Hospitality Industry in Saudi Arabia Size & Share Analysis - Growth Trends & Forecasts (2025 - 2030)

Hospitality in Saudi Arabia Market Analysis

The Hospitality Industry In The Kingdom Of Saudi Arabia Market size is estimated at USD 13.90 billion in 2025, and is expected to reach USD 17.76 billion by 2030, at a CAGR of 5.03% during the forecast period (2025-2030).

The Saudi Arabian hospitality industry is experiencing unprecedented growth, driven by ambitious government initiatives and massive infrastructure investments. According to recent data, Saudi Arabia has emerged as the fastest-growing travel destination among G20 nations, with foreign visitor arrivals surging by 125% compared to pre-pandemic levels. The Kingdom has outlined plans to invest over USD 550 billion in new travel destinations over the next six years, positioning itself as the world's largest investor in tourism. This substantial investment demonstrates the country's commitment to transforming its hospitality sector and diversifying its economy beyond traditional revenue streams.

The regulatory landscape has undergone significant transformation to support the industry's expansion and attract international visitors. The introduction of new visa regulations, including e-visas and visas-on-arrival for visitors from 49 countries, has substantially simplified entry procedures. These policy changes have yielded impressive results, with the Kingdom attracting approximately 94 million tourists in the previous year, significantly outpacing the global tourism industry's recovery. The government's strategic vision aims to elevate the industry's contribution to 10% of GDP within the next six years, highlighting the sector's growing economic importance.

The hotel development pipeline in Saudi Arabia reflects the robust growth trajectory of the hospitality sector. Major international and regional hotel operators are rapidly expanding their presence in the Kingdom. For instance, Rotana is currently developing seven hotels, including five new establishments in Riyadh, which will nearly triple their room capacity to 6,000 in the Kingdom over the next four years. This expansion is part of a broader trend of hotel development across various segments, from luxury hospitality resorts to business hotels, catering to diverse traveler preferences and needs.

The transformation of Saudi Arabia's hospitality sector is characterized by a focus on developing diverse tourism offerings and enhancing hospitality services quality. The Kingdom has emerged as the leader in Arab inbound tourism, welcoming approximately 20 million tourists in just the first three quarters of the previous year. This growth is supported by substantial investments in tourism infrastructure, including new destinations, entertainment facilities, and transportation networks. The industry's evolution extends beyond traditional hospitality, encompassing cultural tourism, religious tourism, and leisure destinations, creating a comprehensive travel and hospitality ecosystem that caters to various visitor segments and preferences.

Hospitality in Saudi Arabia Market Trends

Government Initiatives and Vision 2030

The Saudi Arabian government's ambitious Vision 2030 strategy has emerged as a primary catalyst for the hospitality industry's growth, with the kingdom targeting an impressive goal of welcoming 100 million tourists by the end of this decade. This transformative initiative is backed by substantial government investment, including the development of the USD 50 billion Diriyah giga project on the outskirts of Riyadh, which demonstrates the country's commitment to creating world-class hospitality infrastructure. The government's strategic focus on economic diversification has led to the allocation of USD 37.8 billion specifically for hotel development projects, highlighting the scale of investment being directed towards the hospitality sector.

The implementation of Vision 2030 extends beyond mere infrastructure development, encompassing comprehensive reforms and initiatives designed to enhance the overall tourism ecosystem. The Diriyah Square development, scheduled to open in the current year, represents a flagship project that will serve as the commercial heart of the broader Diriyah development, attracting both domestic and international visitors. This strategic approach to tourism development is further reinforced by the government's commitment to raising living standards and creating a vibrant hospitality sector that can compete on a global scale.

Tourism Infrastructure Development

The rapid expansion of tourism infrastructure in Saudi Arabia is evidenced by the ambitious pipeline of hotel projects, with approximately 80 properties scheduled for completion in the current year alone. This substantial development initiative is further complemented by plans to construct 315,000 new hotel rooms over the next six years, creating a robust foundation for accommodating the increasing tourist influx. The scale of this infrastructure development is particularly noteworthy, as it encompasses various hotel categories and brands, with 38 foreign hotel brands anticipated to enter the market, of which 16 have already confirmed their participation.

The strategic approach to infrastructure development is characterized by its comprehensive nature, focusing on both the quantity and quality of accommodations. The development pipeline includes projects across major cities such as Makkah, Medina, Riyadh, Jeddah, and Dammam, ensuring widespread geographical coverage to support tourism growth throughout the kingdom. This extensive infrastructure development is creating a diverse hospitality landscape that caters to various traveler segments, from luxury seekers to business travelers, thereby strengthening Saudi Arabia's position as a leading tourism destination in the Middle East.

