In recent years the role and importance of travel and tourism industry has increased by a great margin. The sector has become extremely vital for the economic activity because it contributes both directly and indirectly towards the economy (Tyrrell and Johhnston, 2006). The tourism sector consists of a number of different activities and aspects such as education, culture, infrastructure, health, transportation and communication and many more. Currently Saudi Arabia is considered as one of the most popular tourist destinations in the Middle East. The country received more than 16 million tourists from all around the world in the year 2019 (World Bank, 2019). Even though majority of the travel and tourism activities in the country are associated with religion, pilgrimage, still the country experiences travel and tourism related activities in other areas as well (Al-Hazmia, 2020). This includes the likes of medical and health tourism, leisure tourism, domestic business and eco-tourism (Mayer et al., 2010).
The main purpose of this study is to conduct an in-depth analysis of the tourism sector of Saudi Arabia and the impact that it has on the country’s economic systems. In this study, at first, advantages and disadvantages of tourism sector for the country’s economy have been explained. Then the researcher has explained the impact of tourism on the labour market as well. In this regard, the scholar used the theoretical literature and empirical evidence in the report in order to provide a well-structured and effective arguments. Furthermore, it also provides recommendations that can help in enhancing the growth of Saudi Arabia’s travel and tourism sector.
Aim of the current study is “To Assess and Analyse the Impact of Tourism on Economy of Saudi Arabia”. In order to achieve this aim, the following objectives had to be achieved first:
Answering the following questions helped in achieving aim and objectives of the current study:
Tourism is considered to be one of the key sectors of any economy. Eery country strives to make its travel and tourism industry as much thriving as possible. This is mainly due to the reason that the tourism sector can make significant direct and indirect contribution towards economic progress of the country (Perić, 2018). In recent few years, the travel and tourism sector has emerged as one of the main proponents of the Saudi economy. The sector has contributed significantly towards economic growth and development of the country. Over the years several studies have been carried out that provide significant literature, however, there are very few studies that have focused on examining the impact of tourism on Saudi Arabia’s economy (AL-hazmi, 2020).
The main reason for performing the current study is to carry out an extensive analysis of the impact that the tourism sector has on overall economic performance of the country. In this study, at first, advantages and disadvantages of tourism sector for the country’s economy have been explained. Then the researcher has explained the impact of tourism on the labour market as well. In this regard, the scholar used the theoretical literature and empirical evidence in the report in order to provide a well-structured and effective arguments. Furthermore, it also provides recommendations that can help in enhancing the growth of Saudi Arabia’s travel and tourism sector.
The current study has been divided into six chapters. The first chapter is Introduction. In this section the researcher has provided an introduction to the research topic. Here aim and objectives of the study have been presented. In addition, this chapter also presents a rationale for conducting the research work. A gap analysis has been presented in this chapter that would help the readers in getting a better understanding about the research study.
Second chapter is literature review. As the name suggests, this chapter performs a critical analysis of the various past studies. Through such an analysis the researcher gets a better understanding about the subject matter and also gain conceptual clarity about the topic. In the next chapter, i.e. the third chapter, researcher presents and discusses the methods and techniques used during the course of the study. While in the fourth chapter researcher has presented an analysis of the results and has presented the findings. In the fifth chapter, a thorough discussion of the results has been made in order to determine the extent to which it is different or similar to findings of the past studies. The sixth chapter is that of conclusion and in the last chapter, recommendations have been made.
In the current chapter, the researcher has performed a thorough and critical analysis of the various studies that have been carried out in the past. By reading this chapter, the readers can get a better and detailed understanding of the research topic and its various aspects as well.
The United Nations World Tourism Organization (UNWTO, 2019) defined tourism as a cultural, social and economic phenomenon that encapsulates the movement of people to places or countries outside of their usual environment for business/ professional and/ or personal reasons. These individuals are referred to as visitors or tourists. Prior to Covid-19 pandemic, tourism was one of the fastest growing economic sectors in Saudi Arabia, marking 8th consecutive year in 2019 when the growth rate in the tourism industry outpaced the rate of economic growth (Abuhjeeleh, 2019). The tourism industry is also important as it holds a significant part in its National Transformation Plan, which explains why tourism remains at the forefront of attracting domestic and foreign direct investment, in addition to the provision of employment opportunities for local citizens (Saudi Arabian Business Council, 2019).
