Saudi Arabia Sets Sights Sky-High with 315,000 New Hotel Rooms Planned by 2030

The Kingdom is gearing up for a major expansion in its hospitality sector by developing 315,000 hotel keys by 2030, according to global property consultancy Knight Frank.

This growth, Knight Frank says, will see Saudi Arabia’s hotel room inventory swell to become larger than Dubai’s current 140,000 keys. The development of the hospitality sector is a cornerstone of the Kingdom’s economic diversification plans.

Faisal Durrani, Partner – Head of Middle East Research explained: “The volume of hotel room keys planned to be delivered in the Kingdom by 2030 is nothing short of incredible, with a total likely stock of close to 450,000 hotel rooms. For context, the UAE today has a combined total of around 200,000 rooms, including Dubai’s 140,000 keys, so Saudi is gearing up to see nearly 58% more than this figure. A major part of the success of the Kingdom’s future tourism and hospitality market will be its domestic tourism sector. The sector is already alive and thriving, with 65% of Saudis already traveling within the Kingdom between one and three times a month. What’s fascinating however is the fact that 58% of Saudis we spoke to as part of our 2023 Saudi Report opt not to stay in hotels.”

The development of the hospitality sector is a cornerstone of the Kingdom’s economic diversification plans

Addressing the need for diversity in accommodation options, Durrani explains: “The prevalence of large families traveling together may clearly be a factor, but so is cost, quality and location, with these three reasons being cited by our 2023 Saudi Report respondents. Notably, just 17% of the planned hotel supply falls in the three-star or below category, and with 56% of the Kingdom’s population aged below 35, the demand for various accommodation types will likely continue to emerge as a significant consideration for the industry. We will need to think broader and incorporate the likes of luxury glamping sites and youth hostels to cater to this increasingly important segment of the market if it is to thrive and flourish, being mindful of the cultural sensitivities and the need for appropriate adaptations.”

Just 17% of the planned hotel supply falls in the three-star or below category

The rapid expansion of hospitality-linked offerings across the country is expected to play a critical role in boosting domestic tourism, which Knight Frank forecasts will form a key part of the future of the Kingdom’s hospitality landscape and is already a thriving industry.

Turab Saleem, Head of Hospitality, KSA commented: “With a total development cost of $37.8 billion for all the hotel rooms planned in the Kingdom, according to our estimates and giga projects like NEOM leading the supply pipeline, Saudi Arabia is on the cusp of becoming one of the world’s major tourist markets. The key to achieving this goal lies in catering to the diverse accommodation needs of domestic tourists, including the younger generation. Furthermore, supporting hospitality infrastructure, such as new airports and national airlines, both of which are coming, combined with a legislative framework that eases access to the sector for international investors, will be critical.”