Saudi Arabia Secures More Air Travel and Hospitality Assets as Tourism Revenues Surge

The expansion of Saudi Arabia’s non-oil economy is expected to continue apace, in spite of GDP more broadly being weighed down by declining oil production. The transformation of the Kingdom’s tourism industry has been spearheaded by the establishment of a new national airline, a sprawling airport in Riyadh, and key investments in the international travel industry. More specifically, Saudi Arabia’s Public Investment Fund (PIF) recently took a 10% stake in London’s Heathrow Airport, as well as a 49% stake in luxury hotel group Rocco Forte. These acquisitions are only the latest additions to the PIF’s portfolio, valued north of $700 billion, which is also utilized to fund developments tied into the Neom giga project.

Related ETF: iShares MSCI Saudi Arabia ETF (KSA)

One of the key pillars of Saudi Arabia’s planned economic transformation is the establishment of a vibrant tourism economy. Per the Tourism Department of Saudi Arabia, the first six months of 2023 saw a 142% YoY increase in the country’s tourist count and a 132% increase in overall tourism revenue compared to the same period in 2022. The 14.6 million international visitors to the Kingdom in the first half generated revenues of SAR 86.9 billion (equivalent to roughly $23.9 billion). This pace of inbound travel suggests Saudi Arabia could welcome more than 29 million international guests by the end of the year. That would be a massive jump from the 16.6 million tourists who visited in 2022, according to World Tourism barometer.

Earlier this month, Saudi Arabia’s Public Investment Fund (PIF) acquired a 10% stake in London’s Heathrow Airport. The sovereign wealth fund, which has swelled its assets to well over $700 billion in recent years, will join the Qatar Investment Authority as a fellow shareholder in the airport – though the PIF’s position is only half the size of…