Full year 2025 Saudi Arabia hotel performance review. Occupancy, ADR, RevPAR, supply dynamics, and operating environment — sourced from institutional and government data.
This review draws exclusively on data published by government statistical offices, official tourism bodies, and major hospitality associations. All sources are cited at the point of reference.
1. Economic and Tourism Context
The Saudi Arabian economy recorded a real Gross Domestic Product (GDP) growth rate of 4.5% for the full year 2025, according to the General Authority for Statistics (GASTAT) Real GDP and Statistics report. This performance represents a material acceleration from the 2024 period and exceeded the mid-year upward revision issued by the International Monetary Fund (IMF), which had projected a growth rate of 3.5% in its July 2025 World Economic Outlook update. The expansion was characterized by broad-based contributions across the economic spectrum: oil activities grew by 5.7%, while non-oil activities—a primary focus of the Vision 2030 diversification strategy—expanded by 4.9%. Government activities saw a marginal increase of 0.9% during the same period.
Business sentiment remained consistently optimistic throughout the year. The GASTAT Business Confidence Index (BCI) reached 62.0 points in December 2025, a 2.2% monthly increase and well above the neutral 50.0 threshold. Confidence within the services sector, which includes hospitality, was particularly resilient, recording 62.0 points driven by expectations regarding sales and employment. This aligned with the Consumer Confidence Index (CCI) published by GASTAT, which maintained a value of 114 points in late 2025. This indicates a sustained optimistic assessment of current economic conditions by the domestic population, supporting the baseline for internal travel demand.
Tourism volume indicators for 2025 confirm that Saudi Arabia remains on the trajectory toward its revised target of 150 million annual visitors by 2030. According to the Ministry of Tourism (MoT) annual performance summaries, the Kingdom welcomed a total of 122 million domestic and international tourists during 2025, representing a 5.0% year-on-year increase. A significant portion of this growth was concentrated in the “Saudi Summer” program, which alone attracted 32 million visitors—a 26% increase over the 2024 summer season. International inbound arrivals were buoyed by regulatory ease and the maturity of new destinations, with Saudi Arabia ranking among the top three globally for growth in visitor arrivals according to the UN Tourism World Tourism Barometer.
Domestic tourism continues to provide a robust foundation for the sector, accounting for approximately 80 million of the total visitor count. Tourism spending saw a commensurate rise, reaching SAR 300 billion, a 6.0% increase compared to 2024. This expenditure growth underscores the increasing economic contribution of the hospitality and trade sectors, which GASTAT identified as contributing 12.3% to the national GDP at current prices in 2025.
Real GDP Growth and Sectoral Contribution, Saudi Arabia, 2025
| Indicator | Value / Growth Rate |
| Total Real GDP Growth | 4.5% |
| Oil Activities Growth | 5.7% |
| Non-Oil Activities Growth | 4.9% |
| Government Activities Growth | 0.9% |
| Wholesale, Retail, Restaurants, and Hotels (% of GDP) | 12.3% |
The data provided by the General Authority for Statistics (GASTAT) in its 2025 National Accounts and Tourism Statistics releases confirms that the economic environment for the hotel industry is characterized by high consumer confidence and a tourism sector growth rate that continues to outpace broader economic expansion.
2. Hotel Market Performance
The Saudi Arabian hospitality sector recorded a sustained performance trajectory through 2025, supported by increased religious visitation and the expansion of the leisure segment. According to the Ministry of Tourism Hospitality Sector Performance report for the first half of 2025, the national occupancy rate for all tourism accommodation facilities—comprising hotels, serviced apartments, and other licensed units—averaged 56.6%. During the same period, the Average Daily Rate (ADR) reached SAR 458, resulting in a Revenue Per Available Room (RevPAR) of SAR 259. Subsequent data from the General Authority for Statistics Tourism Establishments Statistics indicated that by the third quarter of 2025, hotel-specific occupancy had stabilized at 49.1%, representing a 2.9 percentage point increase compared to the third quarter of 2024.
