The hospitality market in Riyadh has been recording a strong performance due to an ongoing increase in business travel, the start of major events like Riyadh Season along with the expansion of cultural and entertainment offerings in the city, according to leading global property consultancy Knight Frank.
These two factors together are contributing to the sharp improvement in the capital’s hospitality market, stated Knight Frank in a statement.
The average daily rates (ADR) in the Saudi capital, for instance, grew by 19% to SAR847, while occupancy levels remained largely stable at 59.8%.
This stability is likely tempered slightly by the sharp increase in ADR, stated the property consultancy.
Knight Frank said elsewhere in the commercial market, Makkah has drawn more than 1.83 million pilgrims to perform Hajj in 2024.
Of these, 1.6 million arrived from outside the kingdom, a figure largely credited to the ‘Makkah Route Initiative’, a newly introduced programme enhancing efficiency and convenience for pilgrims by allowing them to complete entry procedures at their home country's airports, followed by direct transfer to accommodations in one of the pilgrimage cities of Makkah and Madinah.
The potential positive impact of this, Knight Frank stated, has been curbed by rising room rates and limited supply, although the latter is expected to begin reversing with a significant supply boost expected by 2030, led by the Jabal Omar Development (7,700 hotel rooms).
On the Riyadh scenario, Oussama El Kadiri, Partner – Head of Hospitality, Tourism & Leisure Advisory, MEA, said: "Last year, the kingdom surpassed its 2030 target of attracting over 100 million visitors. And in the first half of 2024 alone, the number of visitors already crossed 60 million."
"Riyadh is tracking 6,688 hotel rooms currently under construction and due to be delivered by 2026," noted El Kadiri.
"While this may suggest a potential future tapering in the rate of room rate increases, it is worth noting that just 11% of the future supply over the next two years will fall into the midscale and economy segments. This limited availability highlights a significant gap in affordable accommodation options within the capital," he added.
Despite subdued KPIs between January and September, Jeddah’s government is pressing ahead with plans to develop the Saudi port city’s rich heritage, said Knight Frank in its statement.
In line with Vision 2030, a recent agreement between the Ministry of Tourism and Al Balad Development Company will further contribute to the city’s appeal to travellers, with new hotels and tourist attractions planned in the city’s historic heart.
Jeddah’s government is working to preserve and nurture the city’s historical legacy while unlocking its tourism potential to establish itself as a premier global destination, it added.