Digital Transformation and Technology Integration

The hospitality industry in Saudi Arabia is experiencing a significant digital transformation, marked by a remarkable 100% year-over-year increase in online travel reservations. This digital revolution is driven by the growing adoption of customer-facing hospitality technology solutions, including AI chatbots, mobile applications, and sophisticated loyalty programs that enhance the guest experience. The integration of these technological advancements is particularly evident in the booking process, with industry projections indicating that half of all reservations in Saudi Arabia will be made online within the next two years.

The technological evolution extends beyond basic booking capabilities to encompass comprehensive back-end systems that streamline operations and improve service delivery. Hotels are increasingly implementing advanced booking engines and distribution channels, creating a more efficient and user-friendly experience for tech-savvy travelers. This digital transformation is particularly impactful in the high-end and mid-scale hospitality segments, where sophisticated online booking systems are contributing to the rapid growth of the financial community through increased digital transactions and improved operational efficiency.

Strategic Partnerships and Investment Opportunities

The Saudi Arabian hospitality market is witnessing a surge in strategic partnerships and investments, exemplified by major industry players like Accor establishing a significant presence through multiple agreements for hotel and real estate projects across the country. These partnerships are creating diverse opportunities across the hospitality value chain, from luxury resorts to mid-scale accommodations, contributing to the market's dynamic growth. The Rua Al Madinah project in Medina stands as a prime example of how these strategic collaborations are reshaping the hospitality landscape through innovative development concepts and world-class hospitality services offerings.

The investment landscape is further enriched by the participation of various stakeholders, including the Diriyah Gate Development Authority (DGDA), which is spearheading transformative projects that combine hospitality, cultural, and commercial elements. These strategic partnerships are not limited to traditional hotel developments but extend to creating integrated hospitality ecosystems that enhance the overall tourist experience. The collaboration between international hotel brands and local developers is fostering knowledge transfer and bringing global best practices to the Saudi Arabian hospitality sector, thereby elevating service standards and operational excellence.

Segment Analysis: By Type

Chain Hotels Segment in UAE Hospitality Industry

Chain hotels dominate the UAE hospitality industry, commanding approximately 66% of the market share in 2024. This segment's strong performance is driven by the presence of major international and national hotel chains, including Marriott International, Accor Hotels, Hilton, and Four Seasons, which have established significant footprints across the UAE. The segment's dominance is further reinforced by the country's high demand from both leisure and business travelers, who often prefer internationally recognized brands for their standardized service quality and reliability. The expansion of housing and investment projects, coupled with the UAE's rapidly growing economy, continues to attract more chain hotels to the region. The segment has particularly benefited from the growth in foreign tourists who typically show a stronger preference for upscale service, privacy, and comfort offered by branded chain hotels. Major international players have been actively increasing their presence in the country, with several new properties being developed across different emirates, particularly in Dubai and Abu Dhabi.

Segment Analysis: By Segment

Luxury Hotels Segment in UAE Hospitality Industry

The luxury hotels segment continues to dominate the UAE hospitality industry, commanding approximately 54% of the market share in 2024. This substantial market position is driven by Dubai's reputation as a luxury hospitality hub and the emirate's strategic focus on high-end hospitality services. The segment's strength is reinforced by ongoing developments of premium properties, with over 130 luxury sites and nearly 34,000 rooms in the pipeline. The UAE's commitment to luxury hospitality is evident in its hotel supply chain, where 64% of the upcoming projects are in the five-star category. These luxury establishments are characterized by their world-class amenities, exceptional service standards, and iconic architectural designs that have become synonymous with the UAE's hospitality industry landscape.

Mid and Upper Mid-scale Hotels Segment in UAE Hospitality Industry

The mid and upper mid-scale hotels segment is emerging as the fastest-growing category in the UAE hospitality industry, projected to grow at approximately 6% during 2024-2029. This growth is being driven by increasing demand from business travelers and middle-class tourists seeking quality accommodation at more moderate price points. The segment is witnessing significant expansion through both international and local brands, with several new properties under development. These hotels are strategically positioning themselves to cater to the growing segment of price-conscious travelers while maintaining high service standards and essential amenities. The segment's growth is particularly notable in emerging business districts and secondary locations across the UAE.

Remaining Segments in UAE Hospitality Industry

The service apartments and budget & economy hotels segments play crucial complementary roles in the UAE's hospitality industry ecosystem. Service apartments cater to long-term stays and family travelers, offering home-like amenities and flexibility, while becoming increasingly popular among business travelers and expatriates. The budget and economy hotels segment serves price-sensitive travelers and helps diversify the UAE's hospitality industry offerings, making the destination accessible to a broader range of visitors. Both segments are witnessing steady development, particularly in areas near business districts and transport hubs, contributing to the overall maturity and diversity of the UAE's hospitality industry market.