The Kingdom is recalibrating its Vision 2030 strategy, reducing spending on tourism megaprojects to prioritise sustainable economic returns
BY FRANCESCA RAPISARDA
Saudi Arabia is scaling back government funding for major tourism projects as part of a broader recalibration of its ambitious Vision 2030 economic strategy.
The shift, confirmed alongside a new five-year plan by the country’s sovereign wealth fund, signals a move away from large-scale, capital-intensive developments towards projects with clearer financial returns and domestic economic impact.
The Public Investment Fund (PIF), which drives much of Saudi Arabia’s development strategy, is reducing its direct spending on flagship tourism megaprojects, including elements of the NEOM and the Red Sea tourism developments.
Instead, officials said investment will increasingly be redirected towards sectors such as artificial intelligence, infrastructure, and industries capable of generating more immediate and sustainable returns.
Launched in 2016, Saudi Vision 2030 aimed to diversify the kingdom’s economy away from oil through large investments in tourism, entertainment and infrastructure.
Projects such as NEOM, a $500bn futuristic city, became central to that vision, designed to position Saudi Arabia as a global tourism hub.
However, several of these developments have faced delays, rising costs and questions over feasibility, prompting a reassessment of timelines and funding commitments.
Officials have indicated that some elements of these projects will be scaled down, delayed, or opened up to greater private sector involvement.
Under the new 2026–2030 strategy, Saudi Arabia is expected to allocate a significantly larger share of investment domestically, with around 80% of spending directed towards the local economy.
This marks a shift from earlier phases of Vision 2030, which emphasised rapid global expansion and high-profile international investments.
Despite the funding adjustments, tourism remains a key pillar of Saudi Arabia’s economic diversification plans.
Rather than abandoning the sector, the government is seeking to rebalance it by:
- prioritising projects with proven demand
- encouraging private investment
- focusing on infrastructure and major international events
This approach suggested a transition from state-led megaprojects to a more market-driven tourism model.
The policy shift also comes amid a wider geopolitical and economic uncertainty as regional tensions and volatility in energy markets have placed additional pressure on public finances, accelerating the need to reassess spending priorities.
At the same time, competition from other destinations in the Middle East and beyond is intensifying, requiring more targeted and commercially viable tourism strategies.