To thoroughly analyse the impact of tourism on Saudi Arabia’s economy, the report focuses on assessment of the advantages and disadvantages of tourism sector, the various factors that impact the tourism sector and how it influences the labour market in Saudi Arabia.
There are several advantages of tourism sector for Saudi Arabian economy. Firstly, tourism industry directly contributed 3.7% to the total GDP of Saudi Arabia in 2019 (World Travel and Tourism Council, 2020). Woo et al. (2018) argues that the host country (i.e. where tourists are going), there are various stakeholders involved who produce output or a service, which in turn adds to the overall gross domestic product (GDP) of the country. In the case of Saudi Arabia, an increase in tourism increases the services provided by stakeholders such as regional transportation providers (air carriers and ground transportation service providers), lodging and accommodation service providers, catering service providers, distribution (including travel agencies and tour operators) as well as excursions. These different service providers experience an increase in demand because of higher inbound tourism, which directly contributes to higher GDP and economic growth of Saudi Arabia.
The second advantage of tourism sector is the boost it provides to the retail and overall consumption in the economy. Alsumairi and Tsui (2017) conducted a case study analysis of the impact of inbound tourism on retail industry in Saudi Arabia and established that in bound tourism has significantly boosted the demand for retail products. Retail includes food, clothing, general items sold by the supermarkets, electronics and other relevant products sold in retail stores. An increase in spending by tourists contributes to higher overall consumption in the Saudi economy (Alsumairi and Tsui, 2017). As consumption is a major component of aggregate demand, higher consumption due to inbound tourism has a multiplier effect in generating a proportionately greater increase in aggregate demand (Raggad, 2020), which explains the positive impact that tourism through consumption has on economic growth.
The third advantage of growth in tourism sector is the tax it generates for Saudi government. As the Government of Saudi Arabia has continued to run a budget deficit since 2016 when the oil prices declined (i.e. revenue of the Saudi government has been less than its spending), this has encouraged the government to achieve economic diversification to reduce reliance on the proceeds of oil and gas (Euchi et al., 2018). Tourism industry has an important role in promoting economic diversification directly through greater contribution of tourism to the country’s GDP, in addition to its indirect contribution. An important indirect contribution of tourism on Saudi Arabian economy is through the tax revenues generated for the government. Analysis conducted by professional services firm Deloitte found that a key objective of raising the value added tax (VAT) in Saudi Arabia from 5% to 15% in 2020 was to boost the overall tax revenues so that the budget deficit could be reduced.
Tourism industry is an important source of VAT revenue raised by the Saudi Arabian government, as 8% of total VAT is attributed either directly or indirectly to the spending by visitors/ tourists (Deloitte, 2020). As the budget deficit of the Government of Saudi Arabia has increased significantly in the Covid-19 pandemic (because of the government support to people and businesses during the economic shutdown), the tax revenue raised through VAT and the role of tourism industry is expected to continue to be vital in helping to reduce the budget deficit of the Saudi Arabia in the future.
The fourth advantage of tourism sector in Saudi Arabia relates to the growth of medical tourism. Analysis conducted by Reddy (2017) established that medical tourism is a rapidly growing industry worth in excess of $50 billion per annum globally. As Saudi Arabia has invested in improving its hospitals, access to medical technology, overall medical infrastructure and attracted qualified medical professionals, this has two positive consequences. The first is that it enables Saudi Arabia to strengthen its reputation as a medical tourism destination in the foreseeable future. The positive reputation for specific medical treatments would enable Saudi Arabia to benefit from an increase in medical tourism, especially considering that it is surrounded by highly populous countries in Middle East and South Asia (Zarchi et al., 2018).
Higher number of medical tourists have the potential to support economic growth, create employment and increase consumer spending in Saudi Arabia. The second positive consequence of improved medical and healthcare infrastructure in Saudi Arabia is that it would reduce the number of local citizens going overseas for their medical treatments. Given the high rate of obesity, diabetes and other chronic disease in Saudi Arabia (Saquib et al., 2017), investment in medical infrastructure and the reduction in outflow of local citizens for healthcare purposes will also support the domestic medical infrastructure in the future.
