Unpacking the Hajj dividend for Saudi Arabia’s travel and hospitality industries

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With pandemic restrictions imposed in 2020 fully lifted, a very large number of people were able to participate in Hajj this year, creating increased business opportunities for travel agencies, airlines and the hospitality industry in the Kingdom and the wider Gulf region. (SPA)
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With pandemic restrictions imposed in 2020 fully lifted, a very large number of people were able to participate in Hajj this year, creating increased business opportunities for travel agencies, airlines and the hospitality industry in the Kingdom and the wider Gulf region. (SPA)
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With pandemic restrictions imposed in 2020 fully lifted, a very large number of people were able to participate in Hajj this year, creating increased business opportunities for travel agencies, airlines and the hospitality industry in the Kingdom and the wider Gulf region. (SPA)
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Updated 01 July 2023
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Unpacking the Hajj dividend for Saudi Arabia’s travel and hospitality industries

  • When COVID-19 restrictions were imposed in 2020, just 10,000 pilgrims were permitted to travel to Makkah
  • With controls now lifted, 1.6 million people were free to take part, generating welcome business for airlines and hotels

DUBAI: Three years after the COVID-19 pandemic forced Saudi Arabia to impose strict travel restrictions, this year’s Hajj has given a palpable boost to the regional economy, with an estimated 1.6 million Muslims from around the world converging on Islam’s holiest sites.

The annual pilgrimage began on Sunday with the ritual of Tawaf Al-Qudum, when pilgrims dressed in white robes walk in a circle around the Kaaba, the stone structure at the center of Masjid Al-Haram, or the Grand Mosque, the most important mosque and holiest site in Islam.

With pandemic restrictions imposed in 2020 fully lifted, a very large number of people were able to participate in Hajj this year, creating increased business opportunities for travel agencies, airlines and the hospitality industry in the Kingdom and the wider Gulf region.




With the coronavirus emergency over, the annual pilgrimage is essentially back to normal. (SPA)

The number of pilgrims is significantly higher this year compared with the period during the pandemic. Only 10,000 people were permitted to participate in 2020, and about 59,000 in 2021, because of social-distancing rules.

Last year capacity was greatly increased but still capped at 1 million pilgrims. During that time authorities also imposed an age cap of 65 to protect older people, who were considered more vulnerable to the most severe symptoms associated with COVID-19.

Now, thanks to the success of the vaccines developed to combat the coronavirus and the lifting of travel bans and other restrictions, the annual pilgrimage is essentially back to normal and the Hajj economy is enjoying something of a post-pandemic rebound.

Through the combined efforts of the Kingdom’s flag carrier, Saudia, and budget airline flyadeal, more than 600,000 pilgrims were transported from domestic terminals to Hajj sites, Saudia Group said.




Saudia, the Kingdom’s flag carrier, and budget airline flyadeal combined transported more than 600,000 pilgrims from local airports to the holy sites this Hajj season. (SPA /File Photo)

The firm, which also operates Saudia Private Aviation in addition to Saudia and flyadeal, said it provided more than 1.2 million seats on its fleet of 164 aircraft, transporting pilgrims to and from more than 100 regular and 14 seasonal destinations, including Jeddah, Riyadh, Dammam, Madinah, Taif and Yanbu.

Just before Eid Al-Adha, the UAE’s flag carrier, Emirates, also added extra flights to cater to an increase in travelers. Ten flights to and from Jeddah, all operated using Boeing 777 aircraft, were added to accommodate Hajj pilgrims until July 7.

These extra Hajj flights were in addition to Emirates’ existing scheduled services to Saudi Arabia and were available to all travelers holding a valid Hajj visa. All passengers over the age of 12 were required to be vaccinated against COVID-19.

Emirates said there had been an increase in bookings for Hajj travel from Pakistan, India, Bangladesh, Indonesia, Thailand, Senegal, Ivory Coast, Mauritius and South Africa. The airline also added 34 flights to popular vacation destinations during the six-day Eid Al-Adha holiday.

