Inside Saudi Arabia’s Push to Become a Global Vacation Destination

Saudi Arabia’s Vision 2030: Diversification Through Tourism & Beyond

Key Concepts:

• Vision 2030: Saudi Arabia’s strategic framework to reduce oil dependency and diversify its economy.
• Non-Oil GDP: The portion of Saudi Arabia’s Gross Domestic Product derived from sectors other than oil production.
• Religious Tourism (Hajj & Umrah): Pilgrimage to Mecca and Medina, historically the dominant form of tourism in Saudi Arabia.
• Leisure Tourism: Tourism focused on recreation, relaxation, and entertainment.
• Red Sea Global: A real estate development company spearheading tourism projects along the Red Sea.
• AlUla: A historical region in northwest Saudi Arabia, positioned as a key cultural and tourism destination.
• Mega-Events: Large-scale events like the World Expo and potential FIFA World Cup, intended to attract international visitors.

I. Economic Diversification & Vision 2030’s Core Objectives

Saudi Arabia is undertaking a massive economic transformation through its Vision 2030 plan. Currently, over 40% of the Kingdom’s GDP is derived from oil, a figure the government aims to reduce to 35% by 2030, with non-oil sectors contributing approximately two-thirds of the GDP. This shift is driven by a desire to lessen reliance on a single commodity and capitalize on other resources, including mining (gold, natural resources), sports, culture, entertainment, and tourism. The initiative is spearheaded by Crown Prince Mohammed bin Salman, who has actively sought foreign investment and partnerships. Despite strong global stock performance, Saudi Arabia’s benchmark index experienced a 13% drop in 2025, prompting a push to open property and equity markets to foreign investors.

II. The Need for Institutional Reform

Steven Cook of the Council on Foreign Relations highlights a fundamental challenge: Saudi Arabia lacks the robust institutions of a market economy. He emphasizes the need for “independent courts, rational investment laws,” and a framework conducive to investment outside the hydrocarbon sector. Cook notes the Crown Prince’s recognition of the need for diversification, stating, “His Royal Highness…said we have to diversify the economy we don’t want to continue relying on one source of income which is the oil.”

III. Tourism as a Cornerstone of Diversification

Tourism is identified as a central pillar of Vision 2030. Minister of Tourism Ahmed al Katib details ongoing efforts to “modernize the country, build new destinations, new airlines, Riyad airlines, new airports including King Salman airport and uh new hotels.” While religious tourism (Hajj and Umrah) currently accounts for 46% of international arrivals (down from 60% in 2019), the strategy aims to significantly expand leisure tourism alongside continued growth in religious pilgrimage. The goal is to attract 50 million foreign tourists and 100 million domestic tourists annually by the end of the decade, despite only opening to leisure tourists in 2019.

IV. Red Sea Global & the Development of New Destinations

Red Sea Global, founded by the Crown Prince, is a key player in developing tourism infrastructure. CEO John Pagano emphasizes the pristine natural environment of the Red Sea region, stating, “We have a beautiful pristine environment which in the world today doesn't exist.” The Shabrara Resort, located on the Red Sea, exemplifies this focus on creating unique and luxurious tourism experiences. Pagano also notes the importance of attracting visitors who will return repeatedly for leisure, not just for business or family visits.

V. AlUla: Blending History, Culture & Luxury

AlUla, a region in northwest Saudi Arabia, is being positioned as a premium cultural tourism destination. Located on the ancient incense route, it boasts significant natural and historical importance, including eight UNESCO World Heritage sites. Habir Lakal, CEO of the Royal Commission for AlUla, describes it as “a home” with families inhabiting the old town since the 12th century. AlUla has already received 300,000 visitors, 30% of whom are international, and aims for 2 million visitors by 2035. Lakal emphasizes AlUla as “Saudi Arabia’s treasure but it’s also the gift for the world.”

VI. Investment & Competition in the Regional Tourism Market

The Kingdom plans to invest nearly $1 trillion in its tourism industry. Private investment in tourism reached $3.8 billion in 2024, with 40% originating from foreign capital. However, Saudi Arabia faces competition from neighboring UAE and other beach destinations in Africa and Asia. Steven Cook notes that Saudi Arabia historically “lagged behind in terms of the kind of ability to attract businesses and firms and and and build these gleaming gleaming cities.” The UAE currently sees international visitors account for almost 80% of its tourism expenditure.

VII. Social Changes & Evolving Regulations

The transformation extends beyond infrastructure and tourism offerings. Significant social changes are underway, including the introduction of cinemas, music, and allowing women to drive. A gradual easing of restrictions on alcohol consumption is also occurring, with a shop now open in the diplomatic quarter, potentially signaling a precursor to broader legalization. While not considered “make or break,” the availability of alcohol could enhance Saudi Arabia’s appeal to Western tourists.

VIII. Infrastructure Readiness & Private Sector Involvement

Saudi Arabia asserts its infrastructure is prepared for a surge in tourism, having already accommodated 116 million visitors without issue. Ongoing projects, including Riyad Airlines, King Salman Airport, and numerous hotel constructions, are further enhancing capacity. The government emphasizes the importance of private sector involvement, viewing itself as a regulator while encouraging private investment in hotels, shopping malls, and restaurants. Minister al Katib states, “We want the private sector to to drive…the private sector in Saudi Arabia is contributing heavily in building new destinations and the new experiences.”

Conclusion:

Saudi Arabia’s Vision 2030 represents an ambitious and multifaceted effort to diversify its economy and transform its image. Tourism, particularly leisure tourism alongside the established religious pilgrimage, is central to this strategy. While significant challenges remain – including institutional reform, competition from regional players, and achieving ambitious visitor targets – the Kingdom is investing heavily in infrastructure, new destinations like the Red Sea and AlUla, and social liberalization to attract both domestic and international tourists. The success of Vision 2030 will hinge on continued private sector engagement and the ability to create a sustainable and appealing tourism ecosystem.