Finally, tourism is an important source of employment creation in Saudi economy. Some of the industries where employment is directly supported in Saudi Arabia include transportation (air and ground) and distribution (travel agencies and excursion/ tour guides) whereas indirect employment is created through tourism in the industries such as hospitality, retail and hotels/ accommodation (Todd et al., 2017). This argument is further elaborated later in the essay, where the paper concentrates on how tourism influences the labour market in Saudi Arabia.
As with the advantages of tourism industry on the Saudi economy, the sector also has its drawbacks. Firstly, a potential negative impact of unplanned or a substantial increase in tourism is noted in the literature with regards to how it can adversely impact the sustainability of the environment (Sharpley, 2000; Xu and Fox, 2014). Khizindar (2012) studied the effects of tourism on quality of life of residents in Saudi Arabia through using the primary research which included 775 survey questionnaires undertaken with the Saudi respondents. If the impact of tourism and growth in the number of visitors on the environment is not adequately planned, tourism has the potential to adversely impact the environment. This is through the damage caused to the local ecology, an increase in pollution, congestion and emissions of greenhouse gases as some of the factors reported in the literature (Daye, 2019). Moreover, Khizindar (2012) reported that negative impact of tourism on sustainable economic development also deteriorates the quality of life of the local citizens. This is because of the burden on infrastructure, rising greenhouse gas emissions and pollution caused by the tourists, which the local population has to live with for the rest of their lives.
Secondly, tourism tends to be a cyclical industry i.e. the growth in tourism fluctuates with the movement in economic cycle (Samitas et al., 2018). This is especially true for business tourism, domestic and leisure tourism whereas medical tourism tends to be more stable and less dependent on economic cycle. As Saudi Arabia is increasingly focused on achieving greater growth in tourism as a means to promote economic diversification, it creates a risk that during the economic downturn (as faced by the present Covid-19 pandemic), the Saudi economy is negatively impacted in terms of the reduction in consumption and higher unemployment attributed to a lack of business tourism, domestic and leisure tourism.
Now the essay discusses several enabling and disabling factors of tourism sector in Saudi Arabia. Damanhouri (2017) investigated the social and cultural aspects of tourists visiting Saudi Arabia and concluded on several enabling factors that promote tourism in Saudi Arabia. These included the robust transport infrastructure adding to the overall convenience and comfort of tourists, ease with which tourists could locate various places of interest including the parks, museums, retail outlets and restaurants. Some of the other factors reported by Damanhouri (2017) that enable the growth of tourism in Saudi Arabia included robust communication infrastructure (allowing the tourists to easily communicate within and outside the country) and appropriate quality of accommodation. The enabling factors as reported by Damanhouri (2017) illustrate the value placed by tourists on comfort, convenience and value for money derived as part of their overall tourism experience.
Service-related factors are also reported in the literature as vital enabling factors that promote the growth of tourism. Samad et al. (2018) found that different aspects of service such as the appropriate security and safety measures, support from relevant governmental departments, cleanliness and hygiene are some of the other factors that enable the growth of tourism industry. Additionally, when it comes to the services available to tourists, general supportive attitude, friendly behaviour of local citizens and the ability to treat the tourists with respect is another important factor that improves the quality of experience of the tourists.
Particularly from the viewpoint of medical tourism, Beladi et al. (2019) find that availability of high-quality medical infrastructure including health care professionals, state of the art technology and medical equipment are important enabling factors. The presence of qualified healthcare professionals including the superior technology and medical equipment adds to the confidence of medical tourists that their health care related needs will be looked after. This in turn improves their experience and positively influences the future growth of tourism sector through the word of mouth effect (Beladi et al., 2019).
As with the enabling factors, there are disabling factors associated with tourism too that should be understood so that appropriate policies can be devised and actions taken by the Government of Saudi Arabia to overcome these factors. Mansour and Mumuni (2019) investigated the motivations and attitudes towards domestic tourism in Saudi Arabia through the questionnaire conducted with Saudi and non-Saudi nationals. Based on the responses using five-point Likert scale, Mansour and Mumuni (2019) found that the strongest disabling factor was a lack of knowledge and awareness amongst the local and tourist population regarding the good sites (such as tourist, cultural or other) that could increase the level of interest and excitement amongst the visitors. This was followed by insufficient provision of information and support to the tourists (e.g. availability of maps, guides and other services) to improve the quality of experience of tourists, which served as another factor that can negatively impact tourism sector in Saudi Arabia.
