Knight Frank predicts major expansion of Saudi hospitality sector by 2030
The Kingdom is gearing up for a major expansion in its hospitality sector by developing 315,000 hotel keys by 2030, according to the latest 2023 Saudi Report from Knight Frank
The results of the three surveys have reaffirmed the company’s understanding of the residential market dynamics in Saudi Arabia. It has also shed light on non-residential sectors and hints at potential new and yet-to-be-tapped sources of demand for real estate in the Kingdom.
The Saudi Report 2023 Highlights special has identified five stand-out opportunities to consider that will help deliver the ambitions of Vision 2030 and which align with market experience.
This growth will see Saudi Arabia’s hotel room inventory swell to become larger than Dubai’s current 140,000 keys. The development of the hospitality sector is a cornerstone of the Kingdom’s economic diversification plans.
Faisal Durrani, Partner – Head of Middle East Research explained, "The volume of hotel room keys planned to be delivered in the Kingdom by 2030 is nothing short of incredible, with a total likely stock of close to 450,000 hotel rooms. For context, the UAE today has a combined total of around 200,000 rooms, including Dubai’s 140,000 keys, so Saudi is gearing up to see nearly 58 percent more than this figure. A major part of the success of the Kingdom’s future tourism and hospitality market will be its domestic tourism sector. The sector is already alive and thriving, with 65 percent of Saudis already traveling within the Kingdom between one- and three- times a month. What’s fascinating however is the fact that 58 percent of Saudis we spoke to as part of our 2023 Saudi Report opt not to stay in hotels.”
According to Durrani, “the prevalence of large families traveling together may clearly be a factor, but so is cost, quality and location, with these three reasons being cited by our 2023 Saudi Report respondents.”
Just 17 percent of the planned hotel supply falls in the 3 star or below category, and with 56 percent of the Kingdom’s population aged below 35, the demand for various accommodation types will likely continue to emerge as a significant consideration for the industry. We will need to think broader and incorporate the likes of luxury glamping sites and youth hostels to cater to this increasingly important segment of the market if it is to thrive and flourish, being mindful of the cultural sensitivities and the need for appropriate adaptations.”
The rapid expansion of hospitality-linked offerings across the country is expected to play a critical role in boosting domestic tourism, which Knight Frank forecasts will form a key part of the future of the Kingdom’s hospitality landscape and is already a thriving industry.
Knight Frank’s annual 2023 Saudi Arabia real estate market surveys were conducted in partnership with YouGov. The three surveys were designed to elicit a deeper understanding of preferences and aspirations for residential properties, as well as gauge attitudes towards other real estate sectors, including hospitality, retail, healthcare, and education.