in annual world rankings. Saudi Arabia continually places in the top four countries in terms of financial freedom worldwide; its tax system has also merited acclaim for stimulating the economy. Saudi Arabia accounts for a full 25% of the Arab GDP, and it owns about 25% of all oil reserves in the world.

The Kingdom’s boom is nowhere more apparent than in Riyadh. Various figures list the population of the buzzing Saudi capital as between 6 and 7.5 million. The capital’s skyline, already iconic as the business hub of the Middle East, is set to change as more than 85 hotels open in the next few years, of which more than 40 will be five star. The spurt of investment in Riyadh reflects the dynamism of one of the most watched cities in the GCC region. “The competition will certainly intensify,” quips Ali.

Of note is the King Abdallah Financial District, a 29 billion riyal project (or $7.8 billion in US dollars). which is slated to provide more than three million square meters of space for various uses,and may well soon become the largest financial center in the Middle East. According toMeed Business Review magazine, it should bring 44,000 new jobs to the Riyadh metro area.

As of 2011, the District also became the largest project in the world to seek accreditation as a green development. To meet LEED (Leadership in Energy and Environmental Design) certification standards, developers must demonstrate initiatives which consider water and energy usage, waste management, erosion reduction, and alternative transport options. In addition to 62,000 planned parking spaces, the center will include a multi-station monorail system as well as changing rooms and parking for bicycle commuters. This metro will connect to the downtown area of the city as well as to the airport, which will itself be expanding to accommodate 35 million, up from its current capacity of 12 million. As the High Commission for the Development of Riyadh told Taweer magazine in 2013, a total of SR264 billion ($70.4 million USD) is being spent on development projects in the suburban areas surrounding the city.

Saudi Arabia, and Riyadh in particular, have certainly stepped up to demonstrate the flawless planning that MICE tourism requires. Until 2011, the MICE segment was considered side income for the country when juxtaposed with the oil-based revenue, but this started to shift in 2010 and 2011 after an International Bank study generated real numbers. In 2011, a new Bureau for Conventions and Exhibitions was formed to promote the MICE trajectory. The 88 million figure the Bureau forecasts for tourists per year as of 2020 includes not only foreign visitors but “local” tourism as well, with Saudis taking holidays or attending training or work-incentive events in Riyadh.

Cherif Ali, general manager of the Tiara Hotel in Riyadh, confirms that the hotel sector is the fastest growing industry in the Kingdom. The hotel opened a mere two years ago, but has already achieved a fantastic market share compared to similar hotels. The company plans to open up six additional properties. The focus, he says, will be on four holdings in Riyadh, and then to expansion into the Eastern Province, Medina, and Jeddah.

Tiara is currently one of the leading boutique hotels in Riyadh, with a unique location halfway between the city center and the airport. “Two minutes away,” laughs Ali. “You walk ten minutes past any restaurant or shop you’d ever want and you’re downtown.”

Tiara’s design makes an architectural statement in a quiet, upscale neighborhood, and features 115 contemporary guest rooms and suites along with a business center, meeting rooms, spa, and theater. In response to this planned activity in the city, the hotel has signed a partnership agreement with its neighbor, the Riyadh International Convention and Exhibition Center (RICEC).

Abdullah Alomran, CEU of RICEC, spoke to MarcoPolis last year. He noted even at that time that the Riyadh of the present is nothing like the city ten years ago, and that side industries– boating, for example, and insurance, plus suppliers of all kinds– are setting up shop in Saudi Arabia in order to be close to the buyers.
“It may seem easier for some exhibitors to go to the neighboring countries,” Alomran says, explaining that some minor bureaucratic issues, such as visa process, which the government is still tweaking. “But I read a few months ago that more than 70% of the visitors attending events in Dubai come from Saudi Arabia. Therefore we have the buyers here in Saudi Arabia. It is why many of the main suppliers are very interested in being here. And that pushes the government to tie up any loose ends.”

The Convention Center is one of the pioneering companies in the business sector segment. Business tourism revenues in Saudi Arabia numbered at USD $2.3 billion for 3.2 million exhibition and conference visitors. In fact, the World Bank report found business tourism accounted for 47 percent of all visits to the Riyadh region in 2010, with business tourist expenditure amounting to 60 percent of all visitor expenditure. Of those visits, a full 10 percent took place at RICEC specifically, generating US$97.9 million (SAR367.24 million).

Around 10 percent of those business tourists were attending events at RICEC, with total meetings taking place at the facility in 2010, generating US$97.9 million (SAR367.24 million) direct spending in the Riyadh region economy.

According to the Meet Arabia Magazine, “Every US$267,000 spent on meetings at RICEC resulted in direct added value of US$162,619, including delegate spending on tourism services, as well as another US$178,881 (SAR671.000) in related activities across other parts of the economy. “ The direct effects of the meeting industry at RICEC contributed US$42.1 million (SAR158.1 million) to the Riyadh region’s GDP in 2010,” the report says. “Meanwhile, the indirect and induced effects on GDP are an estimated US$46.36 million (SAR173.9 million).”

The Riyadh Economic Forum, in conjunction with the Riyadh Chamber of Commerce and Industry, likewise seeks to be a strategic and intellectual center, a seat for national and international discussion of economic and scientific questions. Operating on a think-tank model, the Forum’s operates roundtables every two years with the goal of focusing beyond the immediate investment in Riyadh to the broader issue of sustainable economic development of the whole country. Recent topics have included food security, balanced development across the regions of the Kingdom, technical education, and transportation challenges in Saudi Arabia. As momentum builds for these types of projects, the Convention Center and related MICE industry venues will begin to see their full potential realized.
The strategy for the Tiara Hotel, Ali says, is to become the official hotel for the center, and to host events on its own campus in parallel to the goings-on at the Convention Center per the needs of its guests.

In the meantime, hotels in Saudi Arabia will continue to welcome tourists on personal vacations as well as parts of larger events. “Today’s clients base their travel decisions not only on the best prices, but also on safety. They will only go where there is virtually no risk,” explained Marcel Siekel, manager of the European travel firm Firo.

Saudi Arabia offers an excellent alternative to the neighboring states in this sense, and many hotels offer a soft introduction to Arabia as part of their service package, fusing international luxury with local flair. Tiara, for example, has a full-time personal butler service for guests, premium Arabic coffee offerings and local juices, and top-notch cuisine featuring specialties from around the world. This attention to detail has earned the hotel superior ratings of 8.4 on Gullivers and booking.com.

“Superior service means you give each of your guests personalized service. It means you serve each guest as if he or she was the most important person in the world. We care for our guests the same way that we would care for our staff members,” adds Ali. He notes that with more than 12 years’ experience in hospitality, he considers himself a kind of ambassador on the world stage. “As market dynamics change, I am glad to see that hotels will be competing on the quality of their service rather than on price alone. Reputation is one’s most important asset in the market.”

For now, adds Ali, business opportunities continue to expand. “The return on investment in the sector averages 22%. The time to do business in Saudi is now.”