Meanwhile, hotels in Makkah were fully booked as hundreds of thousands of Muslims descended on the holy city for Hajj.

“The hotel occupancy rates in Makkah have reached 100 percent, such as at the Novotel Thakher Makkah Hotel,” Abdul Aziz Al-Aboudi, the CEO of Thakher Development Company, a real estate firm that focuses on the hospitality sector, told Arab News.

“This substantial increase in occupancy comes in contrast to the 80 percent rate observed during the last Ramadan.”




Hotels in Makkah were fully booked as hundreds of thousands of Muslims from the 2.5 million pilgrims who descended on the holy city for Hajj. (SPA)

In 2022, the occupancy rate was 60 percent, he added.

According to global property consultancy CBRE, occupancy levels in Makkah and Madinah increased by 21.2 percent and 18.5 percent respectively during the first quarter of 2023 compared with the same period the previous year. It attributed this increase to the lifting of travel restrictions and the beginning of Ramadan.

Al-Aboudi said the increase in visitor numbers had generated new business opportunities for the construction and real estate industries. His own company recently opened the Park Inn by Radisson and has obtained the necessary Hajj license for its operation, he added.

The annual pilgrimage is also a source of income for smaller businesses, including those who provide lodgings, transport and gifts. The increased footfall this year has meant higher prices.

IN NUMBERS

10,000 Pilgrims permitted to perform Hajj under pandemic rules in 2020.

59,000 Number of pilgrims permitted in 2021 after easing of travel bans.

1 million Cap on the number of pilgrims performing Hajj in 2022.

1.6 million Estimated turnout for the Hajj pilgrimage in 2023.

According to official data for 2019, the Kingdom generated approximately $12 billion in income from the 2.5 million pilgrims who came to Makkah and Madinah for Hajj that year, and the 19 million who visited for Umrah, another Islamic pilgrimage that can be undertaken at any time of the year.

“Religious tourism is the backbone of Saudi Arabia’s tourism and it will play a wider role in the future as well,” Turab Saleem, head of hospitality, tourism and leisure consultancy at Knight Frank, told Arab News.

“Madinah is increasing its inventory from 18,000 hotel rooms at present to 125,000 by 2030. Makkah as well is increasing its occupancy. Makkah will have more rooms than any other city in the entire Middle East, including Dubai. Both Makkah and Madinah will also play a key role in elevating religious tourism to a new level.”




Madinah's shopping centers and hotels are once again seeing a surge in customers since the lifting of pandemic restrictions. (SPA)

Hajj, underlines Saleem, plays a key role in Saudi Arabia’s tourism market.

He also points out how the economy for an increase in hotel rooms is not as challenging is the need to enhance the infrastructure to cater to the increase in Hajj pilgrims and expansion this year of the Hajj economy.

“Saudi is also observing how religious tourism can convert into leisure tourism,” he added.

“If someone or a family comes for a short tour then they can also take a trip to the Red Sea, AlUla or Riyadh.”

Airlines will also play a big role, adds Saleem. The new airline Saudi Arabia is launching, Riyadh Air will travel to over 212 destinations globally.

“It will do wonders for the country in terms of tourism, both religious and leisure,” he said.




Places as far as Jizan are expected to benefit from an influx of visitors as the Kingdom's religious tourism program goes in full swing. (SPA)

According to TV news channel Al Arabiya, in the weeks prior to Eid Al-Adha, Saudi authorities unveiled their largest-ever operational plan for Hajj season, for which they employed a record-breaking 14,000 staff and more than 8,000 volunteers, who were deployed on the ground to provide assistance for pilgrims.

Abdulrahman Al-Sudais, president of the General Presidency for the Affairs of the Two Holy Mosques, said: “The operational plan for this year’s Hajj season is the largest in the history of the presidency, after the end of the coronavirus pandemic and the announcement of the return of Hajj pilgrims in the millions, as per an integrated system of services prepared by the wise leadership.”

