License Fees Scrapped for Saudi Hotels and Resorts

License fees for Saudi hotels and resorts have been removed, effective September 4, to boost the tourism sector. This decision aims to enhance the Kingdom’s hospitality industry, paving the way for increased tourism and investment.

The significance of removing hotel and resort license fees

By eliminating the license fees, the government intends to stimulate tourism growth, attracting more international and domestic tourists. The policy shift is part of the kingdom’s Tourism Investment Enabler Program which authorities launched in March 2024. Moreover, the program strives to cement Saudi Arabia’s position as a global tourist destination.

The new policy specfically applies to all licensed hotels, hotel apartments, and residential resorts across the Kingdom. This includes luxury resorts along the Red Sea and boutique hotels in Riyadh and Jeddah.

Through the removal of license fees, the government hopes to encourage investment and innovation in the hospitality sector. Experts forecast the revenue from the hospitality sector to reach around USD 48.1 billion by 2028.

In addition, investment banking advisory firm Alpen Capital reports a projected CAGR of 7.5% from 2023 to 2028. CAGR stands for compound annual growth rate, or the yearly rate of return necessary for investments to grow. Factors such as tourist arrivals and international events, in particular, contribute to this rate.

Creating an attractive investment environment

Saudi Arabia’s Minister of Tourism, Ahmed Al-Khateeb, emphasized the strategic importance of removing license fees in supporting Vision 2030 goals. The kingdom aims to diversify its economy away from oil dependence through other industries such as tourism.

Saudi Arabia has specifically invested USD 800 billion for this pursuit. It has made significant progress through cultural initiatives, infrastructure, and re-invigorating the tourism sector.

“This decision comes in line with the goals of the Kingdom’s Vision 2030 to make Saudi one of the most prominent tourist destinations in the world”, the minister remarked.

He also thanked King Salman, Custodian of the Two Holy Mosques, and Mohammed bin Salman, Crown Prince and Prime Minister. This is for their support and guidance on the decision to remove the hotel and resort license fees.

“The approval comes within the framework of the unlimited support of the wise leadership for the tourism sector in the Kingdom, and it represents an important step within the ongoing efforts to provide an attractive investment environment for investors and enhance competitiveness in the promising sector,” he said.

In addition, the minister said, “This will contribute to developing the infrastructure in the tourism sector, especially with regard to hospitality facilities in tourist destinations in the Kingdom.”

A vibrant hospitality sector

Recent international interest in Saudi tourism has been high. The Kingdom has invested in projects like NEOM and luxury eco-resorts. Removing license fees will support these initiatives by making it easier for new hotels and resorts to enter the market. Moreover, boosting investments in the tourism sector will contribute more significantly to Saudi Arabia’s gross domestic product (GDP).

Overall, removing license fees for hotels and resorts will play a crucial role in Saudi Arabia’s efforts to boost tourism. The Kingdom aims to create a vibrant hospitality sector and also position itself as a global tourist hotspot.

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