Bogari et al. (2003) explored the influence of quality of facilities provided to tourists in Saudi Arabia and found that if tourists find it more costly to visit the local destinations and tourist places in Saudi Arabia compared to the cost of visiting similar places in neighbouring countries, this reduces the perception amongst tourists that they are receiving value for money. Higher cost relative to the neighbouring (comparable) countries is an important disabling factor when it comes to the ability of tourism industry to grow in Saudi Arabia. A related factor under quality of facilities is maintenance and cleanliness of the tourism sites. If the sites are not well-maintained, this negatively impacts the experience of tourists, resulting in a detrimental reputational impact and reluctance of tourists to visit in the future (Alqahtani and Saba, 2014). Moreover, multiple pricing systems and a lack of transparency experienced by foreign tourists is another disabling factor. Alqahtani and Saba (2014) noted that if they feel there is a lack of transparency and that they are paying higher prices as a result, this reduces the quality of their experience because of the indication that tourists are not being welcomed and treated fairly. It highlights the importance of transparency and clear pricing system so that tourists do not feel they are being treated unfairly.
The report now focuses on analysis of the way in which tourism influences the labour market in Saudi Arabia. Tourism is an important source of creation of employment in Saudi Arabian economy. Some of the industries where employment is directly supported in Saudi Arabia include transportation (air and ground) and distribution (travel agencies and excursion/ tour guides) whereas indirect employment is created through tourism in the industries such as hospitality, retail and hotels/ accommodation (Todd et al., 2017). Tourism is considered an important driver of new jobs as well as the promotion of local economic development, culture and new product development. This is also reflected in the sustainable development goals (SDGs) 8 (decent work and economic growth), 12 (responsible consumption and production) and 16 (peace, justice and strong institutions) (United Nations, 2020).
A unique impact of tourism on the labour market in Saudi Arabia (and globally) is that given the nature of jobs generated through tourism, it helps to create a considerable number of part-time and temporary jobs. Such roles are particularly well-suited to female workers who may not be available to work full-time (Nassani et al., 2019). It highlights the important impact of tourism in providing job opportunities that are flexible, allowing more women to enter the workforce while maintaining their work-life balance through working part-time.
The impact of tourism on labour market is also highlighted by International Labour Organisation (ILO). Research conducted by the ILO found that a single job created within core tourism sector through the multiplier effect contributes to creation of 1.5 additional jobs within the tourism-related economy (International Labour Organisation, 2019). The industry sectors within which such additional jobs are created include hospitality, restaurants and excursions. The type of jobs created directly and indirectly through tourism are also relevant because apart from flexible nature of these job roles, these roles typically require less prior work experience. It explains why age profile of tourism workforce tends to be generally lower compared to the average age profile in the economy (International Labour Organisation, 2019). This finding has an important implication for the Saudi Arabian economy because of the rising population growth and a large proportion of younger population in the country (General Authority for Statistics, 2020), which puts pressure on the government to create more jobs to reduce youth unemployment.
To conclude, the analysis of tourism sector in Saudi Arabia and its impact on the country’s economy has revealed several interesting insights. Some of the key benefits of tourism sector for the economy include tourism as a source of GDP and employment, the boost it provides to the retail and overall consumption in the economy, tourism as a source of tax revenue (especially through VAT) for Saudi government and the benefits associated with the growth of medical tourism. However, it should be noted that tourism remains a cyclical industry, the growth in tourism fluctuates with the movement in economic cycle. It is worth noting that as Saudi Arabia is increasingly focused on achieving greater growth in tourism as a means to promote economic diversification, it creates a risk that during the economic downturn (as faced ta present amidst the Covid-19 pandemic), the Saudi economy is negatively impacted in terms of the reduction in consumption and higher unemployment attributed to a lack of business tourism, domestic and leisure tourism.
Despite the presence of enabling factors to promote the growth of tourism in Saudi Arabia, several disabling factors associated with tourism were also uncovered in this paper. a lack of knowledge and awareness amongst the local and tourist population regarding the good sites (such as tourist, cultural or other) that could increase the level of interest and excitement amongst the visitors. This was followed by insufficient provision of information and support to the tourists (e.g. availability of maps, guides and other services) to improve the quality of experience of tourists, which served as another factor that can negatively impact tourism sector in Saudi Arabia. It is important that the Government of Saudi Arabia continue to invest in the infrastructure (including medical infrastructure) to attract various types of tourists. The medical tourism is particularly relevant because medical tourists tend to be more consistent and not dependent on changes in economic cycle.
