Saudi Arabia: A key new opportunity for luxury in the Middle East
Saudi Arabia is the country with the greatest potential for luxury brands in the Middle East, according to the Chalhoub group’s annual Luxury Travel and Retail whitepaper.
In order to overcome its dependency on oil, the Wahhabite kingdom is boosting investment with the goal of developing a tourism industry whose appeal goes beyond religion, which would create interesting new possibilities for luxury in the region, with an array of new developments and an attractive project for a wealthy clientele.
“While the region is stagnating, the Saudi Arabian market is growing. There are more and more young people who are working and earning money. Above all there is a growing feeling of enthusiasm as a result of measures taken to liberalise the economy and modernise society,” Patrick Chalhoub, the CEO of the group, explained to FashionNetwork.com. The lifting of the ban on women drivers is an element in this new dynamic.
A protector of Muslim Saints, and country of Mecca, which attracts almost two million pilgrims every year, Saudi Arabia occupies pride of place in the Middle East. A G20 member, it is also holds the world’s largest amount of proven oil reserves (260 billion barrels) and is the leading exporter of oil in terms of value (exporting almost 18% of the global total). The country accounts for 80% of the area of the Arabian Peninsula and is home to 32 million inhabitants (predicted to rise to 46 million by 2050), while 60% of its population is less than 25 years old.
The kingdom is targeting 30 million tourist visits by 2030
Under the auspices of crown prince Mohammad bin Salman, the economic modernisation program “Vision 2030” was put into place, aiming to diversify the Saudi economy and ease its dependence on oil. The goal is to attract 30 million visitors between now and 2030. As part of this development plan, 64 billion dollars have been granted for the realisation of cultural projects and recreation facilities in addition to theme parks, according to the whitepaper.
The country is aiming to construct the largest Islamic museum in the world and to double the UNESCO sites on its territory. Amongst the major projects in the pipeline is an investment, estimated at between 50 billion to 100 billion dollars, into the development of the Red Sea islands and the Al-Ula UNESCO heritage site.
To encourage tourism, visas have been extended: to a future nine days for religious visits and to up to 14 days for major events, the whitepaper said.
Saudi Arabia is also looking to sporting events for economic growth. It has so far hosted the opening of the Formula E 2018-2019 (electric car racing) season, in December 2018; the Italian Super Cup in January 2019; and is set to host the most famous rally raid, Dakar Rally, in 2020. The event has also submitted an application to organise a Formula 1 Grand Prix in the capital of Riyadh.
The death of Jamal Khashoggi has again marred the country's reputation on the international stage
The report also indicates that “public spending for the promotion of the international travel sector are set to increase rapidly.” In 2017, the number of hotel rooms available on the market rose 13%, while 48,000 additional rooms are currently in construction. Investments are also planned for the creation of business and conference centres, surfing on the “bleisure” (business/leisure) trend, combining business trips with shopping.
According to estimates, the travel and tourism sector, both general and religious, and which currently accounts for 9.4% of the kingdom’s GDP, should grow at an annual rate of 10.5% until 2030, the Chalhoub study underlined.
The fact remains, however, the Riyadh has seen its image tarnished recently by the murder of the opposition journalist Jamal Kashoggi, a columnist for the Washington Post, in the Saudi embassy in Istanbul. Saudi Arabia, which has one of the highest rates of the use of the death penalty in the world, found itself again under fire in April after the mass executions of 37 Saudi nationals for “terrorism.” An undeniable impediment for the country as it attempts to modernise itself to attract visitors from the world over, as well as wealthy luxury clientele.
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