Saudi Arabia to open 310,000 hotel rooms by 2030 at a cost of $110bn: Knight Frank

The kingdom’s giga-projects account for nearly 73% of the hotel supply pipeline in the country, consultancy says

Grand Hyatt The Red Sea is part of phase one of the mega-tourism project in Saudi Arabia. All photos: The Red Sea Development Company

SLS Red Sea will welcome guests to Shaura Island in early 2023.

Nujuma, a Ritz-Carlton Reserve, is scheduled to open in 2023. Photo: Marriott International

The St Regis Red Sea Resort will be located on a private island and offer travellers a Maldivian-style experience.

Eco-friendly mountain resort Desert Rock was the first hotel to be announced for Saudi Arabia's Red Sea Project.

The Red Sea Edition on the island of Shaura will be designed to reflect the best of the location's cultural and social environment.

Six Senses Southern Dunes will be one of the first hotels to open at the destination.

The first Raffles resort in the kingdom, Raffles Red Sea, promises a nature-focused stay.

The InterContinental Resort Red Sea will have sea-facing rooms and direct beach access.

Jumeirah's hotel at the Red Sea will have open-plan suites with views of the pristine shorelines.

Fairmont Red Sea is a luxury family-friendly hotel with a focus on wellness and nature.

Hyatt-owned Miraval The Red Sea will be home to the region's largest spa. Photo: Hyatt

Playa Hotels & Resorts has also announced it will open a luxury all-inclusive property on Saudi Arabia's Red Sea. Photo: Playa Hotels & Resorts / Facebook

Saudi Arabia aims to deliver 310,000 completed hotel rooms in the kingdom by 2030 as part of plans to develop its hospitality market for domestic and international tourism.

Delivery of supply is forecast to cost approximately $110 billion, according to analysis by global property consultancy Knight Frank.

“Delivering the vast number of rooms the kingdom has planned is going to bring with it a number of opportunities,” Turab Saleem, partner and head of hospitality, tourism and leisure at Knight Frank, said.

“However, given this is the biggest hotel supply pipeline ever seen in the region, it will usher in a golden age of hospitality for Saudi Arabia.”

Saudi Arabia is developing its hospitality and tourism industries as part of its Vision 2030 agenda to overhaul the economy and reduce dependence on oil.

The total number of branded hotel keys in the kingdom reached approximately 61,400 in the first quarter of 2022, an increase of more than 4 per cent compared to the same period last year, Colliers said in its quarterly review of Mena hotels. About 2,500 keys have entered the Saudi market since the first quarter of 2021.

Supply in the Saudi market is expected to increase at a compound annual growth rate of 11 per cent from 2022 to 2024, accounting for an additional 23,300 keys in the market, Colliers said.

Saudi Arabia, which aims to host 70 million tourist visits this year after drawing 62 million in 2021, according to a tourism official, will experience growth in a number of related industries to cater to the influx of visitors, Knight Frank said.

“Clearly there will need to be a significant change in the kingdom’s physical infrastructure, but in parallel, new national carriers will be needed to be rapidly established, but most importantly, regulations will need to be developed to manage all aspects of an international and vibrant tourism scene, ranging from hospitality labour to facilitating hospitality investments through streamlined processes,” Mr Saleem said.

Saudi Arabia is setting up an airline that will be based in the capital, Riyadh, while state-owned Saudia will be based in Jeddah, under a transportation strategy announced last year.

“We stand at the precipice of a sea-change for Saudi Arabia’s hospitality landscape — we are moving from vision to reality,” Faisal Durrani, partner and head of Middle East research at Knight Frank, said.

“The $110bn Herculean task of transforming Saudi Arabia’s hospitality landscape goes well beyond the delivery of extra hotel room keys. Care and attention must be taken to deliver the correct quantum of product in the right locations.”

Knight Frank’s research also showed a change in the country’s leading hotel room operators by 2030.

By 2030, the Accor Group will be Saudi Arabia’s largest hotel room operator, doubling the number of rooms it manages to almost 28,000, according to the consultancy's estimates.

Hilton hotels will leapfrog from fifth place currently to emerge as the country’s second biggest brand, with almost 19,000 rooms under management by 2030.

“The competition is starting to heat up as hotel operators jostle for a piece of the remarkable hospitality and tourism vision now unfolding in the kingdom,” Mr Durrani said.

“The real crown jewel for hotel operators will be securing a presence in the giga-projects, with Neom and Roua Al Madinah forecast to add around 80,000 keys each.”

The kingdom's giga-projects account for nearly 73 per cent of the hotel supply pipeline across the country, Knight Frank research showed.

Nationwide, it forecasts a 63.2 per cent surge in the number of four- and five-star hotel rooms by the end of the decade.

Knight Frank estimates some $3.4bn is needed to deliver Jeddah’s planned 11,300 rooms, the highest level nationally. Riyadh comes in second, with 11,200 new hotel keys forecast to cost $3.2bn, swelling the capital’s hotel room supply to about 30,000.