The Kingdom is set to undergo a significant expansion in its hospitality sector, with plans to develop 320,000 hotel rooms to accommodate an anticipated surge in tourism, expected to reach 150 million domestic and international visitors by 2030, according to global property consultancy Knight Frank.
GLOThe Kingdom is set to undergo a significant expansion in its hospitality sector, with plans to develop 320,000 hotel rooms to accommodate an anticipated surge in tourism, expected to reach 150 million domestic and international visitors by 2030, according to global property consultancy Knight Frank.
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Currently, 66% of the Kingdom’s existing hotel supply falls into the Luxury, Upper Upscale, and Upscale categories. However, by 2030, this segment is projected to expand further to encompass 72% of the market, totaling 251,500 hotel rooms.
By the end of 2023, Saudi Arabia had already welcomed nearly 100 million tourists, contributing nearly 6% to the Kingdom’s GDP, positioning the sector well to achieve the government’s 10% target by the end of the decade. Tourism spending in the first half of 2023 surged to SAR 87 billion, marking a 132% increase compared to 2022, with international visitor numbers soaring by 142% to 14.6 million arrivals.
The substantial growth is largely fueled by visitors from Muslim-majority nations, with Bahrain, Kuwait, and Egypt emerging as the top three source markets.
Turab Saleem, Partner and Head of Hospitality, Tourism & Leisure Advisory, MEA, highlighted the government’s efforts to attract international travelers through various strategies, including cultural and entertainment developments nationwide, alongside major events like the Jeddah F1 Grand Prix and various ‘Entertainment Seasons.’
Riyadh winning the bid to host the 2030 World Expo is expected to inject a significant economic boost of US$ 94.6 billion into the capital, with an estimated 40 million visitors during the six-month exhibition.
As the hospitality sector expands rapidly, there is a growing need to provide adequate accommodation for hotel staff. Knight Frank’s analysis indicates that 67% of the planned hotel room supply will fall into the ‘upscale’ or ‘luxury’ categories, requiring between 232,000 and 387,000 key workers’ accommodations.
Looking at hotel operators, Knight Frank predicts that Accor Hotel Group will slip to become the second-largest operator by 2030, while Marriott International is expected to emerge as the biggest operator in the Kingdom.
The focus on religious tourism is also evident, with significant hotel developments planned in Makkah and Madinah. The Holy Cities are expected to attract 30 million religious tourists by 2025, with projections reaching 50 million visitors by 2030.
Knight Frank’s analysis estimates that approximately USD 104 billion will be required for construction costs alone to realize the 320,000 hotel rooms, with a significant portion dedicated to the development of the Holy Cities.
About Knight Frank:
Knight Frank LLP is the leading independent global property consultancy. Headquartered in London, the Knight Frank network has 487 offices across 53 territories and more than 20,000 people The Group advises clients ranging from individual owners and buyers to major developers, investors, and corporate tenants. For further information about the Firm, please visit www.knightfrank.com.
In the MENA region, we have strategically positioned offices in key countries such as the United Arab Emirates, Saudi Arabia, Bahrain, Qatar, and Egypt. For the past 13 years, we have been offering integrated residential and commercial real estate services, including transactional support, consultancy, and management.
Understanding the unique intricacies of local markets is at the core of what we do, we blend this understanding with our global resources to provide you with tailored solutions that meet your specific needs. At Knight Frank, excellence, innovation, and a genuine focus on our clients drive everything we do. We are not just consultants; we are trusted partners in property ready to support you on your real estate journey, no matter the scale of your endeavour.
Source: Knight Frank
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