Since Vision 2030, the Kingdom’s development and diversification plan, was launched by Crown Prince Mohammed bin Salman in 2016, Saudi authorities have spent billions of dollars on efforts to make Hajj, the world’s biggest religious gathering, more secure, more accessible, and an easier and more streamlined experience.

Another aim of Vision 2030 is to increase Hajj and Umrah capacity to 30 million pilgrims each year, to the benefit not only of the local economy but to international businesses operating in Saudi Arabia.

Performing Hajj can cost upward of $5,000 a person. It is one of the Five Pillars of Islam and every Muslim who is physically able and can afford it is obliged to participate at least once in their life.

 


Wizz Air aims to expand connections, attract more tourists into Saudi Arabia, says senior executive

Updated 20 May 2024
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Wizz Air aims to expand connections, attract more tourists into Saudi Arabia, says senior executive

RIYADH: Low-cost carrier Wizz Air plans to invest over half a billion dollars in flight operations in Saudi Arabia to enhance connectivity and attract more tourists, according to the airline’s president.

In an interview with Arab News on the sidelines of the Future Aviation Forum, Robert Carey emphasized the impact on tourism, noting that inbound visitors typically stay for three to seven days and spend money on various services like hotels, car rentals, and food.

“We’ve invested over half $1 billion into our flying in the Kingdom so far. we’re going to keep growing that. I think we’ve got a lot to do. Just keep connecting the destinations we’ve already got, connect more of those points together,” Carey said.

Wizz Air is the third-largest low-cost carrier in Europe and the fifth-largest airline e-commerce site globally. It aims to bring more tourists to Saudi Arabia and enhance its accessibility, with plans to continue connecting existing destinations and expand further. 

“We’re operating to seven different destinations from Saudi Arabia. We have four points here. You know, we’re seeing really great consumer response to this. Roughly two to one external like people coming into the Kingdom versus people leaving the Kingdom, on trips,” Carey said.

He added: “But that’s giving a great benefit. We’ve got tourists coming in. We’re giving access to Saudi customers who have travel.”

He also expresses the airline’s positive passenger experience, praising the airline’s clean, new planes, welcoming flight crew, and on-time scheduling.

Additionally, Carey stated that Wizz is working with the minister of tourism, the minister of transport, the General Authority of Civil Aviation, and the Saudi Tourism Authority on their connectivity program.

“If you look at the airline planning season, we’re just coming up on the period where everybody starts announcing what they’re going to do for this winter, so all I’ll say for right now is stay tuned. There’s more to come,” he said.

Carey noted that Wizz Air celebrated its 20th birthday this week, and to mark this milestone, the airline will launch a special promotion on May 21.

He hints that the promotion will be closely related to the anniversary, suggesting significant discounts on every flight. They encourage people to visit the website to take advantage of the upcoming offers.


AI to help optimize Saudi aviation supply chain management: official

Updated 20 May 2024
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AI to help optimize Saudi aviation supply chain management: official

RIYADH: Saudi Arabia’s aviation industry’s supply chain management is set to receive a boost thanks to the use of artificial intelligence in logistics, a top official said.

Speaking on the first day of the Future Aviation Forum in Riyadh on Monday, Suliman Almazroua, CEO of the National Industrial Development and Logistics Program, said that AI implementation will also enhance productivity and customer experience.

“AI in logistics, for example, is shaping and optimizing the supply chain management, improving productivity, productivity maintenance, and enhancing customer experience,” he said.

The official said the rapid technological advancements are reshaping the future of industries.

The CEO highlighted the Saudi aviation sector’s achievements in terms of increased number of passengers, cargo handling, fleet expansion, rise in infrastructure investment, and global connectivity.

