As the country continues its transformation, there are substantial opportunities for investors, and the ripple effects are likely to reshape the global tourism industry. With the increased number of rooms and events driving international arrivals, the Kingdom of Saudi Arabia (KSA) is positioning itself as a major hub for tourists seeking a diverse mix of leisure, culture, and business experiences.
A Strategic Shift Towards Tourism and Hospitality Expansion
Saudi Arabia’s decision to develop hundreds of thousands of hotel rooms is part of a broader, long-term transformation strategy under its Vision 2030. The country has dedicated a massive $110 billion to revolutionize its hospitality sector, which already contributed a significant SAR444.3 billion (around $118.46 billion) to its GDP in 2023. This sector now accounts for 11.5% of the nation’s economy, with expectations for further growth in the coming years. With new hotels, infrastructure developments, and rising international interest, Saudi Arabia is building its tourism sector into a world-class destination.
Oussama El Kadiri, a partner at Knight Frank and head of Hospitality, Tourism, and Leisure, explained that the rise in international visitors is driving this growth. In 2024, the number of international arrivals increased to 30 million, up from 27.4 million in 2023. This surge is only expected to continue, with the kingdom aiming to attract 70 million international visitors annually by 2030. This growth is fueled by investments in new hospitality projects and the increased global awareness of Saudi Arabia as a tourist destination.
Global Events and Their Role in Saudi Arabia’s Tourism Growth
The scheduled global events, such as the 2029 Asian Winter Games, World Expo 2030, and the FIFA World Cup 2034, are also seen as catalysts for tourism growth. These events are expected to draw a large number of visitors and place Saudi Arabia in the global spotlight. Not only will they enhance the country’s reputation as a premier destination for business and leisure, but they will also provide significant opportunities for tourism, hospitality, and related sectors.
The impact of these mega-events on Saudi Arabia’s tourism sector is expected to be substantial. For instance, the World Expo 2030 and FIFA World Cup 2034 are projected to create lasting infrastructure and industry development that will attract international tourists year-round. For travelers, this means not only more access to hotel rooms and amenities but also a wide array of world-class services, entertainment, and cultural experiences. These events will further position Saudi Arabia as a key player in the global tourism market.
Strong Growth in Hotel Room Revenue
Data from STR, a leading hospitality data and analytics provider, reports that hotel room revenue in Saudi Arabia reached an impressive $5.6 billion between January and October 2024. This marks a 3.5% increase from 2023 and represents a significant 26.5% growth compared to 2019. This growth was particularly noticeable in Riyadh and Madinah, where both occupancy and average daily rate (ADR) performance showed upward trends. In Riyadh, the ADR rose by 16% in 2024, while Madinah saw a 5% increase in ADR.
Despite this rapid expansion, experts suggest that the influx of new hotel rooms may lead to some short-term challenges. Philip Wooller, Senior Director for Middle East & Africa at STR, noted that the introduction of new hotels could lead to slight adjustments in room rates as supply meets demand. He emphasized that maintaining competitive pricing and ensuring high occupancy levels will be crucial to sustaining growth in the Saudi Arabian hospitality market.
Hospitality Investment Opportunities: A Growing Market for Travelers
As part of its hospitality sector transformation, Saudi Arabia is hosting the Future Hospitality Summit (FHS) in 2025, set to take place at the Mandarin Oriental Al Faisaliah in Riyadh from May 11 to 13. This event will bring together hospitality leaders, decision-makers, and investors to discuss the vast opportunities within the country’s burgeoning tourism industry. FHS Saudi Arabia, under the theme “Where Vision Shapes Opportunity,” will focus on exploring how Vision 2030 will shape the future of hospitality in the region.
The summit aims to surpass last year’s record of 1,400 delegates and the $1.1 billion worth of business opportunities generated. This further signals the kingdom’s importance in global tourism, as investors, businesses, and travelers are increasingly interested in exploring the opportunities arising from the nation’s expansion.
The Role of New Hotel Developments in Enhancing Visitor Experience
For travelers, Saudi Arabia’s influx of new hotel rooms means more options for accommodations in various regions, including Riyadh, Jeddah, and Madinah. This influx of new, modern, and well-developed properties promises an enhanced experience for visitors, with a range of luxury, mid-range, and budget options to cater to diverse tastes and preferences. Travelers looking to visit the kingdom for leisure, business, or events will benefit from the expanded selection of rooms, resorts, and high-end facilities.
However, industry experts caution that the rapid growth in hotel supply might create short-term pressure on hotel prices and demand balance. The shift in pricing could be a challenge for budget-conscious travelers, but it also presents opportunities for tourism professionals to tap into new customer segments, especially in key cities like Riyadh, which is seeing a surge in both occupancy and ADR.
Tourism Industry Implications: Supply and Demand Dynamics
The introduction of 362,000 new hotel rooms by 2030 is likely to have a profound impact on the local tourism market. With such rapid growth in hotel supply, the market will be more competitive, which could lead to adjustments in room rates, especially in the short term. This will be a critical area for travel industry professionals to manage, balancing the need for affordable accommodations with the desire for high-quality services.
For travelers, this means an increasingly competitive hotel market where discounts, promotions, and loyalty rewards could become more common as hoteliers seek to fill their rooms. The rapid expansion in room capacity will allow for more tourists to experience Saudi Arabia, whether visiting for religious reasons, business events, or leisure travel. As the demand for quality accommodations continues to rise, visitors can expect an enhanced experience, with increased diversity in hotel offerings across the kingdom.
Impact on Global Tourism: Saudi Arabia’s Growing Influence
The impact of Saudi Arabia’s investment in the tourism sector extends beyond the borders of the kingdom. As the country builds its infrastructure and expands its hospitality offerings, it is positioning itself as a destination that competes with global tourism hubs like Dubai, Istanbul, and Paris. For travelers, this presents more options for world-class accommodations, events, and unique experiences that blend luxury, culture, and entertainment.
The country’s transformation could also set a precedent for other nations looking to diversify their tourism economies. As Saudi Arabia becomes a central player in the global tourism landscape, it will likely drive other destinations to reassess their tourism strategies and infrastructure. Global travelers will increasingly see the kingdom as a hub for high-end tourism, attracting those seeking a new and exciting destination for business, leisure, and mega-events.
What Travelers Can Expect in Saudi Arabia by 2030
As Saudi Arabia continues to roll out its ambitious plans to add 362,000 hotel rooms by 2030, travelers can expect an increasingly vibrant and diverse tourism landscape in the kingdom. The expansion of its hospitality sector, coupled with upcoming mega-events and a burgeoning investment climate, sets Saudi Arabia on track to become a global tourism leader. For visitors, this transformation means more choices, better accommodations, and world-class experiences, all set within a country undergoing a remarkable economic and cultural shift. While the industry adapts to new supply and demand dynamics, travelers can look forward to a Saudi Arabia that offers both rich cultural experiences and modern, luxurious amenities in the years ahead.