Hajj is an ancient habit in nations and its purpose is pure religious issue; however, the gathering in Hajj is not free of worldly benefits that increase the moral and material advancement of the nation. The Greeks used to pilgrimage 50 centuries before Christ to Dianna’s temple in Afsone. The Japanese people have been pilgrimaging since a very far epoch to a great famous temple in the state of Asgy, and its visit is obliged on them even for once in a lifetime. The Chinese people have been pilgrimaging to Tian temple since a very far age. Indians are still performing pilgrimage to Gagernate’s Temple or Alora’s temple in Haydar Abad.
Jewish have people been pilgrimaging since the 14th century before Christ to the place where “the ark of the covenant” was. They are pilgrimaging now to a piece of the old wall of Solomon’s temple at the west side of “Alaksa Mosque” and they call it “Albourak.” The Christians have been pilgrimaging to Jerusalem since the year 301 AC and they used to go out to it from west Europe in a great celebration. However, when the Slogokians took possession of Jerusalem, the number of European pilgrims to Jerusalem was reduced and they con- verted their direction to the church of Saint Boutros and Saint Paul in Rome. Hajj in Islam is performed in the Kingdom of Saudi Arabia within a specific geographical territory (Almasha’er Almoukadasa) including the holy mosque in Makkah, Arafat, Muzdalifah, and Mina. It is performed in specific period, from the 8th to the 13th of the 12th month (Dhul-Hijja) according to the hegira calendar. Allah (SWT) says in the holy Quran, (Surat Albakara), verse number 197: “Al-Hajj Ashoron Maalomat” which means that Hajj is performed only at a particular time of the year.
In the case of a female performing Hajj, she must be accompanied with Mehrem (the husband, father, brother, uncle, or nephew). She must wear normal ordinary dresses, without any ornaments, covering all her body and hair except her hands and face. These clothing codes for adults apply for children too. But in the case of a male’s cloth during Hajj, it is two pieces of cloth preferably white (Ihram), so that everyone stands equally. One of the pieces (EZAAR) is wrapped around the midriff to cover his body from just above his navel to his ankles, and the other (REDA) is draped around his shoul- ders to cover the upper body.
This section of the current study deals with presenting the methods and techniques used by the scholar in conducting the study. This chapter holds special importance because it helps the readers in understanding the methods used during the study as well as the reasons for using these methods. Readers can understand how the study was conducted.
Research philosophy connects the improvement of information and its tendency. It contains significant suppositions about the manner in which one would see an examination. There are three fundamental practices in exploration theory, which are: epistemology, cosmology and axiology (Melnikovas, 2018). Every conduct holds significant varieties which impact the manner in which a researcher will consider the examination cycle. There are four philosophical points of view to an exploration, which are: positivism, authenticity, sober mindedness, and interpretivism. The embraced reasoning will be affected by applied contemplations; however the key impact is probably going to be a particular perspective on the relationship among information and the created cycle (Snyder, 2019).
For this study, an epistemological conduct alongside a logical way of thinking is applied. Epistemology is separated into two qualities: assets and feeling analyst. The asset analyst deals with information from the point of view of common researcher by examining realities; while the inclination researcher is worried about the sentiments and mentalities of the laborers towards their bosses or work measures (Mohajan, 2018). Accordingly, the asset researcher is engaged with creating positivist way of thinking though the inclination researcher is centred around interpretivist reasoning, which groups epistemology philosophical position as positivism, interpretivism and authenticity since it likewise takes a gander at objects that address reality, for example, PCs, trucks and machines. Practicality theory moves toward the examination question with a blended strategy, subjective and quantitative, to gather information in a proper way to dodge analysts taking part in futile conversations, yet rather in an investigation that carries revenue and incentive to them and results in a positive outcome (Knottnerus and Tugwell, 2018).
