Saudi Arabia’s hospitality sector is witnessing a strong rebound, as hotel occupancy surged to 63% in the first quarter of 2025, reflecting the Kingdom’s ongoing tourism boom and ambitious Vision 2030 initiatives. The growth marks a significant improvement compared to previous quarters, indicating rising demand for both leisure and business travel.
Industry analysts suggest that the increase is fueled by major tourism campaigns, infrastructure development, and a steady return of international events. Notably, Riyadh and Jeddah remain top contributors to the occupancy boost, with key events like the Red Sea International Film Festival and the Saudi Motorsport Grand Prix attracting thousands of visitors.
Tourism-Driven Growth Across Key Cities
The first quarter performance was driven by both domestic and international tourism, as the Kingdom continues its push to diversify the economy beyond oil. Riyadh led the charge with record occupancy levels at premium and midscale properties. Jeddah and the Eastern Province followed closely, benefitting from waterfront developments and religious tourism hubs.
According to STR Global, a leading hospitality data provider, the 63% occupancy is paired with a 9% year-on-year growth in average daily rate (ADR), signaling robust market confidence. This growth, coupled with a steady RevPAR (Revenue Per Available Room), positions Saudi Arabia as one of the most resilient hospitality markets in the region.
The rise comes as no surprise to stakeholders, as the government has been actively investing in giga-projects like NEOM and the Red Sea Project, which are expected to further elevate the tourism landscape.
Vision 2030’s Influence on the Hotel Sector
Saudi Arabia’s Vision 2030 blueprint plays a pivotal role in reshaping the Kingdom’s economic identity. One of its core pillars is tourism, and the latest occupancy rates reflect the momentum gained through this national agenda. The hospitality sector has seen a rapid expansion of hotel chains, luxury resorts, and cultural experiences tailored to global travelers.
In addition to leisure travel, business tourism is becoming a major player. With conferences, summits, and tech expos scheduled throughout the year, hotel operators are now targeting corporate clientele with tailored services, coworking amenities, and modern conference spaces.
The Kingdom’s relaxed visa policies, increased flight connectivity, and strategic alliances with global hospitality brands are also contributing to this upward trend. Experts believe that maintaining such high occupancy rates will be critical in meeting the government’s target of welcoming 150 million visitors annually by 2030.
Outlook Remains Optimistic for 2025 and