The data shows there are 187 hotel projects total in Saudi Arabia between the Planning, Final Planning and In Construction stages. The construction phase represents the largest portion of the pipeline with almost 40,000 rooms in 94 projects.
Reportedly Makkah is set to receive the largest amount of new supply with more than 23,000 rooms in construction and over 32,000 rooms total in the pipeline. While Jeddah and Riyadh are each approaching 10,000 rooms total in the three phases of the pipeline.
Philip Wooller, STR’s area director for the Middle East and Africa, said: “Saudi Arabia’s hotel market is going through a period of massive supply expansion. In the short term, we’ve already seen this growth affect performance levels, and this trend should continue as more and more properties start to come online.
“But it is important to note that this is part of a major long-term investment for the market to further develop its infrastructure to accommodate millions of annual visitors, which come for religious pilgrimages and as new tourism attractions spring up as part of Vision 2030.”
He also added, “As oil prices continue to rise, we should see performance levels start to recuperate over time. Although there will likely be a delayed effect, in the long run Saudi Arabia’s investment in tourism infrastructure should help protect the market’s hotel sector during future periods of lower oil prices and help boost performance growth when oil prices are high.”
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