Saudi Arabia - Travel & Tourism: Growing market and government’s promotional efforts will drive growth (Strategy, Performance and Risk Analysis)
The tourism industry in Saudi Arabia witnessed strong growth during 2016. Inbound tourism increased due to an increase in the religious visitors, despite the expansion projects in the Holy Mosque of Makkah. In addition, domestic tourism witnessed a substantial increase from the variety of programs organized by the Saudi Commission for Tourism and National Heritage (SCTH).
In the Passenger Airlines segment, number of seats available and sold increased at 7.2% and 7.9% CAGR respectively over 2012-16. The growth is attributed to the increase in air travel demand. In addition, the passenger revenue increased at 6.1% CAGR over 2012-16 primarily due to the increase in inbound and domestic tourism.
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Total passenger airlines revenue to increase
In Saudi Arabia, the total passenger revenue increased at 6.1% CAGR from US$17.2 billion in 2012 to US$21.6 billion in 2016. The growth was primarily due to an increase in the volume of tourists and rising business opportunities in the region. The revenue is further forecast to increase at 10.1% CAGR from US$23.9 billion in 2017 to US$35.1 billion in 2021. The launch of new carriers such as Al Maha and SaudiGulf Airlines, as well as an increase in tourist volumes, will contribute significantly to the growth of the country‘s aviation industry.
Increasing religious, business travel and use of internet and e-commerce to drive travel intermediaries revenue growth
The total revenue from travel intermediaries increased at 7.2% CAGR from US$6,732.1 million in 2012 to US$8,886.0 million in 2016. This revenue is further expected to increase at 6.1% CAGR from US$ 9,818.1 million in 2017 to US$11,741.0 million by 2021. This growth will be driven by an increase in religious and business travel, increasing the usage of internet and e-commerce.
Luxury and upscale hotels to drive total revenue
Saudi Arabian total hotel market revenue increased at 16.3% CAGR from US$2,934.0 million in 2012 to US$5,364.9 million in 2016. Revenue is further forecast to increase at 12.3% CAGR from US$6,064.9 million in 2017 to US$9,662.1 million in 2021. In 2016, the luxury hotel category accounted for 53.6% share of total revenue followed by the upscale hotel with 26.4%, midscale hotels with 11.8% and budget hotels with 8.2%.
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