From a nation of ancient pilgrimage routes to a global tourist powerhouse, Saudi Arabia's hotel industry is not just growing but rewriting its economic story, with revenues soaring to SAR 28.5 billion in 2023 alone.
Key Takeaways
- Saudi Arabia's hotel industry revenue reached SAR 28.5 billion in 2023, marking a 22% year-on-year growth driven by increased domestic and international tourism
- The overall hotel market in Saudi Arabia is projected to grow at a CAGR of 7.8% from 2024 to 2028, fueled by Vision 2030 initiatives
- In 2022, the hospitality sector contributed 4.2% to Saudi Arabia's GDP, with hotels accounting for 65% of that share
- Saudi Arabia had 1,850 operational hotels with 235,000 rooms as of 2023
- Riyadh added 4,500 hotel rooms in 2023, increasing city supply by 12%
- Jeddah's hotel inventory grew to 35,000 rooms by 2023, with 55 new properties under construction
- Nationwide average hotel occupancy rate was 68.4% in 2023, up 14% from 2022
- Riyadh hotels achieved 72% occupancy in Q4 2023, with ADR at SAR 650
- RevPAR in Jeddah rose 21% YoY to SAR 520 in 2023, driven by business travel
- Saudi Arabia welcomed 27.4 million international tourists in 2023, boosting hotel demand by 41%
- Domestic hotel stays reached 58 million nights in 2023, up 22% from 2022
- Umrah pilgrims numbered 13.5 million in 2023, occupying 75% of Makkah/Medina rooms
- Hotel investments in Saudi Arabia totaled USD 3.2 billion in 2023, targeting 50 new projects
- PIF allocated SAR 50 billion for hospitality developments through 2030, with SAR 12 billion spent by 2023
- 28 hotel transactions closed in 2023, valued at SAR 8.5 billion
Saudi Arabia's hotel industry is booming with record revenue and rapid growth driven by tourism.
Hotel Supply and Capacity
- Saudi Arabia had 1,850 operational hotels with 235,000 rooms as of 2023
- Riyadh added 4,500 hotel rooms in 2023, increasing city supply by 12%
- Jeddah's hotel inventory grew to 35,000 rooms by 2023, with 55 new properties under construction
- 5-star hotels numbered 320 across Saudi Arabia in 2023, representing 15% of total properties
- Makkah hotel room supply reached 85,000 rooms in 2023, up 8% from 2022
- Branded hotels accounted for 58% of total room supply (136,000 rooms) in 2023
- Medina's hotel capacity expanded to 52,000 rooms by 2023, with focus on 4-5 star segments
- New hotel openings in 2023 totaled 45 properties, adding 7,200 keys nationwide
- Eastern Province hotel supply hit 28,000 rooms in 2023, growing 14% YoY
- Luxury segment supply comprised 22,000 rooms (9%) of national total in 2023
- Saudi Arabia plans to add 360,000 hotel rooms by 2030, with 110,000 under construction in 2023
- Upscale hotels totaled 450 properties with 65,000 rooms in 2023
- Budget hotel room supply grew to 51,000 rooms (22% share) by 2023
- Riyadh's 5-star room supply reached 18,000 rooms in 2023
- Independent hotels supplied 99,000 rooms (42%) in 2023
- Asir region added 1,200 hotel rooms in 2023, totaling 12,000
- Pipeline of hotel projects in 2023 included 240 properties with 52,000 keys
- Midscale hotels provided 78,000 rooms (33%) nationally in 2023
- Qassim Province hotel supply doubled to 8,500 rooms since 2020 by 2023
Hotel Supply and Capacity Interpretation
While Saudi Arabia is betting big on luxury and scale with cities building hotels like they're going out of fashion, it's the quietly booming budget and independent sectors that show the kingdom is pragmatically building an ecosystem for every traveler, not just the high rollers.
