Saudi Arabia’s Tourism Industry Comes Under Quarantine

What Happened

Saudi Arabia is putting itself into a position where it will soon have to support the latest victim of COVID-19 lockdown measures: its tourism sector. A statement released by Hajj minister Mohammad Benten has signaled that the Hajj pilgrimage associated with the end of Ramadan in July may be canceled this year for the first time in modern history. Saudi Arabia is also putting a 24-hour curfew on the holiest city in Islam, Mecca, to prevent the further spread of the virus. In recent weeks, Saudi Arabia has also closed the holy site of Kaaba for cleaning, restricted prayers and suspended umrah (or pilgrimage) visas while the kingdom continues to see an uptick in COVID-19 cases.

Why It Matters

Saudi Arabia needs to curb COVID-19 in part because its population is uniquely vulnerable to the health impacts of the virus. A third of Saudis are obese and around 18 percent have diabetes, which increases the risk for a higher COVID-19 mortality rate. An unabated spread of the virus within the country could also significantly undermine the kingdom’s public legitimacy, as Saudi citizens expect their royal government to protect their health and well-being.

By shuttering its religious tourism sites, Saudi Arabia's new COVID-19 lockdown measures risk jeopardizing the country's most lucrative source of non-oil revenue.

These tourism restrictions are designed to flatten Saudi Arabia’s own COVID-19 curve by preventing foreign inflows of infected visitors in the otherwise crowded holy sites of Mecca and Medina. But by closing up its crucial Hajj tourist trade, and limiting its year-round umrah pilgrimages as well, Riyadh also risks shuttering one of its most productive non-oil sectors. The Hajj at the end of Ramadan regularly attracts 2 million visitors a year from all over the Muslim world, with the year-round pilgrimage accounting for 20 percent of the county’s non-oil GDP.

What’s Next

Riyadh will now be on the hook for ensuring that Saudis who rely on revenue generated by Hajj tourism can bounce back once the health emergency crisis subsides — especially since Saudi Arabia has also pledged to increase its Hajj tourist trade to 30 million visitors a year as part of its Vision 3030 plan. Some of this stimulus could come from the $ 32 billion COVID-19 financial package promised by the Saudi government in late March.

In addition to the tourism sector, Riyadh will also be needing to support the services and workers in other industries who are facing a loss of income due to widespread lockdown measures. These bailouts will partially be focused on benefiting some of the expatriates who fuel the country’s economy — particularly white-collar professionals who often cannot be easily replaced by Saudi workers — with measures likely ranging from waived taxes and fees to extended visas and direct financial support from state-backed banks. With Saudi Arabia already facing a strained budget due to its oil price war with Russia, Riyadh will likely have to dig even further into its financial reserves to support those affected by the COVID-19 crisis. Indeed, 2020 is shaping up to be an expensive year for the Gulf Arab country.