THIS MORNING: A lost year for regional tourism?

Good morning, ladies and gents. It’s a quiet day in the Kingdom as the August heat beats down on the streets.

The lull hit construction cost growth, which logged its slowest rate in four months. Meanwhile, Alrajhi Capital’s data is showing Saudi Arabia’s biggest banks are trading loan volume for higher margins. Let’s dive in.

Destination Sahel Issue IV, the final issue in the series, drops this week, and we’re exploring how Egypt’s North Coast could become more than a summer story.

Living in Sahel year-round is moving from a seasonal idea to a serious question; an industrial push is reshaping the Coast’s economic base, and Egyptian homebuyers are weighing Sahel against Dubai, London, and other Mediterranean markets for where to put their money.

In this issue, we get into what it would take for Sahel to work beyond the summer, how industry fits into the Coast’s next chapter, and the numbers behind the Sahel-vs-everywhere debate.

Click here to subscribe to the Egypt edition, coming straight to your inbox, Wednesday, 26 August.

Rocky landing

It’s more or less a lost year for regional tourism, while global travel is on track to keep growing. Middle East inbound arrivals are expected to fall 32% this year even if the ceasefire holds, against a pre-war expectation of 14% growth, while the rest of the world will still grow 8%, according to a Tourise and Oxford Economics report (pdf). If hostilities resume, regional arrivals are expected to drop 59%, or by a further 64% under a “sustained disruption” scenario. In these two scenarios, global travel would only take a 1-3% hit.

The gap is an aviation story: Gulf hubs handle around 14% of global transit traffic and roughly 20% of Europe-Asia travel, so instability in the region reprices connectivity everywhere — but is paid for locally. Middle Eastern carriers ran around 50% fewer flights y-o-y in March and cut capacity 37.2% in April. More than 46k flights in and out of the region were canceled between late February and 11 March, and forward bookings through major Gulf hubs for 2Q and 3Q fell by more than 40%.

A reallocation story rather than a demand collapse: Travelers are more likely to adapt than cancel, shifting toward shorter booking windows, regional and domestic trips, and stronger value-hunting. That is a partial hedge for destinations selling to their own neighborhood — and a problem for those built on long-haul, where growth is now seen at 1% in 2026 against a pre-war 10%.

The rebound is back-loaded and steep. Regional arrivals will bounce 51% in 2027 under a ceasefire, but will have a higher rebound to 81% (from a lower base) if hostilities resume first through the rest of this year. That rebound isn’t necessarily automatic, and will depend on restored capacity, clear communication, and destinations showing visible preparedness. Those who tick these boxes recover 1.5x faster than average, the report says, while reputational spillover hits countries associated with the conflict regardless of actual proximity to it.

90-day limit for GCC-registered vehicles

90 days, then out: Saudi Arabia is capping how long GCC-registered private vehicles can stay in the Kingdom, under new rules taking effect Wednesday, 26 August, as published in Umm Al Qura. The 90-day allowance, whether the vehicle is owned or driven by a citizen or resident, can run continuously or be split across any 365-day window from the vehicle’s first entry.

Exit or register: Vehicles already in the country when the rules kick in have until 23 November to either exit or be permanently imported and registered on Saudi plates. Owners can apply through an Interior Ministry platform for a one-time extension of up to 30 days, provided registration and ins. are valid and the request goes in before the standard period runs out.

Overstaying carries a SAR 1k to SAR 2k fine, plus impoundment until the violation is cleared, with the owner covering all impound and seizure costs. The fix is either registering the vehicle in the Kingdom or paying the fines and pledging to remove it.

Data point

15.2 mn — that was the total number of Umrah performers in Saudi Arabia in 1Q 2026, according to data (pdf) from the General Authority for Statistics. Of those, 5.8 mn came from abroad, while 9.5 mn were domestic performers, including 4.4 mn Saudis and 5.1 mn non-Saudis. Men accounted for 59.4% of performers, with women making up the remaining 40.6%.

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The big story abroad

As the regional war continues without a definitive timeline for peace, markets are waiting for definitive clues on Washington’s impending round of Iran sanctions. Here are the top business stories on the front pages.

Fashion’s next big listing: China-born fashion giant Shein is looking to raise up to USD 1.8 bn in its Hong Kong IPO — putting up 280 mn shares — expected to debut on 1 September. After a year of waiting on Beijing’s sign-off, the Singapore-headquartered firm has seen its valuation suffer on the back of fierce competition with Temu, regulatory hurdles, and tariff threats. Among the listing’s cornerstone investors are Boyu Capital, Tiger Global, and Tencent Holdings.

Speaking of China-related stock action, Alibaba is looking to raise as much as USD 10.2 bn via share placement in a bid to increase capital expenditure and bolster its competitive edge in the AI space. The firm will allocate all offering proceeds to AI investments, leveraging a Chinese stock market surge that has driven tech valuations to record highs.

Also in the AI world: Anthropic’s foothold in the US is under threat from more affordable models, casting some doubt on the startup’s upcoming listing, which is expected to be the biggest IPO in history. Over two months after its launch, spending on Fable 5, Anthropic’s largest AI model, has plateaued at roughly 11% of total customer spend on the company's tools, according to Ramp data tracking 70k businesses.