Middle East growth plans

Both Dubai and Saudi Arabia have revealed growth plans that will further reduce their region’s reliance on oil revenues into the future.  

Inevitably, such plans include a major focus on hospitality as a sector that will drive international visitors and revenues, over the next decades. For Dubai, the task is about building on an existing infrastructure; for the Saudis, there are greater challenges for a country that – on an international tourism stage – has to build a more convincing argument for international visitors.   

Dubai has set a target of more than doubling its hotel and tourism capacity, over the next two decades. And more immediately, within a fiveyear deadline, it aims to increase shipping and air route capacity by 50%.  

The additions were set out in the recently released 2040 Urban Master Plan, which includes a range of targets across investment, quality of life for residents, and culture. The three existing urban centres have planned growth, while two new urban centres are envisaged. The resident population, measured at 3.3m in 2020, is expected to grow to 5.8m by 2040.  

“Drawing inspiration from global best practices and adapting them to local needs and requirements, we have created a development model that offers the best possible quality of life and creates the conditions for sustainable prosperity,” said His Highness Sheikh Mohammed bin Rashid Al Maktoum. “Our goal is to create a truly inclusive environment that not only meets the needs of Dubai’s diverse population, but also inspires them to tap into their creative and innovative capacities and realise their true potential.” 

There will be more green spaces, and green corridors to encourage more sustainable travel. And for tourism, the land area set aside for hotels and tourist activities will increase by 134%. Hatta, in the Hajar mountain area, will also be the focus of tourism-led development, as an antidote to those preferring the less glitzy side of Dubai. 

In Saudi Arabia, a USD4bn tourism fund has been established with the aim of transforming the country’s international visitor appeal. This will aim to deliver key steps towards the country’s Vision2030 programme, which aims to lift tourism’s GDP contribution from its current 3%, to 10%, along the way creating a million jobs. To achieve the target, the National Tourism Strategy reckons it will need to attract up to 100m local and international visitors.  

The Saudis are also reported to be encouraging international companies to establish offices in the kingdom, making a local presence a pre-condition of bidding for government business from 2024. A Reuters report suggests 24 companies have committed to make the move, including Bosch, Deloitte, Google and Standard Chartered. Indian hotel group Oyo also revealed it would set up a regional headquarters in Riyadh’s special economic zone, the King Abdullah Financial District.  

At the same time, authorities are reported to be cutting administrative red tape to make doing business easier. Investment Minister Khalid al-Falih told Reuters: “We have made significant progress in recent years in key reforms – introducing 100% foreign ownership across a number of sectors as well as a number of other reforms.” 

Tourism initiatives include a drive for more hotels, and an easing of previous restrictions around leisure attractions. The Saudis have also said they will launch their own airline, to compete with other carriers in the region.  

Aside from the influx of religious pilgrimage visitors to Makkah and Medina, the kingdom is working on broadening its appeal with developments planned elsewhere to attract international visitors. Amaala, on the north western coast, is envisaged as a luxury resort destination. Masterplanned in three parts, it envisages a need for around 30 hotels, among other facilities. Near the border with Jordan, a new mega city called Neom has been proposed. And in February 2021, a new fund was launched to develop Soudah, a mountainous area around 3,000 sq m above sea level that will offer visitors a cooler climate. Developments totalling 2,700 hotel rooms are envisaged, to be delivered by the Soudah Development Company in partnership with private developers.  

Most international hotel brand groups already have an established presence in Dubai, but will be looking for further opportunities as the market develops, and seeks a broader tourism offering.  

But they are less well represented in Saudi Arabia, where InterContinental Hotels looks to be making some strong early running. In early 2021, IHG signed a master development agreement that will accelerate the growth of its Holiday Inn Express brand there. Ishraq Development will deliver the properties in the UAE, Oman, BahrainJordan and Egypt. The company already owns four Holiday Inn Express hotels in the UAE.  

In Saudi Arabia, IHG is working alongside local partner Saleh Alsalamah and Partner Companies. In 2020, the pair committed to developing a Holiday Inn in Riyadh, and this year have found a further site in Jeddah. The 156 room Jeddah Corniche property will be the third Holiday Inn in the Saudi city and should open in early 2022. The company has also agreed to launch its Voco flag in the city, with a 145room hotel close to the airport also due to be ready in early 2022. IHG already has an InterContinental and Crowne Plaza nearby. Matthew Tripolone, IHG’s VP development, MEA commented: “Given the continued progress on Saudi Arabia’s Vision 2030 projects, we expect a continued need for midscale hotel accommodation in key cities such as Jeddah and Riyadh.”  

IHG is also expanding its brand portfolio in the region. Its first Staybridge Suites opened in Dubai in autumn 2020, and it will launch Voco imminently in Qatar. Voco Doha will have a mix of 396 rooms and suites, and is being developed by Al Rabban Hospitality. The group is also rolling out the Indigo brand, with a first property opened in Dubai last autumn.  

Not to be left out, Oman has a Vision 2040 project, with the sultanate looking to transform its economy on a range of fronts, with tourism playing a key part. There too, IHG is making a play, and the group recently signed Indigo Jabal Al Akhdar with an expected opening date of the 176 room property in early 2022. 

HA Perspective [by Chris Bown]: A decade or two ago, there were plenty of people quietly chuckling at the ideas Dubai’s rulers were putting about. But the proud development models launched at international property conferences got mostly built, massive new airlines were created, and few self-respecting UK celebs will admit to having not visited Dubai.  

All of which means that these latest plans could well come off. This time, however, the Saudis will be in (hopefully healthy) competition with their more advanced neighbours, as they create their mega-attractions.  

Let’s hope there are enough tourists to go around, and the territories can get their marketing campaigns, and their cultural sensibilities, right to attract them. Plenty of hotel brands have already been burnt by branding a Middle Eastern hotel, only to watch as occupancy figures failed to make it into profitable territory.  

Additional comment [by Andrew Sangster]: Dubai has been an example of the adage “build it and they will come”. The original quote, from the film Field of Dreams, was actually taken from a much longer speech by the character Terence Mann who said: “people will come”. 

It is the people piece that Dubai has got right. It understood that it was no use simply building something, people had to get there and even better if they got there on their way to somewhere else. Dubai, Abu Dhabi and Qatar have all built global airlines that exploit their ideal location as a stopping off point between Europe and Asia. 

The Kingdom of Saudi Arabia is coming much later to this party but is coming without many of its predecessors’ benefits. KSA is not building a global airline that can be used to entice transit passengers to layover for a few days. In part, the size and scale of the country make this much harder. 

In addition to this, KSA has an unenviable reputation for not letting its hair down. The lack of alcohol and other strictures do not make for a relaxed holiday experience. 

The next few years will be the toughest patch yet for Dubai’s, and particularly Abu Dhabi’s and Qatar’s tourism industry. There is the mother of all supply bumps hitting with Qatar over building to accommodate the soccer World Cup and Dubai doing likewise for its Expo. 

The extent of the pain remains to be seen, but it will make it even more challenging for KSA to drive its tourist offer forward. There is plenty of cash to build it but whether people do indeed come this time is a question. 

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