Saudi Arabia currently holds a hotel development portfolio worth more than $110 billion, showcasing vast hospitality opportunities in Saudi’s giga projects and mega-events. The growth is powered by the country’s giga projects and upcoming global events such as Riyadh EXPO 2030 and the FIFA World Cup 2034.
Saudi Arabia already leads the Middle East and Africa in hotel construction, accounting for 35.1% of all new hotel rooms in the region – numbers likely to go way up as anticipation for the mega events drives demand for accommodation. Looking ahead, Saudi Arabia’s hotel room pipeline is estimated to hit 320,000 rooms, with a total development cost of $104 billion.
These projections are underpinned by a strong market volume. The market size is expected to reach $13.23 billion. It is projected to grow to $16.91 billion by 2029. This growth will occur at a compound annual growth rate (CAGR) of 5.03%.
How Saudi’s Giga Projects and Mega Events are Creating Hospitality Opportunities
Saudi Arabia is undertaking the biggest sports construction project in history, with 15 stadiums planned across five host cities in preparation for the FIFA World Cup 2034.
However, the infrastructure boom extends beyond sports. It encompasses residential and hotel development. With hospitality opportunities in Saudi’s giga projects and mega events on the rise, 230,000 hotel rooms will be needed. These rooms will accommodate the influx of visitors expected for the World Cup.
Similarly, Riyadh Expo 2030 is fueling consistent growth in hotel construction activity. It is set to attract 21.7 million visitors. Of these, 10.3 million are expected to be international visitors. The anticipated growth in hotel room occupancy is expected to result in $5 billion in revenues for hospitality.
Meanwhile, giga projects such as Diriyah Gate, the Red Sea Projects, & Qiddiya account for the largest share of the hotel pipeline in the Kingdom at 73%. Taking a granular look, Diriyah Gate, for example, is planned to have 38 hotels comprised of 5000 hotel rooms by 2030.
Amaala, envisioned to be one of the world’s largest tourism projects, is planned to accommodate 29 hotels, with 3900 rooms set to be completed by the same year. Four Seasons recently unveiled plans for the development of a new luxury wellness resort and private residences in Amaala’s Triple Bay. Four Seasons Resort and Residences Amaala at Triple Bay will host 220 rooms, suites, and villas with private pools, as well as 26 residential villas.
The Kingdom’s capital for culture, entertainment, and sports, Qiddiya, is believed to be home to large hotel chains and resorts as well. Saudi Arabia’s Qiddiya Investment Company was awarded a joint venture. This venture is between local contractor Albawani and Urbacon Trading & Contracting Company. They will establish the Water Park Hotel at Qiddiya’s resort core. The project involves developing a five-star hotel with 550 rooms across 12 floors.
The government’s commitment to attracting private sector investment remains a key growth enabler for Saudi Arabia’s hospitality sector. For instance, an initiative like the Tourism Investment Enablement Program is expected to attract SAR 42 billion in investments. Additionally, it is projected to create 120,000 job opportunities and 42,000 hotel rooms by 2030.
Moreover, the recently launched Hospitality Investment Enablers (HIE) initiative is also expected to attract SR42 billion ($11 billion) in investment. This initiative similarly aims to create 120,000 new jobs by 2030.
Together, these efforts are aimed at fueling the Kingdom’s hotel construction spree. Consequently, this trend is set to extend well into the future, as the country remains on track to become one of the world’s most popular tourist destinations.
Global Industry Players Are Betting Big on Saudi Arabia’s Hospitality Sector Boom
The boundless opportunities in the Kingdom’s hospitality industry are driving global hoteliers, contractors, and investors. They are expanding their operations in the Kingdom. These entities are looking to exploit a rapidly expanding pipeline of projects.
Notable hotel chain operators expanding their coverage in the Kingdom include Jumeirah Group, Marriott, IHG, and Hilton. Hilton has set an ambitious aim to operate 100 hotels in the Kingdom by 2030.
Across the global hotel industry, there’s a growing emphasis on incorporating sustainable practices. These practices span the hotel’s value chain, from construction to operations. They include energy-saving methods, waste reduction, reusable water bottles, and biodegradable materials.
This underlying trend is also coming into view in Saudi Arabia. It is spurring the need for innovative solutions to streamline hotel supply chain operations. Factors like efficiency and recyclability are becoming increasingly important.
Building on this momentum, the country has become an ideal expansion destination. A growing number of global sustainability-oriented consultancies are moving in, including the UK-based RSK, an AstroLabs’ expansion member. This shift aligns with Vision 2030’s objectives to reduce carbon emissions in the sector and achieve net zero by 2035.
From sports stadiums to urban infrastructure, the scale of the upcoming projects is vast. This provides fertile ground for international hotel firms to expand their footprint. These firms can leverage lucrative contracts with promised long-term increases in profit margins and growth projections.
Last year, the Kingdom was named the fastest-growing travel destination worldwide, with a 125% increase in foreign tourist visits. As the country’s position as a leading tourist destination continues to take hold, the Kingdom’s hospitality industry is poised for an upcycle, with increasing interest from international investors.