Investments and Developments
- Hotel investments in Saudi Arabia totaled USD 3.2 billion in 2023, targeting 50 new projects
- PIF allocated SAR 50 billion for hospitality developments through 2030, with SAR 12 billion spent by 2023
- 28 hotel transactions closed in 2023, valued at SAR 8.5 billion
- Marriott signed 15 new management contracts for 4,000 rooms in 2023
- Hilton invested USD 1.1 billion in 12 Saudi projects announced in 2023
- Accor added 20 hotels to its Saudi pipeline in 2023, totaling 5,500 keys
- Red Sea Global secured USD 2.5 billion for 8 luxury resorts by 2023
- AlUla development fund invested SAR 4 billion in hotels through 2023
- 42% of 2023 investments went to Riyadh, totaling SAR 5.2 billion
- IHG expanded with 10 new brands and 3,000 rooms in KSA pipeline 2023
- Foreign direct investment in hotels hit USD 1.8 billion in 2023
- Radisson signed agreements for 15 hotels (2,800 rooms) in 2023
- NEOM allocated USD 500 million for hospitality infrastructure in 2023
- Budget hotel chain investments reached SAR 2.1 billion in new builds 2023
- Makkah luxury hotel upgrades cost SAR 3.4 billion in 2023
- Qiddiya committed SAR 10 billion to integrated resorts by end-2023
- Diriyah Gate hotel projects funded at SAR 6 billion in 2023 phase
- Eastern Province secured SAR 1.9 billion for 18 new hotels in 2023
- Wyndham announced 22 new properties (3,500 rooms) for Saudi in 2023
- Total hotel pipeline value estimated at SAR 120 billion as of 2023
Investments and Developments Interpretation
Even for the famously austere, Saudi Arabia has clearly decided that the only thing bigger than its ambition is its hotel bill, with a 2023 investment spree so vast it would make a golden-era oil baron check his wallet twice.
Market Size and Growth
- Saudi Arabia's hotel industry revenue reached SAR 28.5 billion in 2023, marking a 22% year-on-year growth driven by increased domestic and international tourism
- The overall hotel market in Saudi Arabia is projected to grow at a CAGR of 7.8% from 2024 to 2028, fueled by Vision 2030 initiatives
- In 2022, the hospitality sector contributed 4.2% to Saudi Arabia's GDP, with hotels accounting for 65% of that share
- Saudi hotel market capitalization stood at USD 45 billion in Q4 2023, reflecting robust investor confidence
- The midscale hotel segment grew by 18% in revenue terms in 2023, comprising 32% of the total market
- Total hotel transactions in Saudi Arabia reached SAR 12.4 billion in 2023, up 35% from 2022
- The luxury hotel segment accounted for 28% of market revenue in 2023, generating SAR 8 billion
- Saudi Arabia's hotel industry saw a 25% increase in market volume from 2020 to 2023 post-COVID recovery
- Budget hotel market share expanded to 22% in 2023, with revenues of SAR 6.3 billion
- The hospitality sector's market size was valued at USD 12.5 billion in 2023, expected to hit USD 20 billion by 2028
- Hotel EBITDA margins in Saudi Arabia averaged 32% in 2023, highest in the GCC region
- The Saudi hotel market expanded by 1,200 keys in branded hotels during 2023
- Total addressable market for hotels in Saudi Arabia estimated at SAR 150 billion by 2030
- Upscale hotel segment revenue surged 29% YoY to SAR 7.2 billion in 2023
- Saudi hotel industry's compound annual growth rate was 9.2% from 2019-2023
- Independent hotels represented 42% of the market value in 2023, worth SAR 12 billion
- The hotel market in the Western region grew 26% in 2023, contributing 38% to national totals
- Saudi Arabia's hospitality market attracted USD 2.1 billion in FDI in 2023 for hotel developments
- RevPAR growth across Saudi hotels averaged 19% in 2023, boosting overall market size
- The hotel sector's market penetration rate reached 65% in major cities by end-2023
Market Size and Growth Interpretation
While Saudi Arabia's hospitality sector is no longer just resting on its oil laurels, its hotels are now quite literally making beds *and* banking billions, proving that under Vision 2030, the kingdom is open for business and checking in guests at a spectacularly profitable rate.
