Saudi Arabia poised for hospitality boom
Professional services and investment management company, Colliers, has revealed key market insights for Saudi Arabia ahead of the Future Hospitality Summit (FHS) taking place in Riyadh on 24-25 May 2022 co-organised by The Bench, MEED, and Saudi-based SEMARK.
Under the theme Reimagined Horizons, FHS Saudi Arabia will bring together Government leaders, hotel investors, owners, developers, and operators to discuss the future of hotel development, destination impact, aviation, sustainability, restaurant investment and human capital.
The hospitality sector in Saudi Arabia is well on its way to recovery post pandemic. Events and campaigns such as Riyadh Season, along with growing consumer confidence in travel, have benefitted both Riyadh and Jeddah as key travel hubs in the Kingdom in the second half of 2021, and this is expected to continue having a positive impact on hotel demand in 2022. The forecasted occupancy for 2022 in Riyadh is 65 percent with 54 percent projected for Jeddah, representing a respective12 and 7 percent increase.
On the hotel supply side, Saudi Arabia saw a 4 percent increase in the number of branded hotel keys in 2021 with 60,400 keys at the end of the year. In 2022, the total number of branded hotel keys is set to reach 69,300 keys, representing a 15 percent increase compared to the same period last year, outperforming both the UAE with a projected 3 percent increase and Egypt at 8 percent growth. About 8,900 keys are expected to enter the KSA market this year.
In addition to the sector’s strong performance and outlook for 2022 in the Kingdom, there have been numerous announcements for new hospitality projects that will drive further growth and development in Saudi Arabia, including:
Diriyah Gate Development Authority (DGDA) has unveiled its vision for Diriyah Square, the commercial heart of its 190 Billion SAR [US $ 50 Billion] Diriyah giga-project on the edge of Riyadh, Kingdom of Saudi Arabia, scheduled to be open by 2024. To date, 16 international hotel brands have been confirmed at the Diriyah Gate Development and it is expected there will be 38 in total.
The US $15 billion AlUla masterplan will be developed in three phases in 2023, 2030, and 2035. The plan involves a broad range of initiatives across archaeology, tourism, culture, and education, and the arts and reflecting Vision 2030’s goals in economic diversification, local community empowerment, and heritage preservation. By 2035, The site will have 9,400 hotel rooms, and 2 million visitors a year are expected upon completion.
The AMAALA coastal-based development project will feature 30 hotels and 3,000 hotel rooms. The large-scale mixed-use project is expected to receive around a million visitors a year.
The US $ 13 billion (SAR 50 billion) mega-development project Asser Tourism Masterplan is set to turn the Aseer region on the Red Sea coast into a tourism hub, set to attract more than 10 million domestic and international visitors by 2030. The project, themed ‘The Arabian Highland’, aims to be a sustainable tourism destination offering midscale experiences. The region, known for its agricultural sector, is gradually turning into a modern tourism and hospitality landmark, emphasizing its high mountain peaks and natural resources.
Christopher Lund, Executive Director and Head of Hotels for Colliers MENA, will be moderating a session on the topic of tourism growth at FHS Saudi Arabia titled: “How Tourism Development Fund (TDF) is driving the tourism sector in KSA from partnerships to new concepts to finance,” with panellists Marko Vucinic, Director at Hospitality and Real Estate Development at TDF; Siegfried Nierhaus, Vice President Middle East at Deutsche Hospitality; and Elie Milky, Vice President Development at Radisson Hotel Group. Ahead of his session Lund commented: “We are seeing that developers in Saudi are putting a great deal of importance on finding the right partner and operator for their hotel projects, aiming to have the newest and strongest concepts and best performing properties in the market.”
Looking forward to bringing the second edition of FHS Saudi Arabia back in a new format, Jonathan Worsley, Chairman, The Bench, said: “We are thrilled to be back in the Kingdom later this month following the success of the inaugural Future Hospitality Summit in October 2020 with Saudi Arabia’s Ministry of Tourism and G20 Secretariat and three years of organising the Saudi Hospitality Investment Conference (SHIC). The interest we’re witnessing for this year’s event is exceptional, which is testimony to the great vision and ambition for tourism in the Kingdom. Saudi Vision 2030 is setting the stage for an incredibly promising future of the sector, and with the multitude of investment opportunities arising in Saudi Arabia, we look to provide a unique and vital opportunity for the hospitality investment community to come together and gain crucial insights from key dignitaries and industry leaders involved in the Kingdom’s hospitality market.”