Addressing the forum, Luis Felipe de Oliveira, director general and CEO of Airports Council International shed light on how the aviation industry suffered from different crises.

“I remember from 9/11 to (the 2008) financial crisis to SARS to COVID-19, we always faced an issue, but we are a very resilient industry and we always come back,” Oliveira noted.

He said: “That’s why when you talk about macroeconomic stuff, we see that geopolitical risks are something that can affect us. That we have the inflation going up, of course, affects our business as well. We have the interest rates that affect our GDP.”

“But it is incredible that even considering all these headwinds, the unemployment rate is going down and people are eager to travel,” Oliveira justified.

He also talked about how jet fuel prices, which are the main cost for the industry, are very high nowadays.

“Of course, this affects our ability to fly and also affects the cost of the tickets,” Oliveira said.

Stefan Schulte, CEO of Fraport AG in Germany, clarified that the focus on innovation, sustainability, and connecting people and culture resembled the beginning of a new era.

“The expectations of our customers are constantly increasing. They want consistent, digitalized, resilient, and seamless processes, but they also want us to go green,” Schulte said.

Organized by the General Authority of Civil Aviation, the three-day event will see discussions on issues related to the global flight sector, air transport, and environmental sustainability in civil aviation, as well as talks on enabling advanced air transport and enhancing global connectivity. 

The event also aligns with the Kingdom’s ambition to become a leader in the sector within a decade, including securing $100 billion worth of investments by 2030.


Electric passenger drones set for a year-end launch in Saudi Arabia, says Front End CEO

Updated 20 May 2024
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Electric passenger drones set for a year-end launch in Saudi Arabia, says Front End CEO

RIYADH: Electric passenger drones are set to be launched in Saudi Arabia by the end of this year with Alkhobar-based firm Front End set to introduce the service to the Kingdom, revealed its CEO. 

Speaking to Arab News on the sidelines of the Future Aviation Forum, Majed Al-Ghaslan, who is also the chairman of the company, stated that Front End’s collaboration with the Chinese electric vertical take-off and landing vehicle developer EHang is facilitating the deployment of such electric flights in the Kingdom. 

Al-Ghaslan said: “We’re pushing the boundary of air traffic, also urban traffic management systems. So we’re discussing this with the Civil Aviation Authority (General Authority of Civil Aviation) here in the Kingdom. We’re very closely aligned with the Ministry of Transport.” 

He added: “We have electric buses and cars now; you’re going to have electric flights for passengers. And this is already running in many cities around the world. We want Riyadh and the major cities around the Kingdom to be the first as well. The idea is to launch the pilots this year and hopefully start launching this service as well this year.” 

The official also added that the deployment of these electric drones, capable of carrying passengers, in the Kingdom is very feasible, as such services are running effectively in countries like China, Indonesia, and Japan. 

During the talk, he revealed that these proposed electric flights, which take off vertically, can be used for both carrying passengers and for logistics purposes. 

According to Al-Ghaslan, these flights are capable of traveling up to 30 minutes with two passengers, and with more advanced batteries, the distance can be extended further. 

He explained, “You can do a 30-minute flight, but still, 30 minutes is a long flight. For example, in Riyadh, you can cover end to end because you are going direct path to anywhere, with two passengers. So you can take up to 250 kilograms. And then with more advanced batteries, the distance can be even higher.” 

The official added that the drones capable of carrying passengers, which will be introduced in Saudi Arabia, will be autonomous and will operate using advanced technologies like artificial intelligence. 

Discussing Front End’s eagerness to enter the air mobility sector, Al-Ghaslan noted that the Kingdom’s transformative Vision 2030 program has facilitated the firm’s entry into the industry. 

“Typically, what we do is partner with and localize companies, bringing them into the Kingdom. I never thought I’d be in aviation, but because of the new frontiers that include electric vehicles that vertically take off and land, and advancements in passenger-level drones, that is our interest. We run drone services for our clients, but we are now getting into the air mobility sector,” said Al-Ghaslan. 

