Can Saudi Arabia's billion-dollar bet on tourism succeed?

Earlier this month, Saudi Arabia signed a multimillion-dollar deal with Habitas, the American company that got its start setting up luxury camping at the annual Burning Man festival in the US desert.

That may seem like an odd match at first.

Burning Man is well known for its lack of rules, drinking, dancing, experimental drug-taking and the wild, flesh-baring costumes exuberantly sported by both male and female attendees. Habitas describes itself as an eco-conscious, culturally savvy provider of luxury "homes" and wellness experiences. 

Meanwhile, Saudi Arabia is best known for being ruled by a royal family that tolerates no political opposition, as a global leader in dispensing the death penalty and for its extremely conservative and religious culture that prefers both sexes to dress modestly at all times, as well its ban on all alcohol.

But there's good reason for this $400 million (€365 million) business deal: Saudi Arabia is pouring billions into its tourism sector. As part of Vision 2030, the country's long-term plan to diversify its economy away from oil, it wants to see tourism go from contributing 3% to national income to 10%, and add a million more jobs to the sector.

Saudi Arabia began opening up in 2019

It was only in 2019 that the oil-rich kingdom started to allow visitors from 49 countries easier entry, with the purchase of an electronic visa. This currently costs just over $142 (€130).

"It's extremely exciting to observe what's happening there because, up until recently, Saudi Arabia had been something of a blank spot on the tourist map," Markus Pillmayer, a professor of tourism at Munich's University of Applied Sciences, told DW. "But I think it is also still too early to assess clearly whether it's going to be a success or not."

The numbers suggest that while Saudi Arabia's tourism ambitions are grand, they are not impossible. For example, in the neighboring United Arab Emirates, the total contribution of tourism to national income is around 12%. And the Saudis are spending big on their plans, with a fund of up to a trillion dollars' worth of investment.

They have done deals with some of the biggest names in the business, including Hilton, Hyatt and Accor, among others. A new airline, Riyadh Air, will start flying in 2025.

At the same time that hotels are being built and planes purchased, the country has also prepared its often-neglected six UNESCO World Heritage sites for more visitors. Other huge developments are also planned. These include the Mukaab, a gigantic entertainment and shopping center on the outskirts of Riyadh, as well as new resorts along some 120 kilometers (75 miles) of the country's underdeveloped Red Sea coast, complete with a harbor for super yachts.

Fastest tourism growth in the Middle East

After a yearslong publicity barrage, it's difficult to find impartial analysis of Saudi Arabia's tourism plans. All the nonstop promotion appears to be paying off. Last year, the London-based World Travel and Tourism Council reported that Saudi Arabia had the fastest growing tourism sector in the Middle East and that by 2025, the country would get around 40% more international visitors than nearby tourism-savvy Dubai.

At the same time though, there are more than a few obstacles. "There's been a huge amount of investment and there likely is a chance of success," said Justin Francis, co-founder and chief executive officer of UK-based activist tour operator, Responsible Travel. "I'm not entirely convinced yet. There will certainly be strong resistance."

Saudi Arabia struggles with water scarcity

Resistance could come from different quarters. The tourism sector is increasingly threatened by climate change, and in a 2019 paper published in the "Annals of Tourism Research," the writers concluded the Middle East was one of four regions most at risk.

Water scarcity is one of Saudi Arabia's biggest problems. After all, most of the country is desert. It uses huge amounts of energy to run desalination plants, and is rapidly depleting groundwater sources. It's hard to see how all those hotel swimming pools can continue to be filled with impunity.

The country's Red Sea Project, which should open its first luxury resort this year and will eventually have its own airport, is also likely to cause headaches for conservationists. Like much of the promotional material for the country's mega-projects, the Red Sea Project boasts it will use only renewable energies and allow no discharge into the sea. But financial analysts who have looked more deeply into the plans say that details are largely lacking.

Businesses like Habitas previously said their first hotel in Saudi Arabia, Habitas AlUla, would use solar power and refrain from single-use plastics. But, as recent guests have noted on review sites like Tripadvisor, there are plastic-covered tea bags and coffee pods in use at the hotel. Guests have also criticized things like the environmentally-unfriendly lack of public transport. 

"There's a lot of marketing hype — and greenwashing with it," noted Francis, of Responsible Travel. "It's really important that we thoroughly interrogate claims around sustainability and responsible tourism, of which we should be highly skeptical. And mass tourism here would place a significant strain on resources — water, particularly."

Bikinis and cocktails not allowed

Another challenge that could hinder the development of tourism in Saudi Arabia is its unhappy human rights record and a very conservative local culture, Francis added. "Overcoming that trepidation will be an uphill climb," he said.

Saudi Arabia restricts local women's rights and criminalizes sex before marriage for locals, as well as same-sex relationships. After opening up to tourism in 2019, the country relaxed these kinds of rules — but only for international visitors.

The Saudi Tourism Authority's visa advice website now proclaims that everyone, including LGBTQ visitors, is welcome. "Unmarried couples are able to share accommodation," it notes, adding that visitors should act in accordance with local customs.

Although international travel operators keep saying they hope rules on alcohol will be relaxed, perhaps inside private resorts, drinks are still banned. And there are other restrictions. The Public Decorum Charter — available on the Saudi eVisa website — outlines fines that can be imposed on anyone who is not modestly dressed, who behaves indecently (this can include public displays of affection like holding hands), jumps queues or spits in public.

It's hard to know whether these rules will discourage international visitors or perhaps see them choosing more permissive destinations in the region, like Egypt, Morocco or Jordan. Reactions have varied.

When The New York Times recently reported that Argentine football superstar Lionel Messi might make as much as $25 million (€22.5 million) from promoting Saudi Arabia just by holidaying there, several families of Saudi prisoners of conscience wrote him an open letter.

"The Saudi regime wants to use you to launder its reputation," the group, which included the sister of women's rights activist Loujain al-Hathloul, wrote. Saying no to Saudi tourism sends a powerful message, they argued: "That human rights matter, that decency matters, that those who torture and murder do not do so with impunity."

In 2019, after influencers began posting pictures on social media about Saudi tourism, some fans were critical. 

"The Saudi government executed 37 people in a single day in April," one commenter wrote on Dubai-based musician Lana Rose's Instagram account. "Shame on you for normalizing them."

'Ethical dilemma for travelers'

Others commenters are more sanguine. "Few countries can boast a spotless record on anything, from human rights to fossil fuels or animal welfare," Francis told DW. "But [Saudi Arabia] is a particularly controversial destination and does pose an ethical dilemma for travelers."

However, he doesn't believe in outright boycotts. Instead, Francis hopes Saudi tourism might diversify, "moving away from massive, high-impact luxury golf and resort breaks to focus on the country's natural and cultural assets in a genuinely low-impact, responsible way." Even though, he admitted, "that seems pretty far removed from the model being touted now."

Tourism professor Pillmayer agrees. He'd like to see sincere Saudi efforts at complying with the United Nations' sustainable development goals, which include human rights. "This tendency for higher, faster, further should be assessed critically," he said.

Edited by: Andreas Illmer