Saudi hospitality sector sees record double-digit growth

Saudi Arabia’s hospitality sector has achieved record double-digit growth, according to the latest Knight Frank report, with average daily rates (ADR) rising 10.8% and revenue per available room (RevPAR) up 12.3% in the 12 months to March 2025.

 

This marks the highest annual increase the kingdom has seen, and reflects surging demand across key cities, especially Holy City Madinah, which saw the highest ADR increase at 11.8% in the first quarter of 2025, to reach SAR891. 

 

“These latest figures point to resilient demand amid limited new supply and further highlight Madinah’s pricing strength,” said Amar Hussain, Associate Partner Middle East at Knight Frank. 

 

This hospitality boom comes as Saudi’s tourism sector continues to break records, attracting 116 million tourists in 2024, including 30 million international visitors, an 8% increase from the previous year, with inbound tourist spending up 19% to SAR168.5 billion.

 

Much of the hospitality sector’s growth is being driven by strong demand in Madinah, Makkah and the capital, Riyadh. 

 

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Religious tourism driving growth

In 2024, 35.8 million Umrah pilgrims visited Saudi, a 33% increase on the previous year, pushing the Hajj quota to 2 million for 2025 and further boosting demand for hotel rooms. 

 

In the first quarter of 2025, the ADR in Makkah rose 28.9% year-on-year to SAR859, while RevPAR was up by 35.7% to SAR673, reflecting heightened demand linked to the rise in issued Umrah visas, which grew by 8.3%, according to Ministry of Hajj data.

 

To meet increasing demand, Makkah has more than 8,500 rooms under construction across 12 hotel developments and large-scale projects like Rua Al Haram and Masar Destination, with total inventory set to increase from 63,428 to 71,643 rooms by 2027, according to Knight Frank.

 

Madinah is also growing rapidly, with 2,100 new rooms expected to open by 2027 and major international brands such as Hilton and Marriott planning more than 6,000 additional rooms in the city.