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The development cost of Saudi Arabia’s 320,000 hotel-room pipeline is estimated to hit $104 billion by 2030, according to a Knight Frank report. The luxury, upper-upscale and upscale sectors will command the lion’s share of Saudi Arabia’s hotel supply, comprising 72% of the market in six years.
The report by the global property consultancy revealed that 66% of the existing supply of the 149,400 rooms in the kingdom fall into the luxury, upper upscale and upscale categories. However, by 2030, this segment of the market will expand further to equate to 251,500 hotel rooms.
Saudi Arabia’s planned giga projects are driving growth in the hospitality sector surge, with NEOM expected to add anywhere between 40,000-80,000 room keys, according to the report, followed by 47,000 plus keys in Ruaa Al Madinah.
The report by the global property consultancy further stated the kingdom’s “major expansion” in its hospitality sector will cater to the projected surge in tourism, with 150 million domestic and international tourists expected by 2030.
According to the Saudi Ministry of Tourism, tourism spending in the first half of 2023 rose to 87 billion riyals, marking a 132% increase compared to 2022. Concurrently, international visitor numbers soared by 142%, totalling 14.6 million arrivals, reflecting the sector’s strongest performance in a half-year period.
Riyadh winning the bid to host the 2030 World Expo is expected to inject a substantial economic boost of $94.6 billion into the nation’s capital, with an estimated 40 million visitors expected during the six-month exhibition (Rajhi Capital).
Knight Frank’s analysis of hotel supply in Makkah and Madinah revealed a a significant figure of 221,000 hotel rooms announced, planned or under construction, with 40,000 in Masar Makkah and a further 39,000 in Thaker Makkah.
“The scale of the Kingdom’s hospitality ambitions is further amplified when you consider the projected development costs. By our calculations, to realise 320,000 hotel rooms, approximately $104 billion will be required, in construction costs alone. The Holy Cities themselves, will need to see spending in the region of $70 billion to develop the expected 221,000 hotel rooms,” Daniel Pugh, Partner – Head of Hospitality Valuation & Advisory, MENA, said in a statement.
(Writing by Bindu Rai, editing by Seban Scaria)
