HOTEL INDUSTRY IN SAUDI ARABIA

KEY FINDINGS

• The anticipated surge of 320,000 hotel rooms additions in Saudi Arabia by 2030, aligned with projections of 150 million annual tourists, underscores lucrative opportunities for expansion and investment in the country’s hotel sector.  

• In the first half of 2023, Saudi Arabia’s hotel industry saw tourism spending soar to $23.2 billion (SAR 87 billion), a 132% increase from 2022, with international arrivals reaching 14.6 million, marking a 142% surge year-on-year, highlighting significant investment opportunities in hotel industry driven by escalating tourist demand. 

• Vision 2030’s focus on tourism infrastructure and ambitious projects like NEOM and “The Line” is reshaping the Saudi hotel industry, attracting investors and driving transformative growth. 

• Since 2019, Saudi Arabia has emerged as the G20’s fastest-growing tourist destination, experiencing a 121% surge in international arrivals to 93.5 million visitors in 2022, surpassing global tourism recovery and indicating promising growth prospects for the Saudi hotel industry. 

• Saudi Arabia’s $550 billion investments in tourism by 2030 position it as the world’s largest tourism investor, indicating substantial growth potential for the hospitality sector and fostering numerous opportunities for investment and advancement in the Saudi Arabia hotel industry. 

• The Public Investment Fund’s projects like The Red Sea Development, Amaala, NEOM, Al Ula, and Wadi Al Disah since 2018 are instrumental in realizing Vision 2030 objectives, driving investment and facilitating the establishment of new hotels across Saudi Arabia’s key cities, offering ample growth and investment prospects. 
• The anticipated 40% growth in the Middle East tourism market over the next two years, spearheaded by Saudi Arabia and the United Arab Emirates, suggests a significant boost in demand for hotel accommodations across the region. 
• The country’s focus on diversifying its economy away from oil has led to a concerted effort to boost tourism, resulting in a surge in visitor arrivals and creating a robust demand for hotel accommodations. 
• The emergence of high-tech hotels like YOTEL’s ROBO Hotel in Saudi Arabia signals a future trend of increased integration of robotics and smart technologies within the hospitality industry, revolutionizing guest experiences and operational efficiency. 
• The increasing preference for online hotel booking, particularly for key destinations like Makkah, Medina, Riyadh, Jeddah, and Dammam, is driving the growth of Saudi Arabia’s high-end and mid-scale hotel sectors, aligning with the government’s Vision 2030 goals of enhancing living standards and boosting tourism. This trend underscores the need for hoteliers to prioritize digital platforms and adapt to changing consumer behavior to capitalize on the expanding market. 
• The Saudi hotel industry is undergoing significant growth, driven by government initiatives like Vision 2030 promoting tourism. Religious tourism remains a major driver, but the focus is expanding to attract leisure travelers seeking cultural experiences and luxury stays
• Customer service is a top priority for Saudi hotels, with a reputation for exceeding guest expectations. Data-driven decision-making is gaining importance, with hotels leveraging geospatial data to optimize location selection and resource allocation
• Fluctuations in oil prices, a key factor in the Saudi economy, can impact tourism spending Geopolitical issues in the region can create uncertainty for travelers. A skilled workforce shortage could hinder the industry’s growth potential
• Major tourist destinations like Mecca and Medina present strong investment opportunities. Secondary cities with cultural or historical significance are attracting interest for hotel development. Specialized segments like wellness retreats or business hotels could cater to growing niches within the market.
• The Saudi hotel industry is poised for a bright future. By capitalizing on its unique strengths, adapting to new trends, and overcoming challenges, it can solidify its position as a major player in the global tourism landscape.
• Overall, the Saudi hotel industry is on a promising trajectory, but faces challenges related to economic factors and skilled labor shortages. Adapting to new trends, focusing on sustainability, and catering to a wider range of travelers will be crucial for long-term success.

MARKET OVERVIEW

• Millions of pilgrims visit Mecca and Medina annually, making Saudi Arabia a global leader in religious tourism. This sector remains a strong foundation for the hotel industry.
• The focus is expanding beyond religious travel. The kingdom boasts rich cultural heritage, stunning landscapes, and modernizing cities, attracting leisure travelers seeking new experiences.
• High-end hotels are popping up, catering to a growing demand for luxurious accommodations and impeccable service. Saudi Arabia is establishing itself as a destination for discerning travelers.
• Saudi hotels prioritize exceptional customer service, aiming to exceed guest expectations and build a reputation for hospitality. Personalized service is becoming the norm.
• Gone are the days of relying solely on intuition. Hotels are embracing data-driven strategies. Geospatial analysis helps optimize location selection, resource allocation, and marketing campaigns.
• The Saudi economy is heavily reliant on oil. Fluctuations in oil prices can impact tourism spending, making the industry somewhat susceptible to external factors.
• Mecca, Medina, and Jeddah remain strong investment opportunities due to the consistent flow of religious tourists.
• Secondary cities with historical or cultural significance are attracting interest for hotel development. Consider destinations along the Red Sea coast or near heritage sites. Specialized hotels focused on wellness, business travel, or budget-conscious tourists cater to growing segments within the market.

