Saudi’s hotel sector growing at pace

As the Kingdom of Saudi Arabia’s tourism industry continues with its growth at a rapid rate, so does the list of luxury hotel brands marking their debut in the Gulf nation. With well over 200 hotel projects estimated to be in the pipeline in Saudi Arabia, this exponential growth shows no signs of slowing down.

Undeniably, the knock-on effects of the worldwide Covid pandemic has led to a number of hotel pre-opening phases, previously scheduled for Q4 of 2020, pushed back. However, this year is set to be busy, with operators keen to open the doors at approximately 34 hotel properties nationwide, with a supply of over 17,000 rooms.

With over 70,000 rooms planned nationwide, several submarkets across the Kingdom are expected to see supply rise by 50% or more.

Earmarked for a significant rise in capacity is the holy city of Makkah which alone will see almost 30,000 hotel rooms and suites under development in the coming years – that’s a staggering 81% increase in the cities supply.

Whilst the Kingdoms pipeline is full of noteworthy developments, the largest project in sheer size is the Abraj Kudai Towers in Makkah. This mammoth 9,760-room project will consist of 12 towers, housing a shopping mall, hotels, apartments, and food courts.

Of Saudi Arabia’s new wave of hotel developments, 90 of them will target the four-star market segment, with the remainder comprising of a five-star locations.

Luxury brands set their sights on Riyadh.

In terms of new hotel developments, Riyadh is the country’s fastest-growing city, with 44 projects and 10,602 rooms in the pipeline.

King Abdullah Financial District is set to host InterContinental and JW Marriot properties respectively, with the JW Marriott Burj Rafal set to be the tallest residential building in the city. Keen to be a part of the city’s regeneration and wellness initiative, Fairmont Hotels and Resorts, Mandarin Oriental and Nobu Hotels have all set sights on taking advantage of the diversification plan.

Jeddah similarly follows, with 40 planned openings and over 10,000 keys. Inspired by rich Arab heritage, Raffles is set to unveil its first offering within the city. Featuring 181 guestrooms and 188 branded residences, the debuting property will host a 1,200 square meter spa, a fitness club as well as state-of-the-art event and meeting facilities, including a 1,500 square meter ballroom overlooking the corniche.

The extraordinary growth spurt is in keeping with the Kingdoms aim to build the tourism industry at pace. Following the Vision 2030 blueprint, the Kingdom forecasts the industry to provide up to 10% of annual GDP by 2030.

The success of neighboring hospitality markets is further validation of the region’s appeal as a global tourist destination. Similar growth aspirations and lofty targets are not unfounded. With Saudi’s intrinsic cultural and economic clout spurring such aspirations, a 67% increase in room supply over the next three years is sure to set a solid foundation for future aspirations.