Calls are being made to introduce regulatory measures following an unprecedented surge in hotel occupancy at the start of this month in Riyadh. No vacancy signs abounded as Riyadh played host to the LEAP technology conference, and accommodation prices in the capital skyrocketed, with reports from Al Arabiya indicating nightly rates reached $25,000 at fully booked hotels and rental facilities.
As Riyadh becomes an increasingly popular venue for significant international events, drawing vast crowds from across the globe, the city faces challenges in accommodating the soaring demand for hotel rooms.
The LEAP conference, from 4 to 7 March, delved into artificial intelligence, smart city innovations, the effects of digitisation on the workforce, and strategic transformation, and drew an audience exceeding 200,000. It is reported that the massive influx of visitors, many arriving from other cities within Saudi Arabia or internationally, pushed hotel occupancy rates to their limit, with charges for a room per night often placed between US$3,000 to US$4,000.
The steep accommodation costs have prompted calls for regulatory measures. Dr Mohammed Makni, Assistant Professor of Finance & Investment at Imam Muhammad ibn Saud Islamic University, suggested to Al Arabiya that a price cap might be an idea, in order to temper the soaring hotel rates, ensuring they reflect the quality of services and are in line with international accommodation costs. He highlighted what he termed the “unjustifiable spike” in prices for lower-rated hotels and apartments, attributed to increased demand.
Hotel staff are reported to have revealed that the augmented prices were partly to cover the additional employee costs needed to manage such a large number of guests. Furthermore, they shared insights into the use of AI by the hotel’s revenue management department to set dynamic pricing, with algorithms determining the optimal rate for each room based on the prevailing supply and demand.
The pressure on Riyadh’s hospitality sector underscored the urgent need for further investment. Dr. Makni emphasised the “human tsunami” descending upon Saudi Arabia for various reasons, from tourism to investment and residency, fuelling demand and driving up prices for hotel rooms and apartments.
He advocated for growth in the hotel sector to keep pace with the increasing number of global events the city is attracting. Makni pointed out that high occupancy rates are a regular occurrence during significant periods like the Riyadh season, holidays, and annual exhibitions.
The Ministry of Tourism for its part has enforced stringent standards for five-star hotels to ensure they provide exemplary services, cleanliness, and quality due to their premium pricing. Requirements include the provision of organic personal supplies in each room and the use of ultra-violet ray machines to eliminate bacteria, viruses, and germs as part of cleaning protocols.
