Travel, Tourism & Hospitality Saudi Arabia to add 17,000 hotel keys by 2023

Monday, February 22, 2021

Saudi Arabia's hospitality market is expected to add 17,000 hotel keys by 2023, at a constant annual growth rate of 8%, according Colliers' Mena Hotels Quarterly Report.

The holy cities account for 51% of the expected growth in supply. Pent up demand in the domestic and international segments is expected to be key in the recovery for the Saudi market in 2021 and beyond.

The supply of internationally branded hotels in the Saudi market grew by 4,500 keys, with 80% of the new supply opening in city of Makkah, which is expected to grow by a further 10% per year until 2023, said the report.

The commitment to the development of domestic tourism from the government is expected to help in the recovery of the sector following the Covid-19 impact.

The holy cities experienced the steepest drop in occupancy over the course of the year, due to the closure of the pilgrimage before other travel came to a halt.

Dammam/Khobar retained the greatest share of its market in 2020, capitalising on its access to the domestic market and the closure of the King Fahd Causeway connecting Bahrain.

The recovery of the hospitality demand in the holy cities is dependent upon how well key source market manage the pandemic, the report said.


Dubai hotel occupancy experienced a growth in the latter half of the year after reaching as low as 23.6% in April. Increased domestic tourism and government initiatives, such as the recent “Live your Story” and “World’s Coolest Winter” campaign resulted the increase in occupancy levels, the report said.

Hotels in the UAE have been affected by Covid-19, with the hospitality markets experiencing double digit decreases in occupancy levels when compared year on year. Markets have experienced a decline between 11% and 45% in RevPAR. 

Ras Al Khaimah was able to achieve the highest RevPAR in FY 2020 when compared with other markets in UAE. This is in part due to an increase in staycation and domestic tourism market.

Dubai continued to perform better in Q4 2020 and recorded a 69% occupancy in the month of December 2020. The roll out of Covid-19 vaccinations in the UAE is expected to have a positive impact on demand for hotels across the country.

The branded hospitality market in UAE reached 104,700 keys by the end of 2020, with Dubai being the largest contributor to the new supply.

The supply in the market is expected to increase at a CAGR of 7% between 2020 and 2023 . This will introduce an additional 22,100 keys in the market. However, the ongoing Covid-19 pandemic is expected to have an influence on hotel openings during this period which will inevitably delay openings, the Colliers report said.