Saudi Arabia and tourism. New market for short-term rentals.
A law was enacted in February that allows Saudi citizens to register their properties on a government portal to apply for authorization to start a short-term rental business.
In Saudi Arabia, in fact, until now, this type of activity was not allowed. In truth, there was not even officially the possibility for foreigners to visit the country. There were no visas for tourist purposes and foreigners could only enter the country for religious reasons (the country is home to Mecca, the main destination for Muslim pilgrims) or for business. Now, however, a special government structure has been created to deal with tourism and its development.
Vision 2030 project.
The investment is thousands of millions of Euros and is part of the Vision 2030 project that the country is implementing to reduce its dependence on the oil market (which weights about 35% of the gross domestic product without accounting for the distribution of the same) through the development of new markets such as precisely that of tourism. Tourism should, in the plans of the Saudi government, produce 10% of the gross domestic product. An ambitious but not impossible number if we consider that in the neighbouring United Arab Emirates its value represents 12%.
Short-term rental market
The expectation is that the expansion of short-term rentals will be similar to that of the UAE; last year, Dubai was ranked as one of the most profitable cities for Airbnb owners.
Anna Skigin, Co-Founder of Frank Porter (one of the most successful Airbnb management services companies based in Dubai) stated that “Saudi Arabia can use the growth of Dubai’s tourism and expat markets to encourage more visitors, highlighting the fact that they are connected by a short and direct flight. Saudi Arabia is determined to become the next tourist destination, just like Dubai was, and is investing heavily to make that a reality.”
Suffice it to say that, in the second quarter of 2022, after the opening to tourism and before the approval of short-term rentals, tourism had already welcomed 3.6 million tourists with an increase of 575% compared to the previous year.
In the first 6 months since the opening, there have been numerous requests to obtain authorization and the first facilities have begun to open in the country. There are already over 5,000 active ones that can be found on Airbnb. Mainly concentrated in Riyadh, Jecca and Mecca, but with some realities also in less known places. And we are just at the beginning.
From the map produced by InsideBnB (available here), we are beginning to see the first signs of a diffusion that promises to be explosive. It’s a map worth looking at from time to time.