Sub-market analysis reveals significant geographic variance, primarily driven by the religious tourism hubs of the Hijaz region and the administrative activity in the capital. The city of Madinah emerged as the national leader in occupancy during 2025. MoT data for the first half of the year placed Madinah’s occupancy at 74.7%, with an ADR of SAR 538 and a RevPAR of SAR 402. This performance is attributed to the continued influx of Umrah pilgrims following the expansion of the Nusuk platform and visa facilitation measures. Jeddah followed with an occupancy rate of 59.7% and an ADR of SAR 402, yielding a RevPAR of SAR 240. Riyadh, including the Diriyah governorate, recorded an occupancy rate of 58.3% with a significantly higher ADR of SAR 501, resulting in a RevPAR of SAR 292.
Data provided by CoStar (STR) in its September 2025 Middle East Analysis serves as secondary confirmation of these trends, noting that RevPAR growth across the Kingdom reached 7.8% year-to-date by August 2025. The secondary data highlights that while national supply growth was tempered by a high number of hotel closures for redevelopment in the Holy Cities, major urban centers like Al Khobar, Riyadh, and Jeddah maintained a supply growth rate of approximately 4%. This relative supply constraint in established markets allowed for greater pricing power, with ADR rising 4.3% year-to-date according to the same secondary source.
Segment-level performance indicated a divergence between traditional hotels and the serviced apartment sector. GASTAT reported that while hotel occupancy grew in the third quarter of 2025, the occupancy rate for serviced apartments and other hospitality facilities stood at 57.4%, a marginal decline of 0.5 percentage points from the 58.0% recorded in the prior year. However, the first quarter data from GASTAT showed that serviced apartments achieved an ADR of SAR 209, representing a 7.2% increase over the equivalent 2024 period, suggesting that operators successfully prioritized rate growth over volume in the early months of the year.
Hospitality Performance Metrics by Major City, Saudi Arabia, H1 2025
| City / Region | Occupancy Rate | Average Daily Rate (SAR) | RevPAR (SAR) |
| Madinah | 74.7% | 538 | 402 |
| Jeddah | 59.7% | 402 | 240 |
| Riyadh (incl. Diriyah) | 58.3% | 501 | 292 |
| National Average (All Facilities) | 56.6% | 458 | 259 |
The performance data, sourced from the Ministry of Tourism (MoT) and the General Authority for Statistics (GASTAT), underscores a market transitioning from recovery to sustained growth, with the religious tourism segment in Madinah acting as the primary driver of national occupancy levels.
3. Supply and Development
The total inventory of quality hotel stock in Saudi Arabia reached 171,650 rooms by September 2025, according to the Ministry of Investment (MISA) and data from the Ministry of Tourism. This inventory is heavily weighted toward high-tier segments, with approximately 60% of existing rooms categorized within the luxury, upper upscale, and upscale chain scales. Geographic concentration remains distinct: Makkah holds the largest portion of quality supply with 40,200 rooms, followed by Riyadh with 18,500 rooms.
During the 2025 calendar year, new hotel openings in the Kingdom reached 36 properties, totaling 10,104 rooms. While these completions represent a steady expansion of the operational base, they are outweighed by the volume of assets currently in the development cycle. The General Authority for Statistics Tourism Establishments Statistics for the fourth quarter of 2025 reported that the total number of licensed tourism hospitality facilities—including hotels and serviced apartments—reached 5,900 units, a 34.2% increase compared to the 4,425 facilities recorded in the same period of 2024. This growth was particularly pronounced in the serviced apartment sector, which accounted for approximately 52% of the total licensed facility count by year-end.
The forward construction pipeline reached record levels in 2025. Data from Lodging Econometrics (LE) in its fourth-quarter Trend Report identified 394 projects totaling 106,521 rooms in the Saudi Arabian pipeline, representing a 25% year-on-year increase in project count and a 28% increase in room volume. Within this pipeline, 332 projects comprising 84,172 rooms were under active construction at the close of the year. The luxury segment dominates the development landscape, expected to account for 75% of all new supply scheduled for completion through the medium term.
