College of Business and Tourism
ECON 362
Date:
5/5/2025
Instructor:
Abeer Alqayidi
Saudi Tourism Development Fund
Driving Economic Development and Social
Equity
This project was done by:
Adham AL-Ras 4310649
Wafee Aletani 4111082
Osama Khaled 4211741
Loay Qattan 4112093
Ahmed Kakah 4310463
Fahad Saeed 4311671
Hashim Akif 3910302
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Table of Contents
Introduction ................................................................................................................................3
Program Description ....................................................................................................................4
Eligibility and Target Income Groups........................................................................................4
Key Stakeholders .....................................................................................................................5
Economic and Social Impact ........................................................................................................5
Benefits Across All Income Levels .............................................................................................5
Reducing Inequality and Enhancing Mobility ............................................................................5
Statistical Evidence ..................................................................................................................6
Macroeconomic Linkages .........................................................................................................6
Challenges and Areas for Improvement ........................................................................................6
Limitations of the Program:......................................................................................................6
Potential Economic and Policy-Related Risks: ...........................................................................7
Public Perception .....................................................................................................................7
Recommendations........................................................................................................................8
Policy Proposals .......................................................................................................................8
Future Outlook ........................................................................................................................8
International Best Practices ......................................................................................................8
Conclusion...................................................................................................................................8
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Introduction
The Saudi Arabian economy has traditionally operated through oil revenue streams which generate
substantial GDP value. The economic need for stable development and oil market instability led Saudi
Arabia to introduce Saudi Vision 2030 which serves as a strategic plan to develop tourism and diversify
the economy. The Tourism Development Fund (TDF) began operations in 2020 to stimulate private sector
investments in tourism development because the sector aims to reach 10% GDP contribution by 2030
(TDF, 2025). Tourism stands as a fundamental element for economic diversification because it drives
employment opportunities and builds infrastructure and stimulates regional development.
The TDF along with other inclusive economic programs serves as a crucial tool to reduce income
inequalities while promoting social fairness. The TDF supports tourism projects spread across different
regions and income groups to create business opportunities for small businesses and entrepreneurs and
local communities while drawing in high-net-worth investors. This research evaluates the Tourism
Development Fund's contribution to Saudi Arabia's national development through its effects on economic
expansion and social equality. The research aims to assess TDF services for different income groups and
examine its economic impact at the national level and develop recommendations to improve the program.
Figure 1: logo of TDF
Objectives of the Project:
• To know the role of the Tourism Development Fund in Saudi Arabia’s economic
diversification.
• To evaluate the impact of TDF on different income groups.
• To evaluate the economic impact and effectiveness of TDF.
• To give policy recommendations based on the findings.
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Program Description
Background and Objectives
To strengthen Saudi Arabia's tourism industry, the Tourism Development Fund (TDF) was created in June
2020 by Royal Decree No. (A/30) with USD 4 billion in capital (TDF, 2025). In line with Saudi Vision
2030 and the National Tourism Strategy (NTS), the TDF seeks to draw in both domestic and foreign
private sector investments to create top-notch travel destinations. Its main goals are to increase the GDP
contribution of the tourism sector from 3% to 10% by 2030, create one million jobs, and make Saudi
Arabia more competitive in the global tourism market (TDF, 2025).
Travel destinations, lodging, food and beverage, travel services, tourist experiences, and retail are the six
industries in which the TDF offers investment opportunities, advisory services, and financing solutions.
Small and microbusinesses are supported by initiatives like the AWN Tourism and Hospitality Program,
while major investors are the focus of larger initiatives like alliances with Hyatt and Radisson (TDF,
2025).
Eligibility and Target Income Groups
A wide range of income groups are served by the TDF:
Groups with Low and Middle The TDF provides flexible financing
Incomes (up to SAR 10 million with 10-year
repayment) for small and micro-
businesses, including cafes, tour
operators, and local lodging, through
initiatives like AWN. Operating in
tourism-related industries and
exhibiting growth potential are
prerequisites for eligibility (TDF,
2025).
High-Profit Corporations and Large-scale projects like luxury
Investors resorts and giga-projects like NEOM
and the Red Sea Project are made
possible by the TDF for wealthy
investors and international
corporations. Alignment with NTS
objectives and a sizable capital
investment are prerequisites for
eligibility (TDF, 2025).
SMEs and entrepreneurs The TDF works with organizations
such as the Saudi Endeavor Network
to provide training and funding to
entrepreneurs, especially women and
young people.
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Key Stakeholders
Government: The National Development Fund, Saudi Tourism
Authority, and Ministry of Tourism are in charge of making sure
TDF is in line with Vision 2030.
Private Sector: Investment is fueled by alliances with both
domestic and international businesses, such as Dallah Al-Baraka
and Hyatt and Radisson.
NGOs and Communities: Partnerships with both domestic and
foreign companies, like Hyatt and Radisson and Dallah Al-
Baraka, drive investment.
Figure 2: representatives of TDF
Economic and Social Impact
Benefits Across All Income Levels
The TDF addresses economic differences by offering opportunities for various income classes:
• Low-Income Classes: The AWN program funds rural micro-enterprises, enabling local
entrepreneurs to establish tourism-related businesses. For example, a local café in AlUla
supported by TDF can create employment opportunities for local residents, boosting household
incomes (TDF, 2025).
