Saudi Arabia Hotel Market Size, Share, and Forecast 2025–2033

Introduction: Saudi Arabia’s Booming Hotel Industry

Saudi Arabia is rapidly transforming into one of the world’s most dynamic hospitality markets. Traditionally recognized as the center of Islamic pilgrimage, the Kingdom has long hosted millions of travelers for Hajj and Umrah. But today, it is positioning itself as a global tourism hub, welcoming leisure travelers, business visitors, and luxury seekers.

The growth of the Saudi Arabian hotel industry is fueled by government-backed Vision 2030, a program designed to diversify the economy beyond oil and expand tourism to contribute 10% of GDP. In 2024 alone, Saudi Arabia attracted nearly 94 million visitors, surpassing many global destinations and making it the fastest-growing travel destination among G20 nations. With new mega-projects like NEOM, the Red Sea Project, and Qiddiya, as well as visa reforms and record levels of investment, the Kingdom is laying the foundation for a thriving hotel market.

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Saudi Arabia hotelMarket Size & Forecast: A Decade of Strong Growth

The Saudi Arabia hotel market was valued at US$ 15.40 billion in 2024. By 2033, it is projected to nearly double, reaching US$ 27.26 billion, at a CAGR of 6.55% from 2025 to 2033.

This expansion is driven by:

A steady rise in religious tourism (Hajj and Umrah).

• Investments exceeding US$ 550 billion into hospitality and leisure destinations.
• Growth in domestic and regional tourism after COVID-19.
• Visa reforms that ease entry for millions of international visitors.

The ambitious target is to attract 100 million tourists annually by 2030, supported by over 250,000 additional hotel rooms, including 75,000 already under construction.

Key Growth Drivers

1. Religious Tourism Boom

Makkah and Madinah are the spiritual heart of Saudi tourism, welcoming millions of pilgrims annually. In 2024 alone, the Kingdom hosted 18.5 million pilgrims, with demand for accommodation ranging from luxury hotels near the Grand Mosque to budget-friendly options for families. With government initiatives to expand capacity, hotels in these holy cities consistently report peak occupancy rates during pilgrimage seasons.

2. Vision 2030 and Mega-Projects

Vision 2030 is redefining Saudi Arabia’s global tourism image. Projects like NEOM (a futuristic mega-city), The Red Sea Project (luxury island resorts), and Qiddiya (entertainment hub near Riyadh) are attracting investors and global hotel brands. These destinations are not only drawing high-spending international tourists but also positioning Saudi Arabia as a luxury hospitality leader.

3. Rise of Domestic and Regional Tourism

Post-pandemic, Saudis increasingly explored domestic destinations like AlUla, Abha, and the Red Sea coast. Domestic tourism recorded a 44% boost in bookings in 2024, with 35% of room nights in 3-star or lower hotels—showing that budget and mid-scale accommodations are gaining traction alongside luxury hotels.

4. Visa Reforms and Accessibility

E-visas and visas-on-arrival for travelers from 66 countries have transformed Saudi Arabia’s tourism landscape. Visitors can now stay up to 90 days for events, entertainment, and religious activities, boosting hotel demand across regions.

Challenges in the Saudi Hotel Market

Despite rapid growth, the industry faces key hurdles:

• High Operational Costs: Running hotels in Saudi Arabia is expensive due to energy, staffing, and compliance with Saudization policies (hiring Saudi nationals).
• Workforce Localization: The hospitality sector struggles with a shortage of trained Saudi professionals, pushing operators to invest heavily in training.
• Market Saturation Risks: Riyadh, Jeddah, and Makkah face intense hotel development, which could lead to oversupply if tourist arrivals do not match projections.

Luxury vs Mid-Scale vs Budget Hotels

Saudi Arabia’s hotel market caters to a diverse spectrum of travelers:

• High-End Hotels: Global chains like Ritz-Carlton, Four Seasons, Hilton, and Marriott are expanding aggressively. In Riyadh, 82% of pipeline hotels are luxury or upper-upscale. Jeddah focuses on coastal luxury, while Makkah and Madinah offer premium pilgrimage stays.
• Mid-Scale Hotels: Brands like Holiday Inn, Novotel, and Park Inn serve domestic travelers, corporate guests, and pilgrims seeking comfort at affordable prices. This segment is growing rapidly, especially in secondary cities.
• Budget Hotels: With the rise of family and group tourism, demand for 3-star hotels and serviced apartments is increasing. Many travelers prefer value accommodations, contributing to market diversification.

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Digital Transformation: The Rise of Online Booking

Saudi Arabia’s online hotel market is growing as travelers shift toward digital platforms. With high internet penetration and smartphone adoption, platforms like Booking.com and local players such as Almosafer are leading. Hotels are also investing in direct booking websites and mobile apps to attract customers with discounts and loyalty benefits.

Post-COVID, the demand for flexible booking options and real-time confirmations has made digital channels a cornerstone of Saudi hospitality.

Regional Insights

Makkah & Madinah

Religious tourism dominates these cities, with 80,000+ hotel rooms already in place and a projected 3% annual room growth by 2026. During Hajj, Mecca experiences near 100% occupancy, making it one of the most profitable hospitality markets globally.

Riyadh

The capital city is booming with luxury hotels and conference centers, fueled by business travel, government events, and mega-developments like the New Murabba project. It is becoming a hub for MICE (Meetings, Incentives, Conferences, and Exhibitions) tourism.

Jeddah

Known for its coastal appeal and luxury resorts, Jeddah attracts both religious and leisure travelers. International hotel brands are investing heavily here, aiming to capture affluent tourists.

NEOM & The Red Sea

Saudi’s futuristic projects like NEOM and Sindalah Island are setting the stage for ultra-luxury tourism. NEOM alone targets 5 million visitors by 2030, redefining the Kingdom as a high-end destination.

Company Landscape

The Saudi hotel sector features both domestic groups and international chains:

• Dur Group
• IHG Group
• Marriott International
• Accor
• Hilton Hotels
• Al Hokair Group
• Altyaar Group

Recent deals highlight the sector’s momentum:

• Marriott International (May 2023): Launched City Express by Marriott after acquiring Hoteles City Express.
• Taiba Investments (April 2023): Acquired Dur Hospitality Company, strengthening its position in the Saudi market.

Future Outlook: Building a Global Tourism Powerhouse

Saudi Arabia’s hospitality industry is at the center of its economic diversification. By 2030, the Kingdom expects:

• 100 million annual tourists.
• 250,000 new hotel rooms.

• Expansion in wellness tourism, luxury resorts, and business travel.

With government-backed investment, global partnerships, and strong religious tourism, Saudi Arabia is set to become the hospitality capital of the Middle East.

Conclusion

From Makkah’s pilgrimage-driven demand to NEOM’s futuristic luxury resorts, Saudi Arabia’s hotel market is undergoing a historic transformation. Backed by Vision 2030, billions in tourism investment, and record-breaking visitor arrivals, the sector is on track for robust growth.

For travelers, investors, and hotel operators alike, the Kingdom represents both a unique cultural destination and a world-class hospitality market that is just getting started.

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