Saudi Arabia’s Tourist Visa and its Impact on Hotel Market

This literature review discusses the impact of Saudi Arabia's new tourist visa on the hotel industry, including the growth and development of the tourism sector, the increase in hotel demand, and the investment by major hotel brands like Marriott and Hilton. The review also highlights the government's vision 2030 to diversify the economy and reduce dependency on oil export revenues.

Running Head: Saudi Arabia’s Tourist Visa and its Impact on Hotel Market
New Tourist Visa and Its Impact on Hotel Industry in Saudi Arabia
Literature Review
System04104
9/15/2019

Saudi Arabia’s Tourist Visa and its Impact on Hotel Market
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Literature Review
Saudi Arabia has launched a new special “event” visas for the tourists and the major
intention behind this is to promote tourism in the country. The government of Saudi Arabia
want to promote Saudi Arabia as a global entertainment destination in the world. The new
visa of the country allows the visitors to choose from various sporting, tourism, adventures
activities, and business attractions available in the country (Hvidt, 2019). The government is
very serious about this new type of visa, which offers variety of purposes for the tourists or
visitors to visit in Saudi Arabia and the country also advised the embassies to issue new visa
to visitors within the 24 hours of receiving a request for the visa. However, the approach of
Saudi Arabia government will help the tourism industry to grow and develop in the country
and it has major impact on the hotel industry. The hotel industry has various great advantages
of this new type of tourist visa of Saudi Arabia for the people. Saudi Arabia is investing
billions of dollars in entertainment and tourism industry, which is the part of Saudi Arabia’s
vision 2030 announced by Crown Prince Mohammed Bin Salman. However, the main
intention behind issuing this new type of tourist visa is to increase the employment situation
in the country for the Saudi young people and attract people to enhance the domestic tourism.
This is the part of the marketing vision of Saudi Arabia 2030 (Khashan, 2017). However, the
strategy of Saudi Arabia to attract people in the country will be helpful in the growth and
development of hotel industry because the number of visitors stay in the hotels that will
further increase the revenue of the country from the tourism and hospitality industry.
The CEO and President of ‘The World Travel and Tourism Council (WTCC) David
Scowsill said that the government must focuses on the visa policy to ensure the growth and
investment in the tourism industry that can play a crucial role in the economic reforms or
diversification in the Saudi Arabia. In the reaction of this statement, after very few months
the Kingdom of Saudi Arabia Mohammad Ben Salman ordered the government to launch a
new visa policy that attract the people towards the beauty of Saudi Arabia and develop the
country as the global destination place for the tourists (Export. Gov, 2018). However, the aim
of this visa policy is to ensure the expected growth and development in the economy, so the
economic vision 2030 will be achieved in the significant manner with the aim to reduce the
dependency on oil export revenues and diversified the economy of the country (Khan, 2016).
It is really important to know the main intention of Saudi Arabia to launch such type of
tourist visa for the people because the government want to invite tourists, businesspersons,

