Riyadh fuels 13% surge in spending, with hospitality, food as main drivers

Cafe and restaurant visits by Saudis helped fuel a 13.35 percent annual spending increase across the Kingdom in November, according to. the central bank.

Data released by the institution, also known as SAMA, showed the total of transactions in the penultimate month of 2023 came in at SR65.85 billion ($17.56 billion) — up from the SR58.1 billion registered in November 2022.

Point of sale transactions constituted 80 percent of the total, amounting to SR52.37 billion, with e-commerce experiencing the most significant growth.

Online payments, specifically using Mada cards, reached SR13.48 billion, reflecting a notable 20 percent increase during this period.

The sectors benefiting the most from Saudi spending through POS transactions were restaurants and cafes, and food and beverages, which both contributed around 15 percent to the overall total.

Spending for restaurants and cafes totaled SR7.87 billion, while food and beverages transactions came in at SR8.06 billion.

Riyadh stood out as the city where a significant portion of this spending occurred.

Spending on miscellaneous goods and services, including personal care and supplies, maintenance and cleanings contributed 12 percent to the total totaling SR6.07 billion.

The education sector experienced the highest growth in POS spending, surging by 62.37 percent during this period and reaching SR740 million. This includes diverse transactions, including tuition fees, educational materials, or other related services.

As per a 2021 national payment study released by the Saudi central bank, the saying “Cash is no longer King” holds true, as it is not the preferred method of payment for consumers.

The statistics for ATMs in November underscore this shift. Despite the issuance of over 5.25 million cards, cash withdrawals using both banks and Mada cards increased by only 0.96 percent over the period, reaching SR45.6 billion.

Spending on public utilities using POS transactions ranked second, experiencing a 42.23 percent growth and reaching a total of SR523.8 million.

This suggests a transition to electronic and convenient payment methods for essential services in Saudi Arabia, potentially signaling an enhanced focus on digitalization, convenience, and efficiency in financial transactions.

Survey results from a SAMA study in 2021 confirm that government agencies almost all completely shifted to cashless methods across the spending categories.

Another sector that witnessed increased growth in POS spending was recreation and culture, growing by 23 percent during this period to reach SR1.35 billion. This typically includes spending related to entertainment, leisure activities and participation in cultural events.

The entertainment sector stands out as a testament to the profound transformation of Saudi Arabia over the past six years.

According to the International Trade Administration report from January this year, the General Entertainment Authority issued a total of 11,400 licenses and permits for the entertainment sector, attracting over 120 million attendees by the end of 2022.

Furthermore, the industry created over 100,000 job opportunities, with more than 1,000 companies actively operating within this sector, as highlighted in the report.

In this context, spending on hotels experienced significant growth, increasing by nearly 19 percent during this period and reaching SR1.37 billion.

Riyadh accounted for 34 percent of these transactions, with POS sales totaling SR17.66 billion. This constitutes 17 percent rise and reflects the highest growth rate among Saudi Arabia’s major cities.

As per Saudi Invest, the national investment promotion platform of Saudi Arabia, the Riyadh region, recognized as the economic powerhouse of the country and a prominent hub in the Middle East, is undergoing substantial transformation and experiencing industry growth.

Government initiatives, such as the national regional headquarter program, have attracted premier multinational organizations, positioning Riyadh as a leading global destination.

The region’s competitive investment environment is synonymous with prosperity and an enhanced quality of life.

Notably, large-scale initiatives focused on healthcare, life sciences, and collaboration with international academic institutions are further improving services and fostering development in the region.