EconomyTop Stories
GBO_Saudi Vision 2030

Saudi Vision 2030: Is hospitality in Kingdom too pricey?

One of the major contributors to the expansion of Saudi Arabia's travel and hospitality sector is Accor

Are the new travel options from Saudi Arabia too expensive? At the Future Hospitality Summit (FHS) in Riyadh, there is a consensus.

In Saudi Arabia, 320,000 new hotel rooms are anticipated to open by the decade’s end. Some 82% of those new rooms, according to Knight Frank, are in the high and luxury market.

Moreover, 66% of Saudi Arabia’s 149,400 rooms at this time are luxurious and upmarket.

Eventually, the Kingdom hopes to welcome 70 million foreign visitors. However, it wasn’t even open to tourists until 2019. In 2023, Saudi Arabia welcomed 27 million foreign tourists, many of whom travelled for religious pilgrimages rather than stays at recently constructed entertainment destinations.

Ego Projects Are Disappearing

During a panel discussion at the conference, Elie Milky, the regional vice president of development for Radisson, stated that private investor “ego projects” are becoming less common. Egos and emotional investments are disappearing.

According to Milky, “We must support the tourism plan by doing more than just marketing five-star establishments. Some investors find investing in an area with a five-star hotel excessively hazardous. For a five-star hotel, it might be a great idea, but there might not be a return on investment.”

Saudi Arabia’s Public Investment Fund (PIF) funds numerous projects. Under the direction of Crown Prince Mohammed bin Salman, PIF owns and develops tourist locations like Neom, Diriyah Gate, and The Red Sea, three resorts with a plethora of opulent amenities.

Only five-star hotels are being used in the construction of “giga-projects.” It will be much harder to accommodate 70 million tourists, as some of them intend to regulate visitor numbers.

For instance, the Red Sea project, which aims to recreate the Maldives along the Saudi coast, will see the opening of fifty opulent hotels. Plans include the opening of 16 hotels by 2025 and 34 more by 2030.

Every hotel that has declared its name thus far has done so with elegance.

The Red Sea will contribute one-seventieth of its cost to the achievement of global tourist targets. After completion, the facility will restrict visitors to preserve the ecology.

Democratise Travel: Mid-Markets

Hotel developers are pushing for more affordable brands since luxury developments aren’t doing much to meet visitor targets.

Saudi Arabia will become an exclusive market, according to Panos Loupasis, regional MD for Wyndham.

There is an issue with that. It can’t be too exclusive if you want to draw visitors and encourage them to visit other cities. Travellers benefit from three-star hotels. They make travel more accessible.

“The consumer base for mid-scale brands lacks education. Saudi Arabia appears to be heavily focused on luxury,” according to the CEO of Dubai-based Leva Hotels, JS Anand, who serves mid-scale hotels.

He went on, “Not everyone will pay USD 2,000 a night.”

Such was the opinion of the CEO of a privately held hotel developer and owner. In every city, mid-market hotels serve as the main source of lodging.

CEO of Tashyid Urban Development, Falih Motasim Hajaj, said, “A lot of people in the segment are merely seeking glitz and glamour rather than a serious investment strategy.”

A representative for the Saudi Tourism Authority commented on Skift recognising the value of upscale lodging while also highlighting the variety of mid-range options available in the nation.

The spokesman said, “We recognise that for some of our target audiences, both locally and globally, having luxury destination hotels is vital to their experience. Luxury hotels and products are a key element of what we are doing in Saudi Arabia. But as stated in our national tourist plan, our goals and objectives go considerably beyond that. It’s not only about luxury; it’s about creating a year-round programme that accommodates guests of various budgets.”

One of the major contributors to the expansion of Saudi Arabia’s travel and hospitality sector is Accor. By 2030, the French operator hopes to add 45 more resorts in Saudi Arabia, totalling more than 9,800 rooms.

These will be luxury hotels in important places, such as the giga-projects, says Jean-Jacques Morin, CEO of Accor’s Premium, Midscale, & Economy Division and Group Deputy CEO.

He claimed that “luxury is in the huge leisure projects, such as Neom, Red Sea, Diriyah, and so on. Additionally, we are by far the biggest operator in the holy cities. We have a strategy for premium, midscale, and economy in second-tier cities.”

Are Mid-Market Hotels Going to Open?

There are a few mid-range hotels, although they mostly serve as somewhere to stay for visiting architects, contractors, and consultants. The Turtle Bay hotel on the Red Sea is available for hire, while the Hampton by Hilton in Trojena, which is a component of the Neom project, is currently open.

Being the only hotel in the neighbourhood that business travellers may utilise, this one is even charging premium rates.

“Converting mid-scale hotels will yield super-normal earnings in terms of today,” stated Amir Lababedi, Managing Director, Development, Hilton Middle East & North Africa, who added further, “We will transform existing buildings as much as possible. There are no hotels in Trojena available to contractors. We brought Hampton because of this.”

He continued by saying that Hilton is considering many of Saudi Arabia’s current low-cost hotel options for its upcoming Spark brand.

Another Yotel in Neom, this one intended mostly for professionals, is in the works for Oxagon.

The Vision 2030 projects in Saudi Arabia have high annual visitor projections with the goal of greatly increasing tourism. The Red Sea Project, which emphasises luxury travel and environmentally responsible activities, is predicted to draw one million tourists a year.

Another upscale location, Amaala, expects to see 500,000 tourists annually. Part of the future metropolis of Neom, Trojena leverages its unique offering as a mountain resort in the desert to aim for 700,000 visitors annually. Within Neom, Sindalah anticipates 876,000 guests annually, with a focus on upscale marine travel. Five million tourists are anticipated to visit Neom annually, demonstrating its cutting-edge urban development and cutting-edge experiences.

It is anticipated that 50 million people will visit Diriyah each year, making up a sizable portion of domestic day visits, underscoring the site’s cultural and historical significance. These goals demonstrate Saudi Arabia’s deliberate drive to diversify its economy and establish itself as a major international travel destination.

So, would you like to visit the heart of Arabia? You’ll have to pay through your nose for it.

Related posts

Despite record transactions, Dubai neighbourhoods continue to face housing shortage

GBO Correspondent

Go Green with GBO: Ferrous scrap demand soars amid accelerated global climate efforts

GBO Correspondent

India and UAE bilateral trade to reach $100 bn in five years

GBO Correspondent