KSA unleashes massive hospitality expansion – and a wealth of investment opportunities – as tourism spending nears US$40 billion

(MENAFN- In2 Consulting) Riyadh, Saudi Arabia – 25 April 2024: The Kingdom of Saudi Arabia is expected to deliver 320,000 new hotel rooms – with a development cost of US$37.8 billion – by 2030 as part of its unprecedented investment in infrastructure, tourism transformation and real estate, according to industry data released ahead of the Future Hospitality Summit Saudi Arabia, 29 April to 1 May.

KSA, where tourism spending reached almost US$40 billion last year – up nearly 43 per cent on 2022 – aims to more than treble its current number of hotel keys in line with Vision 2030, with a plethora of new hotels, resorts and tourist attractions scheduled to open in the next six years, says leading real estate consultancy and FHS sponsor Knight Frank.

Saudi Arabia has surpassed its initial tourism target of 100 million annual visitors seven years ahead of schedule, with 77 million domestic travellers and 27 million international tourists in 2023. The new target is 150 million annual visitors by 2030: 80 million from within the country and 70 million from abroad.

Key to this growth is the substantial influx of visitors from Muslim-majority nations, with Bahrain (2.2 million), Kuwait (1.9 million) and Egypt (1.5 million) emerging as the top three source markets, according to Knight Frank, which says that religious tourism remains the cornerstone of KSA’s tourism strategy. Some 27 million pilgrims visited the country in 2023 – almost treble the pre-Covid number of 10 million – spending more than US$26 million on their trip. Around 221,000 new hotel rooms are planned for Maddah and Madinah.

Knight Frank’s analysis shows that 66 per cent of KSA’s existing hotel supply falls into the luxury and upscale categories. By 2030, this segment of the market will expand to 72 per cent, equating to around 251,000 hotel rooms. According to the World Trade Organisation, these hotels require one to two members of staff per room, which means that 232,000 to 387,000 key workers will need accommodation. In turn, this opens up new opportunities for investment in team member housing.

Turab Saleem, Partner and Head of Hospitality, Tourism & Leisure Advisory, Knight Frank MENA, said: "With a new target of welcoming 150 million visitors by 2030 – a 50 per cent increase from its previous goal – the KSA government is actively exploring various strategies to attract to international travellers, including the development of cultural and entertainment offerings nationwide, which complement existing attractions like the Jeddah F1 Grand Prix and numerous 'Entertainment Seasons.'

“Noteworthy additions include theme parks such as Boulevard World in Riyadh, alongside the licensing of 24 additional theme parks by the Saudi General Entertainment Authority over the past year," he added.

Riyadh’s winning of the bid to host the 2030 World Expo is expected to inject a substantial economic boost of US$ 94.6 billion into the nation's capital, with an estimated 40 million visitors expected during the six-month exhibition, and the 2034 FIFA World Cup in KSA promises further momentum for the country’s tourism goals.

Knight Frank’s research also suggests that Marriott International is likely to emerge as the biggest hotel operator in KSA, with around 26,200 hotel keys by 2030. Accor Hotel Group, currently the largest room operator in the Kingdom, will have around 25,400 keys by 2030.

Turab Saleem added: “Saudi Arabia is on the cusp of becoming one of the world’s most significant tourism markets, with giga and mega projects leading the hotel room pipeline.”

The Future Hospitality Summit Saudi Arabia takes place at the Mandarin Oriental Al Faisaliah, Riyadh, 29 April to 1 May, with three days of debate, deliberation and deal making on investment opportunities, ESG, talent, the rise of women in the sector and more.

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