Report: Majority of new Saudi hotels opening in holy cities

Thursday, February 25, 2021

The Holy City of Makkah housed more than 80 percent of the new hotel keys brought into Saudi Arabia last year. That is despite the Kingdom continuing to diversify its tourism and hospitality sector towards leisure-driven markets as well as religious markets.

In Colliers International’s full-year report for the MENA region, it said KSA had 4,500 international-brand hotel keys enter in 2020. It also said room supply in Makkah alone is expected to grow 10 percent per year until 2023.

In the words of TRSDC chief development officer Nicholas King, the Saudi tourism industry is coming from a very low base, apart from domestic, religious tourism.

As the Kingdom has such a strong grip on the religious tourism market, Colliers found that hotel occupancies in these areas were worst hit last year as annual pilgrimages came to a standstill.

Occupancies in Makkah were down 53 percent compared to 2019, with Madinah also taking a 25 percent dip.

Colliers stated that the recovery of these holy cities is dependent on its key source markets, rather than Saudi itself.

It added: “The KSA market is expected to grow by 17,000 keys by 2023, a constant annual growth rate of 8 percent. The holy cities account for 51 percent 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 KSA market in 2021 and beyond.”