Economic overview
Saudi Arabia, an Islamic monarchy, has undergone a remarkable transformation from its beginnings as an agricultural society. The discovery of oil in 1938 transformed the country and provided funding for rapid economic development. The kingdom leads the world in oil exports and has an estimated one-third of the world’s petroleum reserves. The government is establishing regional “economic cities” to promote foreign investment and plans to spend $373 billion by 2014 on social development and infrastructure projects. The economy is growing at about 4 percent annually.
Business travel industry insight
As is true in the United Arab Emirates, another dominant market in the Middle East, an increasing number of multinational companies are operating in Saudi Arabia. The oil and gas industry drives the economy and, therefore, business travel. But huge government projects like universities, hospitals, schools and infrastructure also create demand from international contractors traveling to and from the country. Religious visits to holy sites in Saudi Arabia also spur trips, although most of that is booked as leisure travel.
Opportunities
- Saudi Arabia is one of the largest markets in the region, and leaders have embarked on a long-term effort to diversify the economy.
- Petroleum industries and infrastructure projects keep business travel demand strong.
- The country is increasingly open to outside visitors and business opportunities.
- An “Open Skies” international aviation policy recently has been implemented at many of Saudi Arabia’s airports.
- Extensive airport upgrades are under way in Jeddah and Medina.
Challenges
- Government has a strong say in commerce, including determining the legality of trading and conducting business. Outside companies are required to employ a certain number of Saudis.
- Payment on credit is the norm, and delayed payments often force agencies to operate as bankers.
- Competition is fierce in the business travel sector.
- Online booking is still a work in progress, as is the move toward lodge and corporate credit cards.
- Many local travelers do not plan trips in advance.
When your business expands into new markets, BCD Travel can get your travelers where they need to be. Talk to your account manager about how we can support your company’s growth across the globe.