He added, “The Vision 2030 program actually enabled this transformation to take place, and there are now national-level strategies. We are at the forefront of making it happen from the private sector at least.” 

The official also noted that Front End is planning to introduce a ride-hailing service in Saudi Arabia using a fleet of electric vehicles, under a partnership with an Indian company named Blue Smart. 

“We’re also launching a ride-hailing service. So, this is something we’re also going to be announcing at the right time, again, electric. So, our theme is around sustainability as well. It’s a company from India called Blue Smart. And this is also going to be announced this year,” he concluded. 


Riyadh Air to unveil its crew uniform at Paris Fashion Week, says CEO

Updated 20 May 2024
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Riyadh Air to unveil its crew uniform at Paris Fashion Week, says CEO

  • New attire will ‘become instantly recognizable as the Riyadh color’

RIYADH: Saudi Arabia’s new airline, Riyadh Air, is set to unveil its cabin crew special uniform at the upcoming Paris Fashion Week, according to its CEO.

On the sidelines of this year’s Future Aviation Forum in Riyadh, Tony Douglas, CEO of Riyadh Air, shared in an interview with Arab News a series of strategic developments that are set to propel the new airline into the global spotlight. 

With Riyadh Air scheduled to launch in the summer of next year, Douglas highlighted the airline’s upcoming milestone at Paris Fashion Week, which will take place from June 18-23.

“Our next milestone will be (in) June in Paris,” he said. “This is going to be about Paris Fashion Week. Now, what would we possibly do in Paris Fashion Week? For the first time ever as an airline, we will reveal our haute couture fashion collection. So our cabin crew won’t wear cabin crew uniforms. It’ll be cabin crew fashion,” he added. 

Drawing inspiration from the fashion depicted in the film “Catch Me If You Can,” Douglas emphasized the airline’s commitment to style and sophistication. 

“If you can ever remember the movie ‘Catch Me If You Can,’ where DiCaprio goes through the terminal building, and everybody stops to photograph them because they look glamorous. They look fashionable. They look refined. And we want to bring that back with a modernist twist. And that’s what we’ll be revealing at Paris Fashion Week at the end of June,” he explained.

The new uniforms will feature a unique color that Douglas believed would become “instantly recognizable as the Riyadh color.”

He added: “We want to get that kind of glamor into aviation to make sure that this brand, because of course, the brand is Riyadh wherever it’s identified around the world, that immediately speaks to quality, grace, refinement, and fashion.”

In addition to fashion, Riyadh Air is rapidly building its operational capabilities, according to the top official.

“We now have our first group of pilots who’ve joined us. So we’ve got over 30 instructor pilots, they’re the highest qualified pilots you can get from lots of different international airlines. They’re, of course, engaged with us at this stage to assist with our certification flying. And we’ll start our certification flying in September of this year. So literally months away now,” Douglas revealed.

He added: “Yesterday, our third batch of cabin crew started with us, so this feels like a real airline now.”

The interest in joining Riyadh Air has been extraordinary, according to Douglas. 

He noted the overwhelming response to their careers page, saying: “The statistic that I still almost struggle to comprehend in a very positive way is if you go onto RiyadhAir.com, our website, there’s a careers page, and it allows you to put in your personal details. In just over a year, we’ve had 1.1 million people send the details, their qualifications and their contacts to be considered to become part of the Riyadh Air family, 146 different nationalities, and we think that that’s just completely staggering.”

He added: “We ask ourselves why I would never have imagined so much interest and my only explanation is it’s because it’s under the leadership and the decree of His Royal Highness, the Crown Prince Mohammed bin Salman.”

Looking ahead, Douglas confirmed that Riyadh Air’s headquarters will soon be visible near Riyadh International Airport. 

