Saudi Arabia Hotel Market Size and Share Analysis – Growth Trends and Forecast Report 2025-2033
The Saudi Arabia hotel market is poised for substantial growth, projected to rise from US$15.40 billion in 2024 to US$27.26 billion by 2033, with a CAGR of 6.55% during the forecast period. Supported by Vision 2030, government-led tourism reforms, and massive infrastructure investments, the Kingdom is rapidly becoming a global tourism and hospitality hub. The boom in religious, domestic, and business tourism, coupled with digital transformation in the hotel booking ecosystem, continues to drive demand across luxury, mid-scale, and budget accommodations.
1. Saudi Arabia Hotel Market Summary The Saudi Arabian hotel sector is undergoing a profound transformation driven by robust investments, government reforms, and strategic national projects. The market is expected to grow from US$15.40 billion in 2024 to US$27.26 billion in 2033, expanding at a CAGR of 6.55%. Government incentives such as simplified visa procedures, the introduction of e-visas, and foreign investment facilitation are attracting global hotel chains and significantly increasing inbound tourism.
2. Market Drivers
2.1 Religious Tourism Boom Saudi Arabia continues to be the epicenter of Islamic pilgrimage, with Makkah and Madinah drawing millions of pilgrims each year. In 2024, the Kingdom hosted 18.5 million pilgrims, creating sustained demand across all hotel categories. Strategic expansions near religious landmarks are facilitating higher capacity and improving pilgrim experiences.
2.2 Vision 2030 and Economic Diversification Vision 2030 aims to diversify Saudi Arabia’s economy by developing tourism as a key non-oil sector. Projects like NEOM, Qiddiya, and the Red Sea Project are reshaping the hospitality landscape. Government backing, public-private partnerships, and the easing of foreign ownership laws are encouraging investment in hospitality infrastructure.
2.3 Domestic and Regional Tourism Surge Domestic travel is booming, with bookings up by 44% in 2024. Destinations like AlUla, Abha, and the Red Sea coast are attracting families and groups, especially in the 3-star and budget segment. Government promotion of cultural heritage, improved infrastructure, and targeted tourism campaigns are key growth enablers.
3. Market Challenges
3.1 High Operational Costs and Workforce Localization Operational expenses remain high, particularly for luxury properties. The Saudization policy, aimed at increasing local employment, brings challenges in terms of recruiting and training qualified Saudi professionals. Hotels must balance localization with maintaining service excellence.
3.2 Market Saturation in Urban Hubs Cities like Riyadh, Jeddah, and Makkah are experiencing a rapid influx of hotel developments, especially in the upscale and mid-scale segments. Oversupply risks are rising, leading to pricing pressures and fluctuating occupancy rates. Diversification into underserved regions is essential for sustained growth.
4. Segment Analysis
4.1 High-End Hotel Segment This segment is expanding due to luxury religious tourism and corporate travel. International brands such as Marriott, Ritz-Carlton, and Four Seasons are well-positioned in Riyadh, Jeddah, and pilgrimage cities. Upcoming projects like The Red Sea and NEOM are expected to further elevate luxury offerings.
4.2 Mid-Scale Hotel Segment Mid-tier hotels are gaining momentum with the rise in domestic tourism. Brands like Holiday Inn and Novotel are expanding in secondary and tertiary cities, offering affordability with standardized service. They are particularly popular among pilgrims and budget-conscious travelers.
4.3 Budget Hotel Segment This segment sees increased demand from pilgrims, domestic travelers, and regional tourists seeking affordable stays. Growth in this sector is supported by government efforts to improve accessibility and diversify tourist demographics.
4.4 Online vs Offline Booking Platforms Digital transformation is reshaping booking behavior. Online channels dominate, led by Booking.com, Expedia, and local platforms like Almosafer. Hotels are focusing on direct booking platforms to improve margins. Real-time availability, mobile booking, and flexible cancellations are top consumer priorities.
5. Regional Market Overview
5.1 Makkah The spiritual center of Islam continues to be the strongest hotel submarket. Mega-projects like the Makkah Royal Clock Tower and recent SAR2.5 billion investment in hospitality infrastructure are enhancing capacity and improving services.
5.2 Riyadh As the capital city, Riyadh is a magnet for business travelers. Continued investment in business infrastructure, trade expos, and international conferences keeps occupancy rates stable. Areas like Olaya and King Abdullah Financial District are hotel hotspots.
5.3 Madinah Madinah, like Makkah, thrives on religious tourism. High seasonal occupancy during Umrah and Hajj seasons drives demand for all categories, especially value accommodations close to Al-Masjid an-Nabawi.
5.4 Jeddah Jeddah serves as a gateway to the holy cities and a center for corporate activity. It benefits from seaport trade, international business events, and expanding entertainment options.
5.5 Al Khobar and Dammam Located in the Eastern Province, these cities cater to business travelers and oil industry professionals. They are gaining attention due to diversified economic plans and increasing leisure offerings along the Arabian Gulf.
6. Company Profiles & Developments
6.1 Dur Group
- Overview: Major domestic hospitality player
- Key Person: Abdullah bin Mohammed Al-Issa (Chairman)
- Recent Development: Merger with Taiba Investments
- Revenue: Significant growth post-merger
6.2 IHG Group
- Overview: Operates InterContinental, Holiday Inn, and Crowne Plaza in the Kingdom
- Key Person: Haitham Mattar (MD – IMEA)
- Recent Development: Expansion into NEOM and Red Sea
- Revenue: Robust performance driven by religious and business travel
6.3 Marriott International
- Overview: Expanded with the launch of City Express by Marriott in 2023
- Key Person: Anthony Capuano (CEO)
- Recent Development: Acquisition of Hoteles City Express
- Revenue: Strong growth in luxury and mid-scale segments
6.4 Accor
- Overview: Active across Makkah, Riyadh, and Jeddah with Novotel, Pullman, and Sofitel
- Key Person: Sébastien Bazin (CEO)
- Recent Development: Increased focus on religious tourism
6.5 Hilton Hotels
- Overview: Operates DoubleTree, Hilton Garden Inn, and Conrad
- Key Person: Chris Nassetta (CEO)
- Recent Development: Announced multiple openings across Saudi Vision 2030 projects
6.6 Al Hokair Group
- Overview: Prominent local player in hospitality and entertainment
- Key Person: Majid Al Hokair
- Recent Development: Expansion in budget hotel segment
6.7 AlTayyar Group
- Overview: Strong presence in travel and hospitality services
- Key Person: Abdullah Al-Dawood (Group CEO)
- Recent Development: Integration of booking services with Almosafer
7. Market Segmentation Overview
By Hotel Type:
- High-End Hotels
- Mid-Scale Hotels
- Budget Hotels
By Ordering Platform:
- Online
- Offline
By Region:
- Makkah
- Riyadh
- Madinah
- Jeddah
- Al Khobar
- Dammam
Conclusion: Saudi Arabia’s hotel market is experiencing unprecedented growth, driven by visionary government policies, megaprojects, and increasing domestic and religious tourism. While challenges such as market saturation and operational costs exist, strategic diversification and digitalization are set to keep the Kingdom at the forefront of global hospitality evolution.