Geographic expansion is concentrated in Riyadh, which maintains the largest city-level pipeline in the Middle East with 107 projects and 20,936 rooms. Jeddah and Makkah follow with 63 projects (14,358 rooms) and 35 projects (22,829 rooms) respectively. Beyond the primary urban centers, the 2025 period saw the operational launch of early-phase resorts at “Giga-projects” such as The Red Sea, which initiated the first wave of a planned 3,000-key luxury and regenerative tourism cluster.
Activity in asset repositioning also accelerated during the period. Combined hotel renovations and brand conversions in the region reached a record high in the fourth quarter of 2025, with 81 projects totaling 19,772 rooms. This trend reflects an institutional focus on upgrading existing inventory in the Holy Cities and older Riyadh districts to remain competitive against the influx of international-standard supply. Forecasts for the subsequent 24 months indicate a significant escalation in completions, with 93 new hotels (18,511 rooms) expected to open in 2026, followed by 94 hotels (19,654 rooms) in 2027.
Hotel Construction Pipeline by City, Saudi Arabia, Q4 2025
| City | Project Count | Room Count |
| Riyadh | 107 | 20,936 |
| Jeddah | 63 | 14,358 |
| Makkah | 35 | 22,829 |
| Total National Pipeline | 394 | 106,521 |
The figures provided by the Ministry of Tourism (MoT) and Lodging Econometrics (LE) demonstrate a development environment characterized by a record-high construction volume and a clear institutional shift toward the luxury segment and large-scale urban expansion.
4. Operating Environment
The labor market for the Saudi Arabian hospitality sector in 2025 was characterized by a significant expansion of the workforce and the continued implementation of localized employment mandates. According to the General Authority for Statistics (GASTAT) Tourism Establishments Statistics for the third quarter of 2025, the total number of employees engaged in tourism activities reached 1,009,691. This represents a 6.4% year-on-year increase compared to the same period in 2024. Saudi nationals accounted for 24.3% of this total, with 245,171 employees, while non-Saudi workers comprised 75.7% of the workforce. Data from the Ministry of Human Resources and Social Development (MHRSD) indicated that the number of Saudi nationals employed across the broader private sector reached 2.5 million by year-end, supported by localization decisions targeting 269 professions.
Wage growth across the economy showed moderate fluctuations during the period. GASTAT administrative records and the Labor Force Survey reported that average monthly wages in Saudi Arabia reached SAR 5,795 in the fourth quarter of 2025, a marginal increase from the SAR 5,740 recorded in the third quarter. For the specific sub-sector of accommodation and food services, historical benchmarks from the GASTAT Labor Market Bulletin identify a structural wage gap between public and private sector roles, with private sector Saudi employees in similar service-oriented roles averaging SAR 7,339. The minimum wage for Saudi nationals in the private sector remained fixed at SAR 4,000 for Nitaqat (quota) calculation purposes, though sectoral interventions—such as those in accounting and technical professions—have established higher floors to drive Saudization.
Inflationary pressures remained concentrated in housing and utilities rather than direct service inputs. The Consumer Price Index (CPI) published by GASTAT recorded an annual inflation rate of 1.9% in November 2025. The primary driver was the housing, water, electricity, gas, and other fuels division, which rose by 4.3% year-on-year, specifically influenced by a 5.4% increase in actual rentals for housing. Conversely, the restaurants and accommodation services division saw a relative price decline of 0.5% in the same month, primarily due to a 2.3% decrease in the price of accommodation services. This suggests that while operational overheads related to utilities rose, competitive supply dynamics or seasonal adjustments moderated the end-user pricing in the hospitality sector.
Energy costs for commercial entities were influenced by global price volatility and domestic fiscal policy. Saudi Central Bank (SAMA) data noted that Brent crude oil averaged $75.6 per barrel in the first quarter of 2025, a 9.0% decrease year-on-year, which mitigated some transportation and logistics cost increases. However, the domestic CPI for the energy-heavy housing and utilities sector continued to rise, ending the year with a monthly increase of 0.3% in November.