Saudi Arabia’s Tourist Visa and its Impact on Hotel Market
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investors, and sports lovers to visit in the country that will later increase the income of the
country by collecting revenue from their spending. The kingdom of Saudi Arabia Mohammed
Bin Salman said about the relevance of this visa in the growth and development of the
country that the presence of the country in various nations attracts large number of people to
visit in the country (Moser, Swain, & Alkhabbaz, 2015). The strong global presence of the
country can help the Saudi Arabia to promote its tourism sector and contribute in the
marketing vision 2030 of Saudi Arabia. However, for the development and growth of the
tourism sector, the Saudi government increased its tourism investment funds from $8 billion
to $46 billion in the next four years after 2017 decision of launching new visa schemes
(Writer, 2018).
In last few months duration, it has been seen that there is a dramatic growth in the
business performance of hotel industry in the Saudi Arabia hotel and hospitality industry. The
increasing demand of tourists and visitors in the country enhance the profitability of business
of hotel industries. According to a report, there is a growth of 13% in the booking of hotel
rooms since 2017 and more than 48000 extra room constructed by the hotels for fulfil the
exceeding demand of new visitors in the country (Hussain, 2017). However, the hotel
industry in Saudi Arabia has registered huge growth in the hotel industry because of these
three pools that drive the demand of hotel rooms: leisure, pilgrims, and corporate visitors.
The travel and tourism industry in Saudi Arabia is accountable for the 9.4% of Saudi Arabia
GDP and it has contributed more than $14.8 billion in the country’s total GDP (Writer, 2018).
According to the Savills, the annual growth in demand of hotel rooms enhances the
expenditure of tourist people up to 10.5% in the hotel industry (Bridge, 2019). However, the
strategy of Saudi Arabia to diversify its economy in various sector except than oil import in
align with the vision 2030 plans, the company expect to an increment in the international
arrivals in the country up to 4% per year (Export. Gov, 2018). Apart from this, the country
also expects that the number of tourist will be reach up to 22.1 million by 2025 and 30
million by 2030 (Bridge, 2019). The major reason behind all this strategy that Saudi Arabia
want to diversified its economy and want to a boost in its economy and in GDP growth rate.
The increasing number of hotel obviously will increase the opportunities for new
employment in the hospitality in industry and this will lead to employment generation for the
youths in the country. The major hotels of Saudi Arabia are driving constructions in the
hotels as they target to meet the demand of hotels after this new visa policy of the country.
The increasing number of domestic tourists and international visitors drive the opportunities

Saudi Arabia’s Tourist Visa and its Impact on Hotel Market
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for the hotel industry to grow and enhance their profits by providing best services to the
people who visit in the country for the various purposes (Heialy. 2016). However, it is really
beneficial for the hospitality and tourism industry to increase its profitability after matching
the demand of new tourists and visitors in the country. However, the new visa policy of the
country motivates the both private and public organisation to invest in construction of hotels
and other facilities for the tourists and it will really enhance the employment opportunities for
the young generation in the country. However, the government of Saudi Arabia also helps the
tourism industry and investors to meet this surge in the demand of hotel rooms and other
services for the visitors and domestic tourists. The Kingdom of the country has planned to
invest more than $64 billion in the next decade to promote the culture, entertainment, and
tourism industry projects in the country (Bridge, 2019). The government hopes that the
strategy of launching new visa for various events where people will have choice to visit in
Saudi Arabia for special purpose will definitely boost the tourism and hospitality sector. It
will further provide a diversified economy to the country in the next decade 2030 (Heialy,
2016). However, these steps of Saudi Arabia definitely boost the demand of hotels and force
the hotel industry to meet the increased demand of hotels in the country and enhance their
profitability and business performance by adding additional values and services in the
hospitality industry.
Marriott Hotels in Saudi Arabia
Marriot hotel is the famous hotel group of USA and its Headquarter based in the
Bethesda. The Marriott hotel is the part of Marriott International Inc., which operates its
business in more than 6500 properties and 30 leading hotel brands in 127 countries and
territories. Marriott hotel, which is one of the brand names in the hotel industry, has opened
two aloft hotels in the country (Aina, Wafer, Ahmed, & Alshuwaikhat, 2019). The Marriott
hotel focuses on the investment in the Saudi Arabia after the new launch of visa. The Marriott
hotel opens its two aloft hotel in the country in Riyadh and Dhahran. Apart from this, its
competitors also invested money in the Saudi Arabia after watching the opportunities for a
huge increment in the future in the tourism and hospitality industry in Saudi Arabia. A big
competitor of Marriott hotel is Hilton Hotel opened three new hotels in the country after the
decision of Saudi Kingdom. Apart from this, Swiss-Belhotel International Opened three
hotels, Rocco Forte Hotels opened to new Assila Hotel in Jedah in 2018 (Henderson, 2017).
It means the launch of new visa by the Saudi Arabia for the domestic and international

