Knight Frank reports Saudi Arabia’s 171,650-key hotel market is set to expand by 94,500 rooms, with luxury supply dominating as the Kingdom targets 150 million annual visitors under Vision 2030.
RIYADH – Saudi Arabia’s hotel market, currently comprising 171,650 keys, is set to expand with around 94,500 additional rooms under construction or at advanced planning stages, according to The Saudi Report by Knight Frank. The pipeline follows a year in which the Kingdom’s travel and tourism industry expanded by 32%.
Oussama El Kadiri, Partner – Head of Hospitality, Tourism & Leisure Advisory, MENA, said: “Growth in Saudi Arabia’s hospitality market is being driven by a combination of government initiatives, private sector investment and evolving consumer preferences. Travel and tourism contributed a record SAR 444.3bn (US$ 114.4bn) to the economy in 2024, representing 11.5% of the nation’s GDP – the highest in the region, according to the World Travel & Tourism Council”.
In the first quarter of 2025, international visitor spending reached SAR 49.4bn, marking a 9.7% year-on-year increase, while total tourism spending rose 11% to SAR 284bn. During 2024, Saudi Arabia welcomed 29.7 million international visitors, up 8%, and 86.2 million domestic tourists, a 5% increase. Total annual tourist spending stood at SAR 284bn, with SAR 169bn generated by international visitors, reflecting a 19% uplift.
Faisal Durrani, Partner – Head of Research, MENA, said: “Our research reveals a rapidly evolving industry driven by high-value travellers, experiential offerings and world-class hospitality assets emerging under Vision 2030 and the National Tourism Strategy. Having already reached 116 million domestic and international visitors in 2023, the government has revised its 2030 target from 100 million to 150 million visitors, with one-third expected to be religious tourists. This underscores the Kingdom’s dual ambition of strengthening its global role as Islam’s pilgrimage hub while expanding its reach into international leisure and business travel and domestic tourism.”
Religious tourism remains a key driver. In 2024, Saudi Arabia hosted 1.8 million Hajj pilgrims and 35.7 million Umrah pilgrims. Of these, 16.9 million international pilgrims performed Umrah, representing a 25% year-on-year increase and the highest number recorded.
Non-religious international travellers now account for 59% of total international arrivals, up from 44% in 2019. Leisure and holiday travel generated SAR 36.4bn in 2024. Asia was the largest source market with 9.7 million visitors. Egypt ranked as the largest individual source country with 3.2 million visitors, followed by Pakistan (2.8 million) and Bahrain (2.6 million).
Between January and August 2025, the average daily rate increased by 0.3% to SAR 746 (US$ 199), while occupancy rose to 61%, resulting in a 1.3% increase in revenue per available room. As of September 2025, quality hotel stock stood at 171,650 rooms, with supply projected to increase by 18% by 2027.
Across the Kingdom, approximately 358,000 hotel rooms are planned. Of these, 94,000 keys are under construction or at advanced planning stages. Riyadh is expected to see a 19% increase in quality rooms to 30,330 keys by 2027. Makkah and Madinah account for particularly large pipelines, with projects such as Rua Al Haram (70,000+ keys), Rua Al Madinah (47,000+), Knowledge Economic City (42,000+) and Masar Makkah (41,000+) contributing over 252,000 rooms in the Holy Cities, 64% of which will be in the four- and five-star categories.
Domestic travellers represented 74.3% of visitors in 2024. Around 29% of Saudi nationals and Saudi-based expatriates travel within the Kingdom every two to three months, rising to 50% among those earning over SAR 80,000 per month. Staycations remain popular, with 36% of nationals preferring extended weekend breaks of four to six days and 20% opting for week-long trips. Among higher-income Saudis, 67% prefer domestic holidays of seven to ten days. In contrast, 47% of Saudi-based expatriates favour trips of two to three days.
Thirteen per cent of nationals travel weekly. Since 2019, approximately 250,000 Saudis have relocated to Riyadh, where 66% of new jobs have been created during this period.
Amar Hussain, Associate Partner – Research, MENA, said: “These trends point to robust and broad-based demand for domestic tourism offerings, ranging from short city breaks to longer cultural and nature-based experiences. The consistency of domestic travel behaviour, based both on our data and publicly available statistics, reinforces the importance of ongoing investments in hospitality infrastructure, destination development and regional connectivity under Vision 2030. This is particularly the case in established hubs such as Riyadh, Jeddah and Al-Ula, as well as boosting offerings in popular regional hub locations such as Al-Soudah, Taif and Abha.”
Makkah is the top overall destination at 42%. For Saudis earning more than SAR 80,000 per month, Riyadh ranks first at 61%. Among metropolitan hubs, Riyadh and Jeddah each attract 40% of domestic leisure travel, while the Dammam Metropolitan Area accounts for 16%. Regional destinations such as Abha (24%) and Taif (22%) remain popular, alongside Al-Ula at 20%. Umluj and Jizan account for 6% and 5% respectively.
Knight Frank reports that 60% of the current hotel inventory falls within the luxury, upper upscale and upscale segments, with Makkah accounting for 40,200 rooms and Riyadh for 18,500 rooms. By 2030, this proportion is expected to reach 76% of total room supply, with 83% of travellers preferring four- or five-star hotels.
Serviced apartments are the second most popular accommodation type at 22%, up from 20% in 2023, while resorts account for 11%, up from 9%. Approximately 8,000 hotel rooms are expected across Red Sea resort developments by 2030.
El Kadiri concluded: “Saudi Arabia’s tourism and leisure sector stands on the brink of a historic transformation. Mega-destinations such as The Red Sea, AlUla, and AMAALA are now materialising from visionary blueprints into tangible luxury escapes. The Red Sea’s first resorts and international airport are operational, forming the initial wave of over 3,000 keys that will anchor Saudi’s position as a global luxury and regenerative tourism hub. These developments, underpinned by tremendous 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 Kingdom is crafting a multifaceted tourism identity in which luxury meets authenticity and ambition meets execution.”