INTRODUCTION TO HOTEL INDUSTRY IN SAUDI ARABIA

The hotel industry in Saudi Arabia is a dynamic and rapidly evolving sector that plays a crucial role in the country’s economy and tourism infrastructure. Saudi Arabia has been working diligently to boost its tourism sector, which aims to diversify the economy and reduce its reliance on oil revenue.

In recent years, Saudi Arabia has witnessed significant growth in its hotel industry. This growth is attributed to various factors, including increased tourism promotion, major infrastructure projects, and the easing of visa restrictions.

TRENDS IN HOTEL INDUSTRY IN SAUDI ARABIA

• Beyond Pilgrimage: While religious tourism remains a cornerstone, the focus is on attracting leisure travelers seeking cultural immersion. Hotels are incorporating local art, cuisine, and experiences into their offerings.
• Desert Delights: Adventure tourism is gaining traction. Glamping experiences, desert safaris, and exploration of historical sites are becoming popular, with hotels partnering with local tour operators.
• Wellness Warriors: The demand for wellness-focused vacations is rising. Hotels are introducing spas, yoga retreats, and healthy dining options to cater to this segment.
• Seamless Stays: Mobile check-in, contactless payments, and digital room controls are becoming commonplace, enhancing guest convenience and personalization.
• Data-Driven Decisions: Hotels are leveraging guest data to personalize offers, predict preferences, and optimize marketing campaigns.
• AI Integration: Artificial intelligence (AI) is making inroads. Expect chatbots for guest service, AI-powered revenue management, and even robotic assistants in some hotels.
• Eco-Conscious Choices: Environmental responsibility is becoming a key differentiator. Hotels are implementing water conservation measures, using renewable energy sources, and offering eco-friendly amenities.
• Sustainable Design: New hotels are prioritizing sustainable architecture, utilizing local materials, and incorporating energy-efficient technologies.
• Conscious Collaborations: Partnerships with local communities and businesses that promote sustainable practices are gaining traction.
• The Metaverse Beckons: The metaverse could play a role in the future, offering virtual tours of hotels and destinations, attracting tech-savvy travelers.
• Hyper-Local Hospitality: Hotels are catering to the local Saudi population, offering co-working spaces, hosting events, and creating a sense of community within the hotel.
• Experiential Dining: Restaurants within hotels are moving beyond buffets, offering fine-dining experiences with local chefs showcasing Saudi Arabian cuisine.

HOTEL INDUSTRY IN SAUDI ARABIA MARKET SIZE AND FORECAST

The Hotel Industry in Saudi Arabia accounted for $XX Billion in 2023 and is anticipated to reach $XX Billion by 2030, registering a CAGR of XX% from 2024 to 2030.

HOTEL INDUSTRY IN SAUDI ARABIA MARKET DYNAMICS

Over 50 new Hilton hotels will open in Saudi Arabia. Saudi Arabia will become Hilton’s largest pipeline market in Europe, the Middle East, and Africa (EMEA) when it opens more than 50 new hotels under ten of its brands. According to a statement, Hilton has stepped up its growth strategy in Saudi Arabia in recent years and has announced several signings as it strives to expand its portfolio to more than 75 trade properties nationwide.

Hilton is collaborating closely with their owners to expand the number of award-winning hospitality brands it offers in existing and new sites across Saudi Arabia as a result of the country’s rapid development.  These most recent agreements show their dedication to maximizing the tourism potential in the smaller cities as well as their diverse expansion in huge, upcoming initiatives like Lassen Valley in Riyadh.

Hilton is collaborating closely with top owners and developers to improve business and leisure travel destinations all across Saudi Arabia as it prepares to more than triple its footprint there over the following several years.

HOTEL INDUSTRY IN SAUDI ARABIA MARKET RECENT PARTNERSHIP

The first Regent Hotel in the Middle East will open in Saudi Arabia thanks to a management partnership between Alma hays in Group and IHG® Hotels & Resorts, one of the top hospitality organizations in the world.

