Saudi Arabia’s hospitality industry is witnessing unprecedented growth, with market projections estimating an expansion from $15.4 billion in 2024 to over $27 billion by 2033 (ResearchAndMarkets.com, 2025). This rapid transformation, backed by government initiatives under Vision 2030, is reshaping the country’s tourism landscape, creating new opportunities for investors and elevating Saudi Arabia’s position as a global hospitality powerhouse.
Vision 2030: A catalyst for hospitality growth
At the heart of this expansion is Saudi Arabia’s commitment to diversifying its economy and attracting global tourists. The relaxation of travel restrictions, the introduction of e-visas and visas-on-arrival for 49 countries, and investments in world-class infrastructure have played a crucial role in accelerating the hospitality sector’s growth (ResearchAndMarkets.com, 2025). The industry is expected to sustain a compound annual growth rate (CAGR) of 6.55% from 2025 to 2033, fuelled by an expanding range of upscale accommodations and a regulatory environment that facilitates seamless travel experiences.
Regional hospitality dynamics: A diverse landscape
Saudi Arabia’s hospitality market is not uniform; instead, it is shaped by regional nuances that define distinct tourism experiences:
- Makkah and Madinah: As the spiritual heart of the Islamic world, these cities continue to be at the forefront of religious tourism. Significant investments, such as the SAR 2.5 billion initiative by Umm Al-Qura and GAA, are being made to accommodate the increasing number of pilgrims (ResearchAndMarkets.com, 2025). With demand expected to rise, luxury and mid-scale hotels are expanding rapidly to provide seamless hospitality experiences to visitors.
- Riyadh: The capital is cementing its status as a hub for business and leisure tourism. Infrastructure developments, driven by Vision 2030, have propelled the demand for hotel rooms, supported by a surge in business travel, cultural events, and large-scale exhibitions (CBRE Middle East, 2025). Riyadh’s hospitality sector is attracting global hotel brands eager to cater to corporate travellers and high-end tourists.
- Jeddah and the Red Sea Coast: As the gateway to the holy cities and a key commercial hub, Jeddah is witnessing a hospitality boom. Simultaneously, ambitious projects like NEOM and the Red Sea’s luxury resorts are introducing new paradigms of sustainable tourism and exclusive accommodations, targeting high-net-worth travellers (ResearchAndMarkets.com, 2025).
- Dammam and Al Khobar: As key business destinations in the Eastern Province, these cities are seeing steady hotel growth, driven by increased commercial activity and proximity to Bahrain (CBRE Middle East, 2025).
Luxury hospitality driving market expansion
Luxury accommodations continue to be a major driver of growth across Saudi Arabia. According to research presented at Arabian Travel Market (ATM) 2025, the GCC’s luxury hotel sector has expanded significantly, with Saudi Arabia leading the charge. The country now has more luxury rooms under development than currently exist within its borders, highlighting the shift towards high-end hospitality (Arabian Travel Market, 2025).
Saudi Arabia’s tourism ambitions include attracting 70 million inbound visitors annually, contributing to a broader goal of 150 million total tourists by 2030. Mega-events such as the 2034 FIFA World Cup and major entertainment festivals are expected to further enhance the Kingdom’s tourism appeal.
Major players and investments shaping the industry
The Saudi hospitality market features key players such as Dur Hospitality, IHG Group, and Marriott International, each contributing to the evolving hotel landscape. Recent industry movements include Marriott International’s launch of City Express by Marriott and the acquisition of Dur Hospitality by Taiba Investments (ResearchAndMarkets.com, 2025). These strategic developments underscore the Kingdom’s attractiveness as a high-growth hospitality market.
The segmentation of Saudi Arabia’s hotel market is equally diverse, catering to a broad spectrum of travellers:
- Luxury segment: Iconic brands such as Four Seasons, Mandarin Oriental, and Jumeirah are expanding their presence (Arabian Travel Market, 2025).
- Mid-scale and budget hotels: Brands such as Holiday Inn and City Express are capturing demand from a growing segment of cost-conscious travellers (ResearchAndMarkets.com, 2025).
- Online and offline booking platforms: The adoption of digital booking platforms is increasing, facilitating seamless reservations for local and international visitors (ResearchAndMarkets.com, 2025).
Competitive outlook: The road ahead
Saudi Arabia’s hotel sector is experiencing robust demand, yet the surge in supply presents new challenges. According to CBRE Middle East, while the influx of new hotels is fostering healthy competition, it has also led to slight declines in occupancy rates, which dropped 1.7% year-on-year in December 2024 (CBRE Middle East, 2025). However, Average Daily Rates (ADR) rose by 2.1%, indicating sustained market confidence.
The next 12 to 24 months will be pivotal as new properties enter the market. Cities like Jeddah and Makkah, where significant hotel developments are underway, are expected to see heightened competition. Meanwhile, destinations such as Riyadh and the Red Sea region are poised for sustained growth, bolstered by giga-projects and an increasing influx of international visitors.
Conclusion
Saudi Arabia’s hospitality industry is on an upward trajectory, driven by Vision 2030’s transformative policies and large-scale tourism investments. The market’s projected expansion to $27.26 billion by 2033 signals a thriving future, where religious tourism, business travel, and luxury hospitality converge to establish the Kingdom as a premier global destination. With ongoing infrastructure developments, high-profile events, and strategic partnerships with international hotel brands, Saudi Arabia is well-positioned to redefine the future of hospitality in the region.
