Makkah and Madinah Hotels Outperform Riyadh as Saudi Hotel Market Sees Varied Performance

Saudi Arabia's hotel sector is exhibiting a mixed performance across its major cities. While the holy cities of Makkah and Madinah have shown strong growth and outperformed other markets, the capital city of Riyadh has seen a notable decline in hotel performance.

Riyadh's RevPAR Decline

Riyadh's hotel market recorded a substantial 23.2% fall in Revenue Per Available Room (RevPAR). This decline suggests potential oversupply or decreased demand in the capital, which could impact investment decisions and future development plans for the city's hospitality sector.

Strong Performance in Holy Cities

In contrast, Makkah and Madinah have demonstrated resilience and growth, driven primarily by religious tourism. The consistent influx of pilgrims for Hajj and Umrah continues to bolster occupancy rates and room revenues in these cities, making them key drivers for the overall Saudi Arabian hospitality market. This sustained demand underlines the strategic importance of religious tourism in the Kingdom's economic diversification efforts under Vision 2030.

This diverging performance highlights the distinct market dynamics within Saudi Arabia, where tourism segments cater to different demand drivers and have varying sensitivities to economic shifts and new supply.