Saudi Arabia bets on luxury to lure tourists

Yahoo

21-05-2025

Saudi Arabia is banking on luxury resorts and lavish palaces to reinvent a sector that has largely been defined by religious and business tourism.
A new report by Knight Frank shows that 78% of the kingdom's hotel pipeline is focused on upscale and luxury properties, part of what a senior Saudi tourism official described as a branding exercise to make the kingdom a desirable destination. Habitas AlUla, Six Senses, Amaala, and other design-forward resorts are among the most recognizable hotels in the national branding project.
'The plan is to put the country or the destination on the map,' Oussama El Kadiri, head of hospitality at real estate consultancy Knight Frank, told Semafor. 'The hotel product is not only there for people to sleep in, but also to be seen.'
Saudi Arabia's tourism push is part of the kingdom's Vision 2030 efforts to diversify its economy. The overall effort has had some success — non-oil sectors generated more than half of Saudi GDP in 2024 — but there are challenges. Foreign direct investment hasn't reached its target. Tourism is picking up, though: The kingdom last year surpassed its target of 150 million annual visits, largely driven by domestic travel, according to official data.
The government's strategy is to build high-end properties itself, and as Saudi Arabia becomes part of the global tourism map, private capital will fill out the rest: the 3- and 4-star hotels, the short-stay inventory, and other attractions that make repeat travel viable.
A couple of months ago, when I visited the Six Senses Sand Dunes, the first resort to open under the Red Sea Project in 2023, the setting was cinematic — every corner felt curated, textured, ready to be photographed — and nearly empty.
These are places you recognize before you arrive, because you've already seen them online. Saudis are the largest segment staying in these ultra-luxe spots, and they are coming because they can finally see more of their country. Many Saudis are skipping another hop to Cairo or Dubai to explore the kingdom.
The average Saudi household earns just over 18,000 Saudi riyals a month ($4,800), with half earning less than 11,000 riyals. These aren't incomes built for long luxury getaways. In order to fill up the growing luxury inventory, growing numbers of wealthy Saudis will have to choose to vacation at home, while foreign tourists will have to swap more established destinations like the Maldives or the Seychelles for the Red Sea.