Saudi Arabia’s Tourist Visa and its Impact on Hotel Market
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visitors also enhance the competitive situation in the hotel industry in the country. However,
the role of launching new visa almost proves itself as a boon for the hotel industry as it
enhances the number of visitors in the country. The 84 new hotels were opened in 2018 in
Saudi Arabia after the decision of Kingdom to introduce new visa for schemes for tourists. It
was also recorded that 60% of the hotels in the country are focusing on construction of new
rooms and services for the people (Ekiz, Öter, & Stephenson, 2017). This will definitely
boost the demand of hotel rooms in the country and improve the business performance of the
hotels. The Marriott hotel operates its business in the busiest area of the country where large
number of tourists visiting every year. The busiest areas of the country are Riyadh, Jeddah,
Makkah, and Al Khobar and most of the hotel constructions can be found in these areas.
However, each of the cities is highly demanded cities for the international visitors and
tourists (Alshuwaikhat & Mohammed, 2017). However, the introduction of new visa scheme
of the country is really beneficial for the most of the large hotel brands who serve
international visitors who visit in the country for the purpose of tourism, entertainment, or
business work. The vice president of operations of Hilton Hotel in Saudi Arabia Kamel
Ajami said that Saudi Arabia is a major market in the Middle East region for the growth and
development of hotels industry. The new reforms in the economy help the tourism sector to
raise the quality of hotel services and enhance the employment opportunities in the country
(Henderson, 2017).
The tourism sector has a key role in the vision 2030 in the Saudi Arabia. This will
really help the country to diversified the economy and provide opportunities to collect more
revenue from other industry except than oil industry. The Marriott hotel mainly focuses on
the delivering tourism infrastructure in form of excellent rooms and hotel facilities for the
visitors (Habibi, 2019). The Marriott hotel is known for its best services and quality
hospitality for visitors. Marriott hotel provides comfortable room services to the people when
they stay in the hotels of Marriott (Richard, 2017). One of the major advantages for Saudi
Arabia that its religious place ‘Mecca’ is situated in the country where large number of
Muslims visits every year to watch ‘Mecca’ (Heialy, 2016). Apart from this, it also helps the
country to develop as the religious tourism destination where large number of people visits
every day (Al-Omari & Al-Marghirani, 2017). The Saudi government also announced that the
government would give a non-religious tourism visa for the people who want to visit in the
country and this will help the hotel industry to service those people who want to visit in the
country for the entertainment purposes, sports love, or business purposes (Euchi, Omri, & Al-

Saudi Arabia’s Tourist Visa and its Impact on Hotel Market
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Tit, 2018). The Marriott hotel is specially known for its best courtyard and services for the
people. However, the approach of Saudi Arabia to develop tourism industry as a key sector in
its vision 2030 is very positive and the government attracts the foreign investment in this
sector that is rising every year. The tourism sector in 2017 contributed $64.2 billion in the
economy and it is expected to reach at $110 billion by 2027 with the annual growth rate of
4.8% annual growth rate. The country will also expect that the tourism sector will constitute
11.1% of the total GDP in the country by 2027 (Idrees, Vasconcelos, & Ellis, 2018).
However, the new visa policy of the country enables the country to focus on the tourism
industry especially and develop a good infrastructure for the tourism. However, the inviting
the private investment in the area of tourism will definitely boost the business performance of
hotel industry and the public private partnership in the hotel industry will be helpful in
providing better services for the domestic and international visitors in Saudi Arabia. The
impact of new visa scheme of the country can also be noticed on the hotel industry where the
hotels renovate their infrastructure, construct new rooms and introducing new services for the
people to achieve the desired growth and development in the hotel industry (Mitchell &
Alfuraih, 2018).
The Saudi government also issues a ‘Sharek’ visa for the people to enter in the
country before few days of events and stay in the country for few days after the event. The
Saudi Arab embassy allows a 30 days visa for single entry and single exit for 640 Riyals
($170.65). The Formula-E race also attract people in 2018 when the country hosted its first
Grand pie formula one car race sports. There were huge number of peoples visited in the
country and it allows the hotels to collect huge amount of revenue that contributed in overall
GDP of the country. The Marriot hotel in Saudi Arabia operates its business in the Riyadh
where it provides a variety of facilities to its customers such as AC rooms, Coffee bar, mini
liquor bar, free newspaper, and Wi-Fi connection with Television, coffeemaker machines in
the room to its customers (Zeineddine, 2017). After the launch of new visa policy of Saudi
Arabia, Marriot hotel included some new features like rooms for non-smokers and various
offers and discount for the people who stay in the hotel for the long-time of period. However,
the Marriot hotel also cares for the new visitors in the country and it is located in those areas
where a tourism destination place is available for visitors so they can visit and entertain
themselves in the country after the stay in Marriott hotels. The Marriott hotel has noticed a
significant increment in 2018 and 2019 in the number of visitors in compare to 2016 and
2017 (Ekiz, Öter & Stephenson, 2017). The company is known for its best business

