Saudi Arabia has to increase its hotel capacity to accommodate all those massive tourism-focused projects. By 2030, the Kingdom is expected to add 320,000 new hotel rooms, according to the most recent estimates from the consulting firm Knight Frank.
By the end of the decade, 150 million domestic and foreign tourists are anticipated, so the Saudi market will require it. Sixty-six percent of the newly available hotel rooms will fall into the “luxury,” “upper upscale,” and “upscale” categories. According to the Knight Frank report, by 2030, this segment will ‘expand further to 72 percent of the market, equating to 251,500 hotel rooms’.
Nearly 100 million tourists, both domestic and foreign, visited Saudi Arabia by the end of 2023, and the travel and hospitality industry accounted for almost 6% of the country’s GDP. By the end of the decade, the sector is expected to reach the government’s target of 10% thanks to this.
By 2025, the Holy Cities are anticipated to receive about 30 million religious tourists, and by 2030, the government predicts that this number will increase to 50 million.
Biggest source markets
Spending on tourism increased to SR87 billion in the first half of 2023, a 132% increase from 2022. Foreign visitors increased by 142%, reaching 14.6 million arrivals. Bahrain (2.2 million), Kuwait (1.9 million), and Egypt (1.5 million) were the largest source markets.
“With a target of welcoming 150 million visitors by 2030 — a 50 percent increase from its previous goal—the government is actively exploring various strategies to attract international travelers,” said Turab Saleem, Partner and Head of Hospitality, Tourism & Leisure Advisory, MENA.
“This includes the development of cultural and entertainment offerings nationwide, which complement existing attractions like the Jeddah F1 Grand Prix and numerous ‘Entertainment Seasons’.
New theme parks, like Boulevard World in Riyadh, have been added to this, and the Saudi General Entertainment Authority has licensed 24 more theme parks in the last year.
With an anticipated 40 million visitors over the six-month event, Riyadh’s bid to host the 2030 World Expo is expected to bring in $94.6 billion for the nation’s capital.
Worker accommodation
According to Faisal Durrani, Knight Frank’s Partner – Head of Research, MENA, “Notwithstanding that worker-to-room ratios in Saudi can sometimes be lower than global averages, the provision of key worker accommodation for the hospitality sector will be essential to ensure its future success.
“Not only does accommodation of this type help to mitigate against staff attraction and retention issues, but it also creates investment-grade assets. Indeed, elsewhere in the GCC, key worker accommodation can trade for yields of as much as 10 percent, depending on the location, quality, lease tenure, and of course the tenant.”