The Regent Jeddah will offer guests an ultra-luxury hotel experience with a collection of spaces reflecting taste and luxuries across 29 stories. It is situated on the lovely Jeddah Corniche facing the Formula 1 racetrack and has nearly 182 rooms facing the Red Sea. The new hotel will also draw corporate leaders and Saudi visitors looking for exceptional hospitality thanks to its five roomy penthouses and unmatched level of luxury and sophistication.

The hotel will offer a 1,500-square-foot spa by Raison deter, known for their work with Six Senses Spa, a 200-square-foot health club, indoor and outdoor pools, as well as a variety of exceptional culinary experiences, including three concept restaurants and a lounge.

Three new hotels will open in Riyadh, Kingdom of Saudi Arabia, as part of a new master-planned development project, according to Accor, a global leader in the hospitality industry, and Erath Real Estate Company. A 230-key Raffles hotel, a 250-key Sofitel Serviced Residence, and a 60-villa M Gallery resort will all be part of the future luxury hospitality complex and are scheduled to open in the next years. A central garden area will be surrounded by office towers, apartment towers and retail space in the multifaceted community.

HOTEL INDUSTRY IN SAUDI ARABIA MARKET SEGMENTATION

BY TRAVEL PURPOSE

• Religious Travelers
• Leisure Travelers
• Business Travelers

BY LOCATION AND EXPERIENCE

• City Center Hotels
• Beach Resorts
• Historical Hotels
• Wellness Retreats
• Eco-Friendly Hotels

BY BUDGET AND STAR RATING

• Luxury Segment
• Mid-Range Segment
• Budget Segment

HOTEL INDUSTRY IN SAUDI ARABIA MARKET COMPANY PROFILES

• AccorHotels
• Marriott International
• Hilton Hotels & Resorts
• Rotana Hotels & Resorts
• Saudi Arabian Hotels Company (SAHC)
• Emaar Hospitality Group
• The Red Sea Global Company (RSG)
• Dur Hospitality Company
• Jannah Hotels & Resorts

HOTEL INDUSTRY IN SAUDI ARABIA MARKET REPORT WILL ANSWER FOLLOWING QUESTIONS

1. How many hotels are present in Saudi Arabia and how many are going to be built?
2. How does a customer choose a hotel in Saudi Arabia defined by age, purpose, and other characteristics?
3. What is the average rate across Saudi Arabia for a hotel room for various segments and the operating margin?
4. Market share of the Saudi Arabia Hotel Industry Market and their upcoming hotels
5. Key differentiating factors between various segments and the cost analysis for each segment
6. Key predictions for the next 5 years in Saudi Arabia Hotel Industry 
7. Latest trends in the Hotel Industry Market, by every market segment
8. The market size (both volume and value) of the Hotel Industry Market in 2024-2030 and every year in between?
9. How effectively is the Saudi government’s Vision 2030 plan attracting new demographics of leisure travelers beyond religious pilgrims?
10. What specific cultural experiences and historical sites are gaining popularity among tourists visiting Saudi Arabia?
11. To what extent are luxury hotel brands successfully establishing themselves in the Saudi market, and what are the key factors driving their success?
12. How can hotels in Saudi Arabia leverage data analytics to personalize guest experiences and optimize marketing campaigns for different travel segments?
13. What are the biggest challenges in implementing sustainable practices within the Saudi hotel industry, and how can these be overcome?
14. How is the growing focus on wellness tourism influencing hotel amenities and service offerings in Saudi Arabia?
15. How does the reliance on oil prices impact the overall stability and growth of the Saudi hotel industry?
16. How can hotels in Saudi Arabia mitigate the risks associated with geopolitical uncertainties in the region?
17. What strategies are being employed to address the potential workforce shortage within the Saudi hospitality sector?
18. How will the rise of the metaverse potentially influence the marketing and booking strategies of hotels in Saudi Arabia?
19. What role can hyper-local hospitality play in building stronger relationships with the local Saudi community and fostering cultural exchange within hotels?
20. How can hotels in Saudi Arabia best cater to the growing demand for experiential dining, showcasing local cuisine and Saudi Arabian culinary traditions?
21. How are changing visa regulations and infrastructure developments impacting tourist accessibility and travel patterns within Saudi Arabia?
22. What impact will advancements in artificial intelligence (AI) have on hotel operations and guest services in the future?
23. How can hotels in Saudi Arabia effectively measure the success of their sustainability initiatives and communicate them to environmentally conscious travelers?