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Interview with Abdullah Alomran, CEO of Riyadh International Convention and Exhibition Center (RICEC)
Saudi Arabia attracts a lot of religious tourism and MICE (Meetings, Incentives, Conferences and Events) tourism. According to statistics from the Tourism Bureau, 15% of the 2.5 million tourists are business tourists. Therefore, MICE tourism is a growing niche market. Can you give us an overview of the tourism sector in Saudi Arabia?
Yes, that’s right. Saudi Arabia is not a very tourist-heavy country, except for some religious tourism and MICE tourism, which is starting to make up a large share of the tourism industry.
Riyadh is the capital and one of the most important and populous cities in Saudi Arabia. Riyadh is home to over 5 million people. In 2009, Riyadh International Conference and Exhibition Center (RICEC) was opened and the MICE sector started to grow more and more as this center encouraged more people to come to Saudi Arabia for their MICE purposes.
According to statistics from SCTA, the tourism authority here, Riyadh International Convention and Exhibition Center’s share of total MICE visitors is 10%. Therefore, 10% of visitors to Saudi Arabia for MICE purposes visit the exhibition center here in Riyadh.
Although the number of visitors for MICE purposes is very low compared to other countries in the region, we expect this number to increase with the new government’s strategy and legislation. These should attract more visitors to the sector and ease procedures such as obtaining visas and providing logistical support to embassies outside Saudi Arabia.
The agency’s plan is to have 88 million “tourists” a year in Saudi Arabia by 2020, of which 84 percent will be “locals,” or Saudis vacationing within the kingdom. By 2020, the number of employees is predicted to be 1.5 million.
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One of the major challenges facing Saudi Arabia’s tourism industry is visas. You need a sponsor to come to this country, but you can’t just come to a conference, for example. This is something the government is working on. The government wants to promote tourism and is building infrastructure. For example, this conference center was built by the Riyadh Chamber of Commerce and Industry.
I believe the government’s strategy was announced in 2010 when they started looking at establishing a new Convention and Exhibition Authority. The agency was established in 2011 and is headed by Prince Sultan bin Salman, who is also the head of the Tourism Authority. The bureau acts as an internal regulatory body for the sector, and one of its main goals is to encourage visitors to Saudi Arabia. The department is made up of a board of directors from various government departments and relevant ministries, such as the Ministry of Foreign Affairs. The bureau is dedicated to examining the challenges and obstacles facing the industry, including logistics and visas.
The agency’s plan is to have 88 million “tourists” a year in Saudi Arabia by 2020, of which 84 percent will be “locals,” or Saudis vacationing within the kingdom. By 2020, the number of employees is predicted to be 1.5 million.
If you visited Riyadh ten years ago, you may have noticed that it is very different now. There are more highways and many public transportation projects underway. There are currently 3,000 rooms under construction here in Riyadh, which should cover the demand in the hospitality sector. Therefore, infrastructure development related to the MICE field is undergoing major changes. There are also major expansion plans to increase the capacity of Riyadh Airport.
How important is the MICE segment in the tourism industry here? How much economic activity does it generate and what growth potential does it have?
Saudi Arabia is an oil-based economy. The MICE sector was considered a side income until 2011, when the Secretariat was established and began looking at statistics on the direct and indirect impact of this industry. In 2010, the International Bank conducted a study in Riyadh and announced that the indirect income from the construction of RICEC was 370 million riyals. It was in 2010 that the number of events was very limited. When he used the same method in 2012, he found that the amount rose to 500 million riyals. This figure represents indirect income from industries related to this sector, such as hospitality, transportation, and logistics.
Regarding direct income, to be honest, there are no statistics that can be published yet. But we do know that many sub-activities, such as shipbuilding, services, and the private sector, are growing very rapidly. When we started our business, there were very few service providers in Riyadh, but now there are 100 in this sector alone. This shows that this industry is encouraging more investors to invest in activities related to this industry.
What is your occupancy rate?
This number is not normally made public. We have benchmarks to meet each year and have grown at an average of approximately 12% since 2009. We host more events every year and our space usage increases every year. Compared to the GCC region, I think Riyadh is currently in a very good position in terms of space utilization and the number of events it hosts.
I think big events will be attracted here at RICEC. Last year, there were more than 1 million visitors from Japan and abroad. There were over 3,200 exhibitors, of which 60% were from overseas.
What important events would you like to attract in 2014 and beyond?
Our plan is to combine international and local events. We currently host most of the major events in the region and the country. Although these are organized by the private sector, we host events at this center. We also have several plans to co-sponsor with international organizers in the energy and construction sectors.
Due to a confidentiality agreement, we cannot publish the name of the event. In the future, there are plans to attract more recognized events and brand names to Riyadh.
When you talk to potential clients about hosting an event here, do you get a lot of resistance from them? Perhaps they suggest Dubai or Qatar instead?
Yes, that’s right. We hear it a lot. However, we have to take into account that according to a report we read a few months ago, more than 70% of visitors attending events in Dubai come from Saudi Arabia. So we have buyers here in Saudi Arabia. That’s why many of the major suppliers in many industries are very interested in coming here to be closer to their buyers. Exhibitors invest in attending events because they want to do business, and what better way to do that than to get closer to buyers?
We have several challenges. It may be easier for some exhibitors to go to neighboring countries, but as mentioned earlier, these issues will now be discussed by the highest authorities.
The government clearly recognizes the potential in this area.
Yes, definitely. That’s why they started with statistics that show the sector’s economic impact.
How to validate their strategy?
Of course, it is also to support the economy. Having some numbers and statistics will help you compare and get proper perspective. The problem here is that there are no statistics on the private sector. But now that we have data centers, I think the impact will become apparent soon, and the government is working towards resolving most of the obstacles.
What about growth rates?
From now until 2017, growth is expected to be around 10-17%, primarily in Riyadh. More projects and venues are scheduled to open across the Kingdom. Overall, we can definitely expect more than 10% growth here.
Saudi Arabia is emerging as a transshipment hub as it has natural advantages compared to Dubai. Here he can be unloaded from the ship in Jeddah and transported by train in 12 hours.
yes. Infrastructure is very important. I think it ranks very well in terms of ease of doing business. Our forecast is for our growth rate in this area to be 10-15%.
Please tell us a little about the exhibition center. What facilities do you have and how is it different from other centers?
RICEC was built by the Riyadh Chamber of Commerce and Industry. Our company’s site area is approximately 190,000 square meters. It is designed to host conferences and exhibitions and is the only center in Saudi Arabia built for that purpose. It has a very modern design. Our hall has a total area of 15,000 square meters and is fully equipped with support facilities such as a workshop, warehouse and service area. We have a very good system of crowd circulation and movement. There are many buildings that support visitors, including restaurants, cafes, a business center, and a VIP reception lounge, as well as seminar and convention-related facilities. It has an auditorium with 1,000 seats. We have a parking lot for over 1,500 cars. Part of the center is home to the National Product Center, with permanent retail outlets to bring local manufacturers closer to international exhibitors. Currently, there is a lot of business at the exhibition between local manufacturers and international visitors.
We have many plans for future expansion. In the first phase, the hall area will be expanded by 5,000 square meters. We are planning a 4-star hotel on site with 200 keys. Construction of the hotel is scheduled to begin in early 2015. We plan to continue expanding with the second stage hall expansion.
What is the estimated value of your planned investment?
I think we will invest about SR170 million over the next three years.
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