Saudi Arabia’s Tourist Visa and its Impact on Hotel Market
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operations in Middle East and Africa where it operates its business in more than 5700 hotel
rooms in 29 hotels. The company mainly its operates its businesses in Riyadh where the
Marriott hotel has 8 operating hotels. However, the increasing number of visitors and
customers after the launch of new visa scheme of Saudi Arabia force the Marriott hotel to
open two new hotels for the visitors to meet the demand (Mohammed Al Yousif, Al Bakr, &
Authority, 2017).
The growth strategy of Marriot hotel is testament to the Kingdom’s vision to achieve
a thriving economy, vibrant society, and ambitious nation that will diversify its economy by
reducing the independence of the country on oil export revenue (Hvidt, 2019). Saudi Arabia
want to reduce its dependency on the oil export and want to increase its total non-oil revenue
to $160 billion by 2020, which is $43.5 billion higher than the last year. However, the
economist and government of the Kingdom understand the importance of tourism sector by
diversifying the economy, so they majorly focuses on those sectors which can contribute
more in the GDP of the country (Idrees, Vasconcelos, & Ellis, 2018). Marriott Hotel in the
starting of 2017 operates its business in nine cities of the Saudi Arabia in 29 hotels, which
have 5700 rooms in the country (Hvidt, 2019).). After the launch of the new visa policy of the
country, the Marriott hotel understands the increasing demand of visitors to stay in world
class hotels. Therefore, the hotel decided to expand its services and business operation by
increasing the number of hotels and hotel rooms. The company then construct more than
1172 room in the top 8 cities of the country including Yanbu, and King Abdullah Economic
City (Jones & Comfort, 2019). However, in most if the cities the Marriott hotel acquires
second number in terms of number of customers after the Hilton hotels. The country also
encourages through this kind of visa to those people who visit in the country for the purpose
of religious travel.
Conclusion
In conclusion, the contributions of hotels in the tourism sector and in the economic
development of the country are really remarkable. The hospitality industry of any country
contributes a major portion in the GDP of the country. Here the role of Marriott hotel is so
crucial in the country where Marriot hotel provide a foundation for the growth and increasing
revenue of the country from the tourism sector. People who arrive in the country want to stay
for longer time of period if they get better hospitality and services in the country from the
hotel industries, Apart from this, the concession, pricing strategy, and offers of the hotels also

Saudi Arabia’s Tourist Visa and its Impact on Hotel Market
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attract the customers to stay longer in the country and enjoy the destination and its beauty.
Therefore, the role of hotel industry is really important in the vision 2030 of Saudi Arabia.
The issue of new visa policy not only enhance the employment opportunities in the country
rather it also diversified the economy of the country in various sectors and industry, so the
dependency of Saudi Government on the oil export can easily be reduced. The increasing
numbers of customers in the Saudi Arabia is showing the great success of new visa policy of
the government. After the launch of new visa policy, the hotel industry has recorded a huge
boost in the number of domestic and international visitors in the hotels. However, this is
really beneficial for the company if the arrivals of people increase every year as the expected
rate then definitely Saudi Arabia will diversified its dependence on the oil export revenues
and achieve its vision 2030 in a manner as the country expected.

Saudi Arabia’s Tourist Visa and its Impact on Hotel Market
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