Saudi Arabia Bets on Luxury in Hotel Sector

Gulf Insider

12-05-2025

Saudi Arabia's hospitality sector is scaling up fast, with nearly 80% of its future hotel supply geared toward the luxury, upscale, and upper-upscale categories, according to Knight Frank's Saudi Arabia Hospitality Market Review – 2025.
Driven by Vision 2030 goals, the Kingdom aims to develop 362,000 hotel rooms by the end of the decade, supporting its target of 150 million domestic and international visitors annually.
As of Q1 2025, Saudi Arabia had 167,500 hotel keys, with 61% already in high-end segments. Another 99,500 rooms are planned or under construction, and 78% of these will cater to the premium market.
'The focus on high-end hotel development plays to Saudi Arabia's growing reputation as a luxury destination,' said Faisal Durrani, Partner – Head of Research, MENA, Knight Frank.
'That said, there's a growing need for modest accommodation options to support domestic demand, which remains the sector's backbone.'Tourism revenue soars
In 2024, Saudi Arabia hosted 127 million visitors, contributing 4.7% to GDP. The Kingdom is on track to hit its 10% GDP target by 2030.
International arrivals rose 9.5% to 30 million, while inbound tourism spend hit a record SAR153.61 billion ($40.9 billion), up 13.8% year-on-year, according to the Saudi Central Bank.
Travel has been made easier by the eVisa platform, which allows citizens from 66 countries — including the US, UK, China and Japan — to enter for leisure, Umrah, business events, and family visits. Hajj remains under a separate visa system.
Diversified visitor mix
While religious tourism remains foundational, Saudi Arabia is attracting a broader audience. As of Q3 2024, leisure tourists made up 30% of inbound travel, visits to friends and family 24%, and business, education, and medical travel accounted for the rest. Religious pilgrimage made up 26% of all inbound visits.
'Hosting global events like Expo 2030, Asian Games 2029, and the FIFA World Cup 2034 will be transformative,' said Oussama El Kadiri, Partner – Head of Hospitality, Tourism & Leisure Advisory, MENA.
'These will draw 150 million visitors and boost Saudi Arabia's profile as a top destination for culture, business and sport.'
Key growth engines
In 2024, Saudi Arabia welcomed 1.8 million Hajj pilgrims and 35.7 million Umrah pilgrims — including 16.9 million international Umrah pilgrims, a record 25% increase from 2023.
Over 252,000 hotel rooms are planned or under development in Makkah and Madinah, with 64% in 4- and 5-star categories. Mega-projects like Rua Al Haram, Rua Al Madinah, and Masar Makkah are reshaping the religious tourism landscape.
'Opening up Holy Cities to international investment is a pivotal move,' said Amar Hussain, Associate Partner – Research, KSA. 'It will inject capital, boost liquidity, and accelerate project delivery.'
Also read: Saudi Arabia: Kingdom Arrests 15,928 Illegals In One Week
Source Gulf News