New Travel and Tourism Services Regulations: Guarantees and Compensation

In a decisive regulatory move aimed at elevating the tourism sector in Saudi Arabia and keeping pace with the rapid growth in visitor numbers, the Ministry of Tourism has unveiled a draft comprehensive amendment to the Travel and Tourism Services Regulations. The draft includes fundamental changes such as a precise licensing classification, the imposition of financial guarantees of up to two million riyals, and the requirement for companies to adhere to strict policies for the immediate compensation of tourists, all designed to guarantee the rights of all parties and enhance the quality of services provided.

A regulatory framework that aligns with Vision 2030

These new amendments come within the framework of the National Tourism Strategy stemming from the Kingdom’s Vision 2030, which aims to make the Kingdom a leading global tourist destination, and to receive more than 150 million visits annually by 2030. The Ministry recognizes that achieving these ambitious figures requires a solid legislative and regulatory structure that ensures a safe and reliable tourist experience, which enhances the reputation of the Saudi tourism sector regionally and internationally, and encourages foreign and local investments in a transparent and organized working environment.

Financial guarantees and maximum consumer protection

The most significant aspect of the new regulations is the requirement for license applicants to provide a financial guarantee or insurance policy not exceeding two million Saudi riyals. This measure serves as a financial safeguard, as the tourist's financial rights and any fines imposed in the event of the service provider's breach of its obligations will be deducted from this amount. The regulations stipulate, with unprecedented rigor, that the tourist's financial rights must be recovered from this guarantee within just 24 hours of the licensee being notified, thus eliminating any delays in recovering these rights.

Regarding service disruptions or outages, the draft law establishes precise standards to protect tourists, obligating service providers to offer an alternative of equal or higher quality, or to issue an immediate full refund without any deductions. It also grants tourists the option of a full refund or a replacement unit if essential services (such as electricity and water) are interrupted for more than two hours, and prohibits any charges to credit cards without prior agreement.

Licensing and Fee Structure

The regulations prohibited engaging in any tourism activity without a valid license, and divided licenses into two main categories to cover all activities:

• Travel and tourism agency: Issuance fee of 14,000 riyals for a period of 5 years.
• General travel and tourism services: with an issuance fee of 28,000 riyals for a period of 5 years.

The regulations also stressed the prohibition of using flight booking systems by unlicensed entities, and banned the sale of tickets with IATA numbers to entities outside the Kingdom, in order to control the market and prevent manipulation.

Investing in human capital and quality

The draft also addressed operational quality, stipulating a minimum of one licensed tour guide for every 25 tourists. Regarding professional qualifications, it imposed stringent requirements on staff, requiring Saudi managers to hold a bachelor's degree with one year of experience, or a diploma with two years of experience, while expatriate workers in highly skilled professions were required to have at least seven years of experience. This was done to ensure the provision of professional services befitting the Kingdom's tourism standing.

The regulations also included incentives for investment, whereby certain projects can be exempted from the financial guarantee by a ministerial decision if they add qualitative value to tourist destinations or provide job opportunities for citizens, reflecting the ministry’s flexibility in supporting economic development.