A rise in the number of pilgrims visiting the Kingdom for Hajj and Umrah, are boosting domestic tourism growth, with Saudi residents making 22.5 million overnight trips per annum.

Tourism receipts for Hajj and Umrah currently account for around three per cent of GDP and, according to tourism officials, the country gained a reported US$16.5 billion from tourism in 2012, representing a ten per cent increase on the previous year.

The largest hospitality market in the GCC, Saudi Arabia also accounts for the bulk of international tourist arrivals, at 46 per cent according to an October 2012 GCC Hospitality Industry Report from Alpen Capital, representing a 50 per cent year-on-year increase against 2011 figures.

“The Kingdom is investing heavily in it’s infrastructure as expansion plans for the new US$7 billion Jeddah airport project move ahead, with the airport projecting annual passenger volume of up to 80 million passengers within the next two decades,” said Mark Walsh, portfolio director, Reed Travel Exhibitions, organiser of Arabian Travel Market .

The Red Sea port of Jeddah is the gateway to Makkah and Medina, a favoured destination for domestic tourism in the summer, as well as a commercial trading hub for the west coast of Saudi Arabia.

In addition, Riyadh the capital city and seat of the government, is also experiencing increased demand from business travellers.

Saudi government investment into key infrastructure projects including airport expansion, railways and roads, is pegged at around US$80 billion between now and 2022, with investment into major tourism initiatives forecast to grow at a CAGR of 6.9 per cent.

According to the Alpen report, tourist arrivals are expected to grow at a CAGR of four per cent between 2012 and 2022, driven by strong growth across all sectors, with occupancies set to jump from 67.5 per cent in 2011 to 74.2 per cent by 2016 and a US$30 increases in ADR to US$258.4.

“In tandem demand for hotel rooms means that aggressive development and expansion plans for a number of major international hotel groups is also on the short-term agenda.

“InterContinental Hotels Group has said that Saudi Arabia is one of the markets representing the most opportunity for its Middle East business to grow in 2013, with two new properties set to open in Riyadh this year, and a total of eight hotels by 2018,” added Walsh.

Hotel room supply in the Kingdom is expected to increase at a CAGR of 1.5 per cent between 2011 and 2016, increasing from 243,117 rooms in 2011 to 262,049 in 2016, with 69 properties currently in the planning or construction phase.