Labor and Price Indicators, Saudi Arabia, Q3/Q4 2025
| Indicator | Value / Rate |
| Total Tourism Employees (Q3 2025) | 1,009,691 |
| Saudi National Participation in Tourism (Q3 2025) | 24.3% |
| Annual Inflation Rate (November 2025) | 1.9% |
| Housing and Utilities Inflation (November 2025) | 4.3% |
| Restaurants and Hotels Price Change (November 2025) | -0.5% |
The operating environment, as documented by GASTAT and MHRSD, reflects a sector successfully scaling its human capital requirements while navigating a high-rent environment, even as direct hospitality service inflation remains suppressed relative to national averages.
5. Outlook and Risk Factors
The outlook for the Saudi Arabian hospitality sector in 2026 is governed by a further acceleration in macroeconomic activity and the transition of several “Giga-projects” from the construction phase to full operational status. According to the International Monetary Fund (IMF) World Economic Outlook update issued in early 2026, the Kingdom’s real GDP growth is projected to reach 4.5%. This forecast, an upward revision of 0.5 percentage points from previous estimates, is predicated on an expected increase in oil production following the expiration of voluntary supply cuts and the continued expansion of the non-oil economy, which remains the primary catalyst for domestic hospitality demand.
Forward performance indicators for the first quarter of 2026 already demonstrate a significant year-on-year escalation in demand. Preliminary data from the Ministry of Tourism (MoT) reported a 16% increase in domestic tourism volume during Q1 2026 compared to the same period in 2025, reaching 28.9 million domestic tourists. Total tourism expenditure during this quarter reached SAR 82.7 billion, while the national average occupancy rate across all hospitality facilities rose to 59%. Madinah remains the leading sub-market with a projected Q1 occupancy of 82%, followed by Makkah at 60%, driven by robust seasonal demand during Ramadan and the primary school holidays.
Specific demand catalysts for the remainder of 2026 include a dense schedule of international trade and sporting events. The Future Hospitality Summit (FHS) in June 2026 and the Hotel & Hospitality Expo in September 2026 serve as institutional anchors for corporate travel. Furthermore, the expansion of the “Saudi Summer” program and the scheduled opening of additional luxury assets within the Red Sea Global and NEOM portfolios are expected to diversify inbound international arrival profiles. These catalysts align with the Saudi Central Bank (SAMA) assessment that structural reforms and the growing capacity of the economy to generate private-sector employment will sustain high levels of domestic discretionary spending on leisure and hospitality services.
Principal risk factors identified by institutional sources remain centered on global macroeconomic volatility and regional geopolitical dynamics. The IMF has identified rising trade tensions and the uncertain pace of global inflation as potential downside risks that could affect international travel propensity. Domestically, SAMA’s 2025 Inflation Report notes that while core inflation remains stable, the “housing, water, electricity, and gas” division continues to record the highest inflationary growth (5.7% in Q3 2025), which may exert sustained pressure on hotel operating margins through utility overheads. Additionally, as documented in the Vision 2030 Annual Report, the rapid influx of hotel supply—projected to exceed 18,000 new rooms in 2026—presents a structural risk to ADR stability in established urban markets like Riyadh and Jeddah if demand growth does not maintain its current trajectory.
Macroeconomic and Tourism Forecast Indicators, Saudi Arabia, 2026
| Indicator | Forecast Value / Change |
| Real GDP Growth (IMF Projection) | 4.5% |
| Consumer Price Index (IMF Projection) | 2.3% |
| Q1 Domestic Tourism Growth (MoT Actual) | 16.0% |
| Q1 National Occupancy Rate (MoT Actual) | 59.0% |
| Q1 Total Tourism Expenditure (MoT Actual) | SAR 82.7 Billion |
The indicators provided by the IMF, SAMA, and the Ministry of Tourism (MoT) suggest a robust outlook for 2026, characterized by high occupancy floors in religious hubs and a maturing leisure segment, provided that operators can mitigate the margin pressures associated with rising utility costs and localized supply competition.
