Whitepaper DESTINATION SAUDI The Impact of Vision 2030 Kingdom of Saudi Arabia Destination Saudi — Leisure, Culture and Tourism Potential Accelerating success. “We will support promising sectors and foster their success so that they become new pillars of our economy… Seán Young Head of Destination Consulting | London sean.young@colliers.com Imad Damrah Managing Director | Saudi Arabia imad.damrah@colliers.com In the tourism and leisure sectors, we will create attractions that are of the highest international standards, improve visa issuance procedures for visitors, and prepare and develop our historical and heritage sites.” Vision 2030 With Vision 2030 identifying the potential for entertainment and cultural development, and with significant growth forecast in domestic tourism, is Saudi Arabia set to see an unprecedented growth in its leisure and cultural offer? 2 Destination Saudi – Leisure, Culture and Tourism Potential | 2017 | Kingdom of Saudi Arabia Despite slightly lower projected growth rates than historical levels, the annual rate of population growth in KSA should stay above 2% for the foreseeable future. This is expected to be a boom for the retail sector as population has a direct effect on potential market size. Tourism in KSA 8% 9.2% Domestic Tourism – Purpose of Visit 2013 Total contribution of 8% and forecast to rise to 9.2% in 2026 2015 2026 7% Leisure VFR Religious Business Other 35% 30% Source: MAS, 2014 Domestic tourism forecasts Domestic Tourism – Purpose of Visit 2020 2015 2020 CAGR Tourists 46.5m 66.2m 7.4% Spend (SAR) 47.9bn 82.6bn 11.5% Source: MAS, 2016 Inbound tourism forecasts 2016 2026 CAGR Tourists 20.2m 32.3m 4.8% Spend (SAR) 32.8bn 55.9bn 5.2% (Source: WTTC, 2016) 13% 15% of total GDP in 2015 5% Leisure VFR Religious Business Other 10% 30% 30% 25% Source: Colliers International Estimate, 2016 Destination Saudi – Leisure, Culture and Tourism Potential | 2017 | Kingdom of Saudi Arabia 3 There is a positive outlook for tourism in Saudi Arabia, with strong growth forecast and a wave of investment underway. At a total contribution of SAR 190bn in 2015, Travel & Tourism is currently the second highest contributor to Gross Domestic Product (GDP) growth in Saudi Arabia, albeit from a relatively low base compared to other countries. Inbound tourism is forecast to grow to over 32m trips per annum by 2026, driven primarily by growth in religious tourism. Domestic tourism is forecast to grow to an impressive 66m trips per annum by 2020, driven by growth in both religious and leisure tourism. Travel & Tourism is estimated to have attracted capital investment of SAR 81.1bn in 2015. This is forecast to rise by 4.2% in 2016, and by a further 4.4% pa over the next ten years to SAR130.5bn in 2026. It is projected that Travel & Tourism’s share of total national investment will rise from 12.5% in 2016 to 14.3% in 2026. Initiatives to support the growth of Tourism include: • Investment in major transport infrastructure such as the new Jeddah airport (open 2018) and the Haramain High Speed Rail line (2018) linking the holy cities of Medina and Mecca via King Abdullah Economic City, Rabigh, Jeddah, and the new Jeddah airport • Increased capacity at the Holy Mosques in both Mecca and Madinah and new Madinah airport (2015) • Significant private sector investment in hotels and resorts • Significant Government investment in parks, attractions, festivals and other recreational activities • Government investment of over USD 13 million/year on the preservation of heritage sites • Introduction of the ‘Umrah Plus’ Visa which allows Pilgrims to travel around the KSA for up to 30 days • Potential introduction of a single Schengen-style visa for all GCC countries • Tourism skills training for over 30,000 Saudi citizens within the ‘Takamul’ program • Gradual opening to new forms of leisure, entertainment and cultural activities e.g. the successful ILuminate Show in Riyadh in summer 2016. If these ambitious plans are delivered, tourism has the potential to make an important contribution to economic diversification and job creation, as well as promoting softer benefits such as pride in Saudi culture and quality of life for Saudi residents. Source: Architects: Snøhetta, Visualization: Luxigon 4 Destination Saudi – Leisure, Culture and Tourism Potential | 2017 | Kingdom of Saudi Arabia Culture, Leisure & Entertainment “We are well aware that the cultural and entertainment opportunities currently available do not reflect the rising aspirations of our citizens and residents, nor are they in harmony with our prosperous economy… We will allocate prime areas within cities for educational institutions, retail and entertainment centers, large areas along our coasts will be dedicated to tourist projects …..” Vision 2030 Demographic Structure of KSA Gen – Z Gen – Y Gen – X Baby Boomers 2,500,000 2,000,000 1,500,000 Saudis Non-Saudis 1,000,000 500,000 0 1 10 20 30 40 50 60 70 80+ Years Source: SAMA, Colliers Analysis Destination Saudi – Leisure, Culture and Tourism Potential | 2017 | Kingdom of Saudi Arabia 5 Recent Leisure Projects: • KidZania Jeddah • Snow City Riyadh Pipeline Leisure Projects: • Theme Park, Safari Park & Water Park, King Abdullah Economic City • Theme Park & Adventure Park, Wadi Al Asla, Jeddah • Indoor Waterpark, Jubail • Six Flags Theme Park, Riyadh • KidZania Riyadh • KidzMondo Riyadh • Knowledge Economic City Leisure Park, Madinah Recent Cultural Projects: • King Abdulaziz Centre for World Culture, Dhahran • Saudi Aramco Oil Museum refurbishment • Mishkat Science Centre, Riyadh • Old Dir'aiyah Heritage Park, Riyadh Pipeline Cultural Projects: • National Park development, Riyadh • Islamic Faith Museum, Mecca • National Museum redevelopment, Riyadh • Natural History & Science Museum, Riyadh • Number of new cultural attractions proposed for the Financial District, Riyadh In addition to the projected growth in domestic leisure tourism, there are a number of additional factors supporting the development of culture, leisure and entertainment offers in the Country: • A large and fast growing population: The population is forecast to grow from 31.5m in 2015 to 37.6m in 20251 • A young population: 57% of Saudi Nationals are under the age of 252 with increasing aspirations for quality leisure and entertainment experiences • An increasingly affluent population: average monthly expenditure of a Saudi household in 2013 was SAR 15,367, a 16% increase on 20073. • Increasing spend on leisure: 2030 Vision is targeting an increase of household spend on culture and entertainment from the current level of 2.9% to 6%4. • A significant lack of out-of-home culture, leisure and entertainment: the existing offer is on the whole limited to public parks, malls, festivals and traditional museums. This is now changing with the recent opening of commercial attractions such as KidZania in Jeddah and Snow City in Riyadh, together with the world class King Abdulaziz Centre for World Culture in Dhahran. • A competitive and open business environment: the government is primed to engage and partner with international leisure and tourism investors, developers and operators e.g. Six Flags partnership for up to 3 theme parks. • Education and training: ‘Experience Saudi Arabia’ is a program that aims at educating Saudi Arabian youth about the heritage and culture of the country. New courses and training to support employment in leisure and hospitality are also being introduced. The large-scale leisure, culture and entertainment projects now emerging in Saudi Arabia are expected to encourage Saudis to spend more of their disposable income within the country rather than overseas. With other GCC countries also investing heavily in new tourism attractions and infrastructure, the region is becoming increasingly competitive. Nonetheless the prospects for growth in Saudi Arabia are bright. 1, 2, 3, 4 Source: General Authority for Statistics, 2015 • King Salman Science Oasis, Riyadh • Madinah Welcome Center 6 Destination Saudi – Leisure, Culture and Tourism Potential | 2017 | Kingdom of Saudi Arabia Conclusion, Opportunities and Key Issues In conclusion, it is apparent that the Cultural, Leisure and Tourism landscape in Saudi Arabia is changing quite rapidly and the scale of opportunity, particularly from domestic tourism growth, is significant. Expectations in terms of the variety and quality of entertainment provision within the Country are rising and the new Entertainment Authority has high aspirations to meet these expectations. We believe that the overarching market opportunity is to provide ‘Family Fun’ experiences in safe, controlled and culturally appropriate environments. Key Development Opportunities Key Considerations for Developers and Operators • Theme Parks • Cultural Fit • Zoos and Safari Parks • Climate • Indoor and Outdoor Adventure Activities • Day vs Stay Visitors • Commercial Family Attractions • Repeatability • Touring Exhibitions • Religious Pilgrims • Retail, Dining and Entertainment (RDE) Zones • Physical and/or Temporal Visitor Segregation • Festivals • Staff Recruitment and Training • The Power of Social Media and Word of Mouth Marketing Destination Saudi – Leisure, Culture and Tourism Potential | 2017 | Kingdom of Saudi Arabia 7 Colliers International Destination Consulting BUSINESS SUPPORT TRANSPORT PLACES ACCOMODATION RETAIL THE CUSTOMER EVENTS ATTRACTIONS ECONOMICS ENTERTAINMENT FOOD & DRINK ENVIRONMENT MANAGEMENT & FUNDING MARKETING & PROMOTION CONFERENCE & EVENTS The Colliers International Destination Consulting team understands all parts of the complex tourism industry and is currently working on a number of leisure, cultural and tourism development initiatives all across the Kingdom. We advise on the key ingredients of success in delivering a destination that meets the needs of both destination creators (developers, investors, government stakeholders) and the destination consumers (residents and visitors). We combine 10 years of local experience in the Saudi market with over 20 years of experience in international destination development to advise our clients throughout all stages of the destination development lifecycle: 8 • Destination concept, strategy and product development • Market & Financial Feasibility Study • Development Consultancy & Highest and Best Use Analysis • Operator Search & Contract Negotiation • Project Monitoring (Assistance with Pre-Opening Expenses and Business Plan) • Asset Management/Operational & Financial Performance Review • Site and Asset Investment Strategy/ Brokerage Destination Saudi – Leisure, Culture and Tourism Potential | 2017 | Kingdom of Saudi Arabia 554 offices in 66 countries on 6 continents $2.5 billion in annual revenue 16,140 over professionals 1.9 billion over square feet under management (excluding residential properties) For further information, please contact: Seán Young Head of Destination Consulting | London MAIN +44 20 7935 4499 sean.young@colliers.com Imad Damrah Managing Director | Saudi Arabia MAIN +966 11 273 7775 MOBILE +966 50 417 2178 imad.damrah@colliers.com Colliers International Al Faisalah Tower Riyadh | Kingdom of Saudi Arabia MAIN +966 11 273 7775 Jameel Square Jeddah | Kingdom of Saudi Arabia MAIN +966 12 610 5900 Colliers International Middle East Colliers International is a global leader in commercial real estate services, with over 16,000 professionals operating out of more than 554 offices in 66 countries. A subsidiary of FirstService Corporation, Colliers International delivers a full range of services to real estate users, owners and investors worldwide, including global corporate solutions, brokerage, property and asset management, hotel investment sales and consulting, valuation, consulting and appraisal services, mortgage banking and insightful research. The latest annual survey by the Lipsey Company ranked Colliers International as the second-most recognized commercial real estate firm in the world. colliers.com Copyright © 2017 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report. Accelerating success.
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