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

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

Delivering the offer is expected to cost around $110 billion, according to analysis by global real estate consultancy Knight Frank.

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

“However, given that this is the largest 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 program to restructure the economy and reduce dependence on oil.

The total number of branded hotel keys in the kingdom reached around 61,400 in the first quarter of 2022, an increase of more than 4% 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% from 2022 to 2024, representing an additional 23,300 keys in the market, Colliers said.

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

“Obviously, it will require a significant change in the physical infrastructure of the kingdom, but in parallel, new national carriers will have to be quickly established, but above all, regulations will have to be developed to manage all aspects of an international environment and dynamic tourism scene, from hotel workforce to facilitating hotel investments through streamlined processes,” Mr. Saleem said.

Saudi Arabia is setting up an airline to be based in the capital, Riyadh, while state-owned Saudia will be based in Jeddah, as part of a transport strategy announced last year.

“We are on the verge of a sea change for the Saudi hotel landscape – we are moving from vision to reality,” said Faisal Durrani, Partner and Head of Middle East Research at Knight Frank.

“The herculean $110 billion task of transforming the Saudi hotel landscape goes far beyond delivering more hotel room keys. Care and attention must be taken to deliver the right amount of product to the right places.

Knight Frank’s research also showed a shift in the nation’s top hotel room operators by 2030.

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

Hilton Hotels will grow from the current fifth place to become the second largest brand in the country, with nearly 19,000 rooms under management by 2030.

“Competition is starting to heat up as hoteliers jostle for some of the remarkable vision of hospitality and tourism currently unfolding in the kingdom,” Mr Durrani said.

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

The kingdom’s giga-projects account for almost 73% of the hotel supply pipeline across the country, according to research by Knight Frank.

Nationally, it predicts a 63.2% increase in the number of four- and five-star hotel rooms by the end of the decade.

Knight Frank estimates that about $3.4 billion is needed to deliver the 11,300 rooms planned for Jeddah, the highest level nationwide. Riyadh comes second, with 11,200 new hotel keys expected to cost $3.2 billion, taking the capital’s hotel room supply to around 30,000.

Updated: May 23, 2022, 09:36

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