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Saudi Arabia’s hospitality sector set to accelerate growth

Article-Saudi Arabia’s hospitality sector set to accelerate growth

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New hotels and massive projects pipeline to boost industry expansion as well as help achieve Kingdom’s Vision 2030 aspirations

The hospitality sector in Saudi Arabia has witnessed impressive growth in recent years, thanks to several key initiatives by the government to boost the hotel industry and ramp up its overall tourism aspirations as part of its Vision 2030.

World’s biggest tourism investor

Since opening to tourism in 2019, Saudi Arabia has been recognised as the world’s fastest-growing tourism destination in the G20. The Kingdom witnessed a 121% increase of international tourist arrivals compared to pre-pandemic levels, welcoming 93.5 million visitors in 2022 and is outpacing global tourism sector recovery, as recognised by the UNWTO.

Saudi Arabia’s efforts in boosting its tourism and hospitality sector have made it the world’s biggest investor in tourism, with committed investments in excess of $550bn to new destinations by 2030.

Aggressive push

In 2022, Saudi Arabia ranked first among Arab countries for inbound visitors with more than 18 million travellers visiting the Kingdom during the first three quarters of the year. A new tourism law introduced last year seeks to accelerate the development of an internationally competitive tourism sector in the Kingdom, which will in turn drive business, innovation, and investment.

The newly introduced legislation will also help fast-track the achievement of an annual 100 million tourist arrivals target and a 10 per cent sector contribution to Saudi Arabia’s GDP by 2030.

Meanwhile, new visa reforms, such as e-visas and visas-on-arrival for visitors from 49 countries, have eased travel restrictions and paved the way for an influx of tourists into the Kingdom, providing further impetus for its hospitality sector to grow.

Multi-layered hospitality

Key to this growth is providing multi-layered hospitality experiences which are very much in-demand and essential to the future of hospitality in the kingdom.

According to Agnès Roquefort, global chief development officer, luxury and lifestyle, Accor, “Our multi-faceted approach to hospitality is to create places not just to stay, but to live, and to enjoy life.

“A perfect example is in Riyadh, where we’ve just announced the development of a new luxury hospitality community that will include a Raffles hotel, a Sofitel serviced residence, and an MGallery resort.

“Alongside owning partner Erth Real Estate Company, the project will also layer in office towers, medical buildings, and retail and commercial space, all built around a central garden area. Our goal is to be as welcoming to locals and residents as to hotel guests and offer unique experiences that create a true neighbourhood vibe.”

Prospects and pipeline

Analysts from Knight Frank Middle East estimate more than USD1 trillion worth of real estate and infrastructure projects, including 315,000 hotel keys, are under development or in the pipeline in the Saudi Arabia.

In a recently published report, the company says, “new hotel rooms are likely to almost double to around 200,000 in the next four to five years, with at least 50 per cent of the proposed supply becoming operational by 2028, with some existing properties exiting from the market to make way for new, more competitive and appealing hotels and resorts.”

New openings and anticipated launches

Working to Saudi Arabia’s favour is the fact that the hotel and tourism developments are not only focused on the major cities of Riyadh and Jeddah but are strategically spread over other parts of the country.

Luxurious hotel properties are set to welcome visitors to Saudi Arabia’s Red Sea, with Six Senses Southern Dunes from IHG reportedly beginning operations later this year, with Nujuma, A Ritz-Carlton Reserve, and St. Regis The Red Sea from Marriott following shortly.

The three properties are part of the flagship The Red Sea project by Red Sea Global Development. By the year 2030, the destination expects to see a total of 48 hotels.

Earlier this year, Neom announced a partnership with Four Seasons Hotels and Resorts to develop a new luxury resort on Sindalah Island as part of its futuristic project.

Meanwhile, Marriott International will open eight new hotels in Madinah, in partnership with the Saudi PIF’s Rua Al Madinah Holding Group, to capitalise on the rising demand for luxury hospitality in the area.

Year-round destination

Hoteliers are optimistic that Saudi Arabia has laid out a well-strategised plan for fuelling the expansion of its hospitality sector to address current demand as well as ensure its sustainable growth well into the future.

Surely, the Kingdom has allocated the needed funds for the build-up and has generated more than enough interest from hoteliers to invest in new properties across the country.

But the Kingdom has other aces up its sleeves. The Saudi Tourism Authority, for instance, is building partnerships around the world to drive awareness about its destinations and unlock opportunities for collaborations. The Kingdom is aiming to position itself as a year-round tourist destination, with generally warm weather providing a haven for tourists throughout the year.



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