The global tourism industry has, in recent years, been witnessing the emergence of sovereign wealth funds (SWFs) as relevant sources of financing. They have taken on growing exposure to tourism projects or enablers needed for the development of the sector.
There is no standardised methodology or collection of data showing their level of involvement in the sector, but there is plenty of evidence easy to find just by looking at their active portfolios of investments. For example, The Norges Bank Investment Management of Norway and the Government of Singapore Investment Corporation (GIC) are two of the institutions that seem to be actively investing directly or indirectly in tourism-related projects. Nevertheless, more recently the attention has turned to SWFs from the Middle East.
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According to data from Global SWF, 11 of the world’s 20 largest SWFs are located in the Middle East, managing altogether around $4.9tn in total assets. This is expected to rise to around $7tn in 2030. These investment vehicles will represent a relevant source of funding for the sector in the years to come as growing levels of investment show their appetite for investment in the sector.
Maybe the best example to highlight is the growing involvement of the Public Investment Fund (PIF) of Saudi Arabia which is leading top-notch tourism development such as the Red Sea Global Project, NEOM, Qiddiya, Roshn and Diriyah, among others, mainly focused on the creation of luxury sustainable destinations.
Another good example is the Qatar Investment Authority (QIA), which is strengthening its international position by investing in high-profile hotels around the world through its hospitality arm, Katara Hospitality.
Some others, like the Kuwait Investment Authority (KIA) and the Abu Dhabi Developmental Holding Company (ADQ), and also the before mentioned QIA and PIF, are pushing tourism developments in North Africa, especially through projects in Morocco (Casa-Port, Al Houra Resort), Tunisia (Anantara Tozeur Resort), and Egypt (coastal city of Ras El-Hekma), and actively looking for new opportunities and bidding processes that might arise in the region.
The investment carried out by these financial vehicles goes far beyond mere financial commitments. Their actions are pushing economic growth through the development of tourism-related infrastructure and services, fostering the attraction of more visitors and creating new jobs.
Their involvement in the tourism sector is also expected to swift towards green projects. Considering the interdependency of the industry and the environment — the tourism sector is both dependent on nature, as a key element of appeal, and a contributor to climate change — the inclusion of sustainable practices in every aspect of its development is key to ensure its durability.
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This is why the increasing participation of SWFs in the tourism sector is good news. As they seek long-term returns, their DNA is focused on promoting and encouraging more sustainable projects and practices, a perspective that is surely transforming the global tourism landscape.
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This article is part of the Special Report:
Tourism Investment Report 2024