Tourism investment in the GCC countries

Date: 25 - 08 - 2023

Abu Dhabi

Source: Mufakiru Alemarat

Dr. Ali Mohamed Al Khouri

The countries of the Cooperation Council for the Arab States of the Gulf are witnessing rapid and exciting developments in various sectors, especially the economic, service, technological and industrial sectors. Over the past years, the region has witnessed remarkable shifts from dependence on traditional energy resources, such as oil and gas, to an increased focus on diversifying sources of income and economic flexibility. This diversification, which is the result of the proactive plans pursued by the GCC states, has become crystallized and evident with their ambitious infrastructure development projects, and their implementation of transportation, communications, aviation, education, health, clean energy, competitive business environments, and safe and healthy buildings. The thriving tourism sector, in particular, has emerged as a mainstay of diversification strategies, and a new and significant contributor to the national income of countries in the region.

The tourism sector as a catalyst for economic growth

The service sector represents the highest income and the most dominant sector in global economic output, and tourism contributes significantly to economic activities. In 2022 – according to the World Travel and Tourism Council – it amounted to approximately 7.6 percent of the global GDP; That is about eight trillion dollars. The tourism sector – which has become a development priority all over the world – plays a major role in stimulating the growth of national income and exports, attracting foreign investments, and an important source of foreign exchange and tax revenues. It also plays a major role in providing job opportunities, which – according to 2022 statistics – amounted to more than 330 million opportunities worldwide.

These data prompted the countries of the Cooperation Council for the Arab States of the Gulf to give priority to the development of the tourism sector as one of the main tributaries of their economies, and devoted their efforts to building a strong tourism infrastructure, including hotels, villages, famous tourist sites and developed airports. In addition, the countries of the region also focused on training qualified and skilled manpower to ensure excellence in service provision, and to confirm the role of the vital sector in supporting the economic prospects in the region.


The strategic approach to pioneering tourism investment

The United Arab Emirates, in particular, stands out as one of the most advanced countries in the Arab region in the field of tourism. The country had launched its national strategy for tourism, which was based on 25 initiatives and policies revolving around four main pillars, including strengthening the national tourism identity, developing and diversifying specialized tourism products, building tourism capabilities, and increasing investments in various tourism sectors.

The strategy, which extends until 2031, includes a variety of types of tourism, such as historical, recreational, therapeutic and environmental tourism; What makes the UAE an attractive global destination for various interests; The strategy also includes ambitious goals to raise the contribution of the tourism sector to the national gross domestic product to reach 450 billion dirhams, attract 100 billion dirhams of new investments, and host 40 million guests in hotel establishments.

The ambitious plan for Saudi tourism

Tourism in the Kingdom of Saudi Arabia represents the second economic sector after the banking sector, in terms of employment opportunities for Saudi citizens, who represent 27.1 percent of the total number of workers in the tourism sector. The Kingdom’s interest in this sector has increased with the allocation of investments worth $ 800 billion over the next decade.

This investment aims to raise the contribution of the tourism sector to the national income to approximately 10 percent, a significant increase from the current rate estimated at about 3 percent. To facilitate this growth, the Kingdom implemented many development strategies, including electronic tourist visas that allowed citizens of 49 countries to enter Saudi lands with previous approval, and eased entry requirements for other countries, in addition to many initiatives included in Vision 2030 related to the development of tourism facilities and infrastructure. Intensifying tourism and commercial marketing efforts, and promoting religious and recreational tourism. Saudi Arabia appears to be reaping the fruits of these strategies. Tourism revenues rose to 4.45 percent this year, and thousands of direct and indirect jobs were created in this sector.

Tourism investment is a means of employment and cooperation

The large tourism projects being established in the Arab region are expected to boost the growth of the tourism sector beyond its current contribution of 3 percent of the total global tourism movement, in addition to providing millions of direct job opportunities in the GCC countries. These projects promise to reduce youth unemployment rates and increase the sectoral contribution to the national income of the countries of the region. Moreover, this sector would highlight the capabilities of the Gulf region in the international arena, enhance its global mental image, lead to strengthening social peace, facilitating international cooperation, and attracting global investment to this region in various sectors.

The future of Gulf tourism investment

There is no doubt that the Gulf gradual development in harnessing the potential of the tourism sector will prove its results through strategic investments looking to diversify the economic bases. With the major Gulf countries, such as the UAE and Saudi Arabia, continuing to harness the potential of this sector, tourism will undoubtedly play a more important role in shaping the future economic landscape of the Arab Gulf region, demonstrating the transformative power of tourism investment, revealing its role as a basic engine for national economic development, and creating Jobs chances; This requires policy makers to remain focused on priorities and innovation in this sector; To ensure that the region remains a major player on the global stage.

In this vital sector, several drivers emerge, one of which is related to the development of national incubators that support technological applications and innovation, such as employing artificial intelligence and social media technologies in the tourism sector. To enhance customer service experience, promote tourism facilities, and market major infrastructure projects and tourist attractions; This requires, of course, continuous investment in tourism infrastructure, and training of the workforce to ensure the provision of high-quality services, and being a necessity to attract tourists from different countries of the world.

Other directives are the periodic review of strategic and operational plans, ensuring their convergence and adaptation to the requirements of sustainable growth and emerging trends in the tourism sector, not ignoring the fact that the tourism sector plays a role in encouraging international cooperation, and strengthening diplomatic relations in the global system.

In the end, it must be noted that to ensure the development of the Gulf countries, and to maintain their competitive capabilities in the global tourism industry, and to reap the returns and the gigantic economic opportunities that it offers; The main requirement will inevitably be dependent on the ability to maintain strategic focus and innovation in this sector.