• Middle-Income Groups: SMEs are financed by TDF, for instance, the SAR 644 million
financing of a beach resort in the Eastern Province, creating employment opportunities for mid-
professionals (TDF, 2025).
• High-Income Groups: High-income investors are attracted by large projects, resulting in GDP
growth and infrastructure development.
Reducing Inequality and Enhancing Mobility
The TDF promotes social equity through the focus on creating jobs and developing areas. Through its
activities, the TDF has funded over 100 projects worth SAR 35 billion, opening up over 7,500 hotel
rooms and 16,000 employment opportunities (X Post, 2024). Such employment, ranging from hospitality
to management roles, enhances economic mobility for middle-class and working-class individuals. The
TDF's focus on underdeveloped regions, like AlUla and the Red Sea, addresses imbalances between urban
and rural regions, in line with macroeconomic goals of balanced development.
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Statistical Evidence
Economic Impact: The TDF investments are projected to contribute SAR 2 billion to GDP through the
creation of employment and tourism revenues (X Post, 2022). Macrofinancial stability is ensured by
sector growth as it reduces oil dependence.
Social Impact: The AWN program aims to support 2,000 small enterprises with SAR 500 million,
empowering women and young entrepreneurs (NDF, 2023).
Case Study: Radisson Blu hotel in Al-Ahsa, which is capitalized at SAR 200 million, consists of 180
rooms and more than 100 locals as staff, exhibiting genuine strengths (X Post, 2024).
Macroeconomic Linkages
Macro-economically, the TDF increases aggregate demand due to higher tourism spending, and increases
consumption and investment. It facilitates support to fiscal policy since it contributes non-oil revenue to
assist in reducing the budget deficit. Employment generation by the TDF increases labor market policy,
which assists in reversing unemployment (5.1% in 2024) and improving labor force participation,
particularly for women (35% participation rate in 2024) (General Authority for Statistics, 2024).
Challenges and Areas for Improvement
Limitations of the Program:
1. Human Capital Development: One of the challenges is the shortage of skilled manpower in the
tourism sector.
2. Infrastructure Gaps: In some places, there is a shortage of necessary infrastructure to embark on
large-scale tourism projects.
3. Accessibility: Small business lending is limited by stringent eligibility criteria, which excludes
some micro-entrepreneurs located in remote areas.
4. Regional Imbalances: Even though the TDF targets lesser developed regions, mega projects are
concentrated in urban areas like Riyadh and Jeddah with limited rural penetration.
5. Over-Dependence on Foreign Investment: Over-reliance on foreign partners risks profit
repatriation, reducing local economic retention.
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Potential Economic and Policy-Related Risks:
1. Administrative Delays: Investment processes and regulatory approvals can be slow and complex.
2. Economic Uncertainty: Risks of global and domestic economic conditions changing and affecting
investor confidence.
3. Risk of Inflation: Mega-tourism projects could raise local prices, putting pressure on low-income
families.
4. Sustainability: Environmental issues are raised by mega-projects such as NEOM, which could
hamper Saudi Arabia's net-zero ambitions by 2060.
5. Bureaucracy: Complex approval processes for funding discourage small businesses, delaying
project execution.
Public Perception
Some critics argue the TDF prioritizes luxury tourism over
community-based projects, potentially exacerbating income
inequality. Social media discussions highlight concerns
about job quality, with many roles being low-wage
hospitality positions (X Post, 2024).
Figure 3: TDF public presence
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Recommendations
Policy Proposals
• Facilitate Financing Access: Streamline application processes for SMEs and provide micro-grants
for low-income entrepreneurs to make it more inclusive.
• Broaden Rural Focus: Allocate a larger percentage of funds to rural tourism projects, such as eco-
lodges, to accommodate more balanced regional development.
• Expand Training Programs: Work with HRDF to introduce vocational training for low-income
workers to facilitate higher-income job opportunities.
Future Outlook
The TDF can expand its reach by integrating digital platforms, such as a mobile app for loan applications,
to improve accessibility. Collaborating with fintech firms could offer innovative financing models for
SMEs.
International Best Practices
1. Singapore’s Tourism Grants: Singapore’s SME-focused grants offer flexible repayment terms, a
model the TDF could adopt to support micro-businesses.
2. Dubai’s SME Ecosystem: Dubai’s integration of mentorship with financing could enhance TDF’s
entrepreneurial support programs.
Conclusion
The Tourism Development Fund is one of the main catalysts for the economic diversification of Saudi
Arabia under Vision 2030. By financing projects across various income segments, it promotes regional
development, job creation, and social mobility.
Despite some problems, TDF has been extremely promising and successful. With continued investment,
reform, and application of international best practices, the fund can increase its contribution to the
economic transformation of the Kingdom.
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References
• Home. (n.d.). [Link]
• National Development Fund. (2023). Saudi Arabia’s Development Ecosystem Enhances its
Economic, Social, Cultural Impact in Q3 2022. Retrieved from
[Link]
enhances-its-economic-social-cultural-impact-in-q3-2022/)
• Zawya. (2022). TDF, SEN partner to back entrepreneurs in Saudi’s tourism sector. Retrieved
from [Link]
tourism/tdf-sen-partner-to-back-entrepreneurs-in-saudis-tourism-sector-uforjyga)
• General Authority for Statistics. (2024). Labor Market Statistics Q3 2024. Retrieved from
[Link]
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