The data collection process is vital for any study. It empowers the analyst to get a superior comprehension about the topic and assemble the vital data from the members. There are two fundamental sources from where information for an examination can be gathered – primary and secondary (Dźwigoł and Dźwigoł-Barosz, 2018). The current investigation involves gathering information from both the sources. The primary purpose behind choosing both the sources is that it would empower the researcher in getting better and broad comprehension about the topic.
The primary data was gathered through interview procedure. By utilizing this technique, the analyst will interface with researcher s about the current point and ask them inquiries. Albeit this is a tedious strategy for gathering essential information, however it empowers the researcher in improving and powerful comprehension about the examination subject (Ryder et. al, 2020).
On the other hand, secondary data was collected by in a general sense keeping an eye on and dismembering past journals, books, reports and articles on the point. By performing such reviews, the expert will have the choice to develop a sound speculative base and increment hypothetical clearness (Ngozwana, 2018). These could help in playing out the examination in a predominant and progressively convincing manner. While gathering the discretionary data, the emphasis will be given towards exploring issues experienced by housing fashioners when they search for organizing assents from the organization and its connected workplaces.
The process of sampling is one in which the objective populace is separated into various segments and more modest parts. Dodds and Hess (2020) argued it is a vital piece of any examination cycle. By characterizing and deciding the correct inspecting procedure and strategy, the researcher can undoubtedly play out the way toward gathering the information just as guarantee that the examination is done successfully. By plainly characterizing the examining methodology, the analyst can decide the best way(s) to do the examination and in this manner guarantee that its point and destinations are satisfied (Ragab and Arisha, 2018).
There are two main approaches of sampling – random and non-random (Bairagi and Munot, 2019). In the current study, researcher used technique of purposive sampling. In order to use this method, the scholar contacted and recruited managers of tourism companies in Saudi Arabia. Attention was given to ensure that the managers had experience of more than 5 years in their respective organisations.
In this part, insights about the strategies and methods that have been utilized to dissect the information gathered from the previously mentioned sources have been examined. Through this section, readers can comprehend the general attitude of the researcher while leading the investigation. This aides in improving the allure and viability of the examination and furthermore keeps readers keen on the exploration work, according to Kanu (2019). There are two fundamental strategies for information investigation – subjective and quantitative. In this examination, the researcher has utilized a subjective way to deal with information investigation. The fundamental purpose behind choosing this methodology was that there is a lot of data effectively accessible on the topic; and hence, subjective strategies end up being valuable in breaking down the informational collections in an itemized way (Zangirolami-Raimundo, 2018). In this examination, the strategy of topical investigation has been utilized.
Thus, the researcher created different subjects, in view of point and destinations and afterward assessed the information in like manner (Knottnerus and Tugwell, 2018). In the current examination, the analyst has zeroed in on subjective information so subjective strategies of information investigation have been utilized by the agent to produce fitting investigation discoveries. The examiner has interpreted the sound reactions of members into MS words. In addition, the researcher has applied the methodology of topical examination to make various subjects through which both essential and auxiliary information can be analysed in a proper way. Snyder (2019) expressed the topical examination plays a significant to classifications the information regarding study objectives. Besides, it would be discovered extremely viable to introduce the data as writings and outlines. Besides, the researcher has additionally thought to be the methodology of guiding. It has paid a significant part in improving the legitimacy of the meeting timetable and study findings. To analyse the data relied on performing a thematic analysis of the data collected from the various sources.
This ethical consideration is additionally significant from the perspective of The Data Protection Act 2010. On the off chance that this law is penetrated, at that point it can contrarily affect the general nature of the investigation. According to the demonstration, the researcher , during the exploration examination, necessities to guarantee wellbeing of reactions of the members. To guarantee that it is not gotten to by some other individual or outsider, the researcher kept the reactions in computerized design on a pen drive which was then kept in a safe. Moreover, another duplicate of these reactions was likewise put away on the cloud to make it protected just as more open to the researcher (Melnikovas, 2018). With regards to the current examination, the researcher has thought about various ways to deal with deal with the entire investigation under the moral standards. Moreover, the researcher has taken the endorsement from college prior to starting the real examination (Mohajan, 2018). Additionally, the examiner has likewise obtained endorsement from the member for data assortment, sharing, and introduction. Notwithstanding that examination has likewise viewed as real wellsprings of optional information to get guarantee about the legitimacy of information. Looking for further insights on Understanding Tourism Management? Click here.
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