New Tourist Visa Provides Opportunities
Saudi Arabia has announced a relaxation of visa restrictions on overseas visitors, allowing foreign nationals travelling to the country for pilgrimage to stay for a longer period of 30 days. Under the 'Extended Umrah Tourism Program', set to be launched on December 4, the Umrah (pilgrimage) visa will be converted into a tourist visa upon expiry. This marks a significant step forward in Saudi Arabia's tourism ambitions: the authorities have not issued tourist visas to visitors until now, limiting entry for most nationals outside of the GCC. 65 countries will be eligible for the scheme; although a precise list has not yet been announced, it is likely to include most Muslim countries.
|Strong Tourism Potential|
|Saudi Arabia - TADAWUL Tourism & Hotels Sub-Index|
Saudi Arabia has been slow to develop its tourism sector, with limited investment and marketing to-date. However, momentum has picked up in recent years under the leadership of Prince Sultan bin Salman, head of the Saudi Commission for Tourism and Antiquities. The government is keen to grow its domestic tourism market in an effort to capture some of the capital spent by the millions of Saudi citizens who travel abroad each year, mainly to other countries in the Middle East. By also developing the religious tourism and business travel sectors, the government hopes to encourage economic diversification and create job opportunities for nationals, who remain reluctant to move away from the public sector. The value of the TADAWUL Tourism & Hotels Sub-Index, composed of only three firms, has doubled since the start of the year (see chart above).
We expect religious visits to remain one of the main drivers for the tourism industry over the medium term. The Kingdom is home to Mecca and Medina, two of Islam's holiest cities, and every year millions of Muslims come to Mecca for the Hajj, the largest annual pilgrimage in the world. 1.38mn foreign pilgrims performed the Hajj over 2013 - down by 21% y-o-y due to health fears and ongoing construction projects, but still constituting a substantial customer base. The authorities' move to create a tourist visa for religious visitors and extend their stays could therefore provide a strong boost to tourism receipts going forward, underpinning our largely positive outlook on the industry. Saudi Arabia scores 50.57 in our Tourism Industry Risk/Rewards ratings for the fourth quarter of 2013, leaving it in sixth place for the Middle East and North Africa region - below Israel but ahead of Egypt.
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