KAEC plans its part in Saudi tourism and leisure revolution

At the World Economic Forum (WEF) annual meeting in Davos in January, Saudi Arabia’s Energy Minister Khalid Al-Falih surprised the audience at one event with the words: “We are going to turn Saudi Arabia into a softer, more pleasant place to live.”

One of the ways the Saudi government is planning to do this is by boosting the tourism sector, adding to the Kingdom’s appeal as a place to visit, and as a place for Saudi citizens to spend their vacations, rather than traveling abroad.

Tourism is already a vital component of the Saudi economy, contributing around SR244 billion ($65 billion) in 2016, or around 10 percent of gross domestic product (GDP), according to a recent report from the World Travel and Tourism Council (WTTC).

A portion of that comes from Haj and Umrah pilgrimages, which is a testimony to the Kingdom’s place as a leader of the global Muslim community, and to the efficiency of the authorities in organizing the mass movement of people every year. Already tourism supports more than 1 million jobs in the Kingdom and is a vital component of the national economy.

But Al-Falih’s comments signaled a new approach to the leisure and entertainment industry in Saudi Arabia, aimed at broadening and deepening the commitment to its leisure industry. It is part of the transformation of the Saudi economy and society envisaged in the Vision 2030 strategy, which seeks to diversify the economy away from the dependence on oil.

The strategy’s first big project geared toward leisure was announced earlier this month when plans were unveiled to develop an “entertainment city” south of the capital Riyadh. The 334-square-kilometer development, which will include a Six Flags entertainment park, will be a cultural landmark and help meet the aspirations of future generations for recreational and social pastimes within the Kingdom.

By 2022, when the city is planned to open, Saudis will feel less need to travel to recreational locations outside the Kingdom. It will be a vital boost for the national economy, keeping billions of riyals in the Kingdom rather than being spent abroad, and adding thousands of jobs to the labor market.

But the initiative is not confined only to the capital. Across the country, on the shores of the Red Sea near Jeddah, another big leisure development is being planned to cater for the needs of the second-largest conurbation in Saudi Arabia.

KAEC entertainment district in the works

In February, King Abdullah Economic City (KAEC), which is about 100 kilometers north of Jeddah, signed an agreement with the General Entertainment Authority (GEA) to set up the Juman Carnival, an integrated tourism and entertainment district within KAEC’s boundaries.

The new district will be a key element of the plan to make KAEC a thriving urban hub on the Red Sea coast. An entertainment location serving the needs of the western part of the country will join KAEC’s facilities, which include a port, industrial site and residential and commercial hubs.

Details of the entertainment development are under wraps for now, but in a visit to KAEC recently, I learned a bit more about the plans being considered by Fahd Al-Rasheed, the chief executive of KAEC, which was developed in partnership with an offshoot of Dubai real estate company Emaar.

The UAE company already knows a thing or two about leisure tourism as one of the biggest developers in the Arabian Gulf, and the force behind Dubai’s major tourist attractions, like Dubai Mall and the Burj Khalifa.

The new KAEC resort is provisionally entitled Laguna Land, though the final branding is still to be decided, and it will be home to a motor park with racing facilities, a children’s theme park probably centered around a water sports development, an eco-park and a safari district.

Partners are being sought in the international leisure development business, but no contracts have been signed yet. That will come later this year.

Visitors to the new development will be able to travel from Jeddah on the Haramain high-speed rail project, which has a station dedicated to the KAEC site, which will also speed travelers arriving at the new airport planned for Jeddah.

The new leisure project will be a boost for KAEC’s ambitious development. By 2025, it aims to attract 3.2 million tourists, who are expected to spend SR5 billion within the city boundaries. 

Those estimates could be conservative if the current progress is anything to go by. In the first quarter of this year, some 160,000 visitors came to KAEC; the same number visited the city in the whole of 2016.

The comparison with Dubai is compelling. Thirty years ago tourism was only a small part of the emirate’s economy, but the development strategy put in place by its leaders saw tourism as a vital component. Now Dubai is one of the world’s biggest tourism destinations.

Of course, Dubai, with a population of a few hundred thousand back then, had to import that demand from the outside world. The beauty of the Saudi strategy is that there is plenty of pent-up demand already in the population of some 32 million.