SAUDI ARABIA – Following an excellent year in which the country’s travel and tourism industry grew by 32%, the number of hotel rooms in Saudi Arabia is set to expand significantly from the current inventory of 171,650 key rooms, with approximately 94,500 additional rooms under construction or in advanced planning stages, according to a report from real estate consultancy Knight Frank.
Osama El Kadiri, Partner and Head of Hospitality, Tourism and Leisure Advisory at MENA, said: “The growth of Saudi Arabia’s hospitality market is being driven by a combination of government initiatives, private sector investments and evolving consumer preferences. Travel and tourism contributed a record R444.3 billion ($114.4 billion) to the economy in 2024, representing 11.5% of the country’s GDP, the highest in Saudi Arabia.” According to the World Travel and Tourism Council, the region
In the first quarter of 2025 alone, international tourist spending soared to SAR 49.4 billion, an increase of 9.7% year-on-year, and total tourism spending rose by 11% to SAR 284 billion.
In 2024, the country welcomed 29.7 million international tourists, an 8% increase from the previous year, and 86.2 million domestic tourists, a 5% increase from 2023.
Total annual tourist expenditure was SAR 284 billion, of which international tourist spending amounted to SAR 169 billion, reflecting an increase of 19%.
Faisal Durrani, partner and head of research at MENA, said: “Our research shows that the world is rapidly evolving with high-value travelers, experiential products and world-class hospitality assets emerging under Vision 2030 and National Tourism Strategies. The number of domestic and international tourists in 2023 has already reached 116 million, and the government has revised its 2030 target from 100 million to 150 million tourists, of whom one-third are expected to be religious. This confirms Saudi Arabia’s dual ambitions to expand its reach into overseas leisure and business travel and domestic tourism, while strengthening its global role as a center of Islamic pilgrimage. ”
market drivers
Religious tourism remains a major driver of the hospitality market. Last year, Saudi Arabia welcomed 1.8 million Hajj pilgrims and 35.7 million Umrah pilgrims.
Of these, 16.9 million international pilgrims performed Umrah in 2024, an increase of 25% compared to 2023 and the highest number of international pilgrims ever recorded.
In addition to this, a notable structural change is the rise in the number of non-religious international travelers.
This group now accounts for 59% of all international arrivals, up 127% from 44% in 2019. Leisure and holiday travel alone generated R36.4 billion in 2024.
Asia was Saudi Arabia’s biggest market for international tourists last year, with 9.7 million visitors.
Egypt came next as the country with the largest number of individual visitors, with 3.2 million visitors, followed by Pakistan (2.8 million) and Bahrain (2.6 million).
Increase in hotel supply
From January to August 2025, the average daily room rate for hotels across the country increased by 0.3% to 746 Saudi Riyals ($199), occupancy rose to 61%, and revenue per available room increased by 1.3%.
As of September 2025, Saudi Arabia’s quality hotel stock was 171,650 rooms, with supply expected to increase by 18% by 2027.
Approximately 358,000 hotel rooms are planned across the Kingdom, of which 94,000 are under construction or in advanced planning stages, highlighting the scale of the medium- to long-term pipeline. Riyadh is expected to see a 19% increase in quality rooms to 30,330 keys by 2027.
Elsewhere, Mecca and Madinah have particularly large hotel pipelines. For example, projects such as Rua Al Haram (more than 70,000 keys), Rua Al Madinah (more than 47,000), Knowledge Economic City (more than 42,000) and Masar Mecca (more than 41,000) will provide more than 252,000 rooms in the Holy City, of which 64% will fall into the four- and five-star categories.
Domestic travelers continue to make up the majority of tourists, with 74.3% of visitors in 2024 being Saudi nationals. Almost a third (29%) of Saudi nationals and Saudi-based expatriates travel within the Kingdom every two to three months, rising to 50% for those earning more than R80,000.