“Our brand new headquarters building will be available for us to start occupying in the summer of this year. And just out by Riyadh International Airport, people will see their biggest brand logo lit up in the skyline, probably in the next two months. And that’s when you will know where the home of the Riyadh Air family is,” Douglas announced.

The CEO acknowledged the challenges and opportunities ahead by reflecting on the industry’s current dynamics: “What a difference two or three years makes pre-pandemic. It was actually difficult to make any money in aviation. Ticket prices for a decade were almost at an all-time low.” 

Douglas added: “Here we are today, where demand is significantly ahead of supply in many markets and, in particular, our market. But also we all know ticket prices are actually expensive at the moment. I don’t think that will last because it is a cyclical industry and it’s one again where classic Keynesian economics supply and demand at the moment.” 

The Riyadh Air head confidently predicted ongoing market growth and outlined the carrier’s mission, saying: “Is the market going to continually grow? The answer is very simply, yes it is. Back to the proposition of Riyadh Air. We’ll bring a full-service carrier, the sort of carrier that the Kingdom needs and quite frankly, demands such that we’ll have global connectivity.” 

Douglas invited guests to witness Riyadh Air’s debut at Paris Fashion Week and teased future technological innovations. 

“Come and see us in Paris. Come and see the incredible fashion, which will stand out, but also later on in the year will start to reveal what our digital proposition is, and that will be another standout case for our industry,” he concluded.


Closing Bell: Saudi Tadawul closes in red across all indexes   

Updated 20 May 2024
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Closing Bell: Saudi Tadawul closes in red across all indexes   

RIYADH: Saudi Arabia’s Tadawul All Share Index slipped on Monday, losing 73.02 points, or 0.60 percent, to close at 12,125.36.     

The total trading turnover of the benchmark index was SR6 billion ($1.6 billion) as 68 of the listed stocks advanced, while 155 retreated.   

On the other hand, the Kingdom’s parallel market Nomu also slipped 25.51 points, or 0.09 percent, to close at 27,036.50. This came as 24 of the listed stocks advanced, while as many as 40 retreated.  

Similarly, the MSCI Tadawul Index also dropped 13.53 points, or 0.89 percent, to close at 1,515.07.  

The best-performing stock of the day was Al-Baha Investment and Development Co. which saw its share price surge 7.69 percent to SR0.14.  

Other top performers include Almasane Alkobra Mining Co. as well as the Mediterranean and Gulf Insurance and Reinsurance Co., whose share prices soared by 7.05 percent and 6.72 percent, respectively, to stand at SR63.80 and SR25.40.     

In addition to this, other top performers included Almunajem Foods Co. and Methanol Chemicals Co.  

The worst performer was Fawaz Abdulaziz Alhokair Co., whose share price dropped by 8.04 percent to SR10.06.   

Al-Babtain Power and Telecommunication Co. as well as Ash-Sharqiyah Development Co., also saw their share prices dropping by 7.39 percent and 4.45 percent respectively, to stand at SR41.35 and SR20.20.

Moreover, other worst performers also include Arabian Contracting Services Co. and East Pipes Integrated Co. for Industry.  

On Nomu, Future Care Trading Co. was the top gainer with its share price rising by 11.05 percent to SR15.28.   

Other best performers on Nomu were Professional Medical Expertise Co. as well as Osool and Bakheet Investment Co., whose share prices soared by 8.42 percent and 4.53 percent to stand at SR103 and SR 41.50, respectively.  

Other top gainers also include Sure Global Tech Co. and Ghida Alsultan for Fast Food Co.  

Leen Alkhair Trading Co. experienced a significant drop in its share price on Nomu, with the company’s shares falling by 7.72 percent to SR26.90.    

The share prices of Almuneef Co. for Trade, Industry, Agriculture and Contracting as well as Riyadh Steel Co. also fell by 7.68 percent and 6.25 percent to stand at SR51.70 and SR30, respectively.  

Other major losers include Molan Steel Co. and Mayar Holding Co.