Operational Performance
- Nationwide average hotel occupancy rate was 68.4% in 2023, up 14% from 2022
- Riyadh hotels achieved 72% occupancy in Q4 2023, with ADR at SAR 650
- RevPAR in Jeddah rose 21% YoY to SAR 520 in 2023, driven by business travel
- Makkah hotels recorded 92% occupancy during Hajj 2023, averaging SAR 1,200 ADR
- Average Daily Rate (ADR) for Saudi 5-star hotels was SAR 950 in 2023
- Medina's RevPAR peaked at SAR 780 during Ramadan 2023, with 88% occupancy
- Budget hotels' occupancy averaged 62% in 2023, with ADR of SAR 280
- Luxury segment RevPAR grew 25% to SAR 1,100 in 2023 across KSA
- Eastern Province hotels saw 65% occupancy and SAR 450 ADR in 2023
- National ADR increased 18% YoY to SAR 520 in 2023
- Upscale hotels achieved 70% occupancy and SAR 680 RevPAR in 2023
- Riyadh business hotels hit 75% occupancy in H2 2023
- Midscale RevPAR rose to SAR 380 in 2023, up 16% YoY
- Hajj season 2023 boosted national RevPAR by 35% to SAR 750 temporarily
- Independent hotels' average occupancy was 64% with SAR 410 ADR in 2023
- Jeddah leisure hotels recorded 68% occupancy in summer 2023
- 5-star ADR in Makkah averaged SAR 1,500 during peak 2023
- Saudi hotels' GOPPAR averaged SAR 420 in 2023, up 20% YoY
- Asir hotels achieved 58% occupancy with SAR 350 RevPAR in 2023
Operational Performance Interpretation
The Saudi hotel industry is soaring beyond mere recovery, trading heavily on its religious and business pillars, as evidenced by Makkah's pilgrimage-priced luxury during Hajj and Riyadh's boardroom-driven occupancy, while the nationwide boom leaves no segment behind, from Jeddah's corporate resurgence to budget hotels finding their steady footing.
Visitor and Demand Trends
- Saudi Arabia welcomed 27.4 million international tourists in 2023, boosting hotel demand by 41%
- Domestic hotel stays reached 58 million nights in 2023, up 22% from 2022
- Umrah pilgrims numbered 13.5 million in 2023, occupying 75% of Makkah/Medina rooms
- Riyadh Season events drove 4.2 million hotel guest nights in 2023
- GCC visitors to Saudi hotels increased 32% to 8.7 million in 2023
- Hajj 2023 hosted 1.84 million pilgrims, generating 2.5 million hotel nights
- European tourist arrivals grew 55% YoY to 1.2 million in 2023, favoring luxury hotels
- Leisure travel accounted for 52% of hotel demand in 2023 (32 million nights)
- Business travelers occupied 28% of rooms, totaling 22 million nights in 2023
- Asian markets contributed 2.8 million visitors, up 45% in 2023
- Female travelers increased to 38% of total hotel guests in 2023
- Red Sea destinations saw 1.1 million visitors, filling 85% hotel capacity in 2023
- Average length of stay in Saudi hotels was 3.2 nights in 2023
- NEOM project attracted 450,000 early visitors, boosting regional demand in 2023
- Winter at Tantora festival generated 750,000 hotel nights in AlUla 2023
- Repeat visitors to Saudi hotels rose to 42% of total guests in 2023
- Diriyah Gate development drew 2.5 million tourists, 60% staying overnight in 2023
- Qiddiya entertainment city pre-launch events hosted 1.8 million guests in 2023
- Saudi hotel bookings via digital platforms surged 48% to 65 million in 2023
- Adventure tourism demand grew 35%, filling 70% of niche hotels in 2023
Visitor and Demand Trends Interpretation
Saudi Arabia’s hotel industry is riding a tidal wave of ambition, where pilgrim devotion, blockbuster events, and luxury-seeking tourists are all checking into the kingdom's grand transformation at the same time.
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