‘Staycations’ are particularly popular among Saudis, with 36% of them favoring a long weekend break of four to six days, and 20% opting for a full week. Among Saudis with high incomes (above R80,000 per month), 67% prefer a domestic holiday of 7-10 days. In contrast, 47% of Saudi-based expats prefer to travel for two to three days, and 19% limit their trips to day trips. For both groups, vacations longer than two weeks remain rare.
A remarkable 13% of the population travels weekly, confirming the popularity of short-distance travel between cities and the establishment of weekly commuting patterns.
In fact, around 250,000 Saudis have moved to Riyadh since 2019, many to take advantage of the fact that 66% of all new jobs in Saudi Arabia were created in Riyadh during this period.
Amar Hussain, Associate Partner, Research at MENA, said: “These trends demonstrate that demand for domestic travel is strong and broad, from short city breaks to longer culture and nature-based experiences. The consistency of domestic travel behavior based on both our data and publicly available statistics shows that We are reinforcing the importance of continued investment in hospitality infrastructure, destination development and regional connectivity under Vision 2030. This is particularly true in established hubs such as Riyadh, as well as in popular regional hub locations such as Al Souda, Taif and Abha. ”
most popular destinations
The report also highlights that domestic leisure travel is concentrated around Saudi Arabia’s major urban centers and religious destinations.
Mecca is the top destination overall (42%). But for Saudis with a monthly income of R80,000 or more, Riyadh is the biggest attraction (61%).
Among the country’s major metropolitan centers, Riyadh is the top destination with 40%, followed by Jeddah with 40%, based on its role as a gateway or center for business, leisure and cultural experiences.
The Dammam metropolitan area was chosen by 16%, reflecting its coastal charm and growing status as a leisure hub in the Eastern Province.
Domestic travelers are increasingly exploring regional destinations beyond major cities. Abha and Taif are particularly popular among the population at 24% and 22% respectively, highlighting the appeal of the highland climate, which is cool during the summer months.
AlUla attracts attention as a heritage and cultural hotspot with 20% of the total, while the developing markets of Umruj and Jizan have a more niche appeal with 6% and 5% respectively.
focus on luxury
According to Knight Frank research, 60% of Saudi Arabia’s 171,650 hotel rooms are in the luxury, upper luxury and luxury hotel categories, with the highest concentration in Mecca (40,200 rooms) and Riyadh (18,500 rooms), accounting for 23% and 10% of total supply, respectively.
Looking ahead, the proportion of luxury, upper luxury, and luxury rooms is expected to reach 76% of the country’s total number of rooms by 2030.
This reflects demand trends, with 83% of travelers preferring 4- or 5-star hotels.
There is little demand for lower-tier hotels (2 stars and below), underscoring Saudi Arabia’s position as a market characterized by high levels of quality and service.
Serviced apartments are the second most popular accommodation type after hotels, with 22% of respondents favoring this option, up from 20% in 2023. Resorts are preferred by 11%, up from 9% in 2023.
However, Knight Frank expects the resort to grow in popularity over time, particularly with the Red Sea project, which has a growing portfolio of resort accommodation with an expected number of approximately 8,000 hotel rooms by 2030.
El-Qadiri said: “Saudi Arabia’s tourism and leisure sector is on the brink of a historic transformation. Mega tourist destinations such as the Red Sea, AlUla and Ama’ara are now taking shape from a visionary blueprint to a tangible luxury escape. The Red Sea’s first resort and international airport are now operational. Forming the first wave of more than 3,000 keys that will cement Saudi Arabia’s position as a global luxury and regeneration tourism hub, these developments, backed by significant infrastructure investment and sustainable design, reflect a strategic focus on both volume and value.
“Saudi Arabia’s trajectory remains remarkable. By blending heritage tourism, pilgrimage innovation, and modern leisure experiences, the country is creating a multifaceted tourism identity that blends luxury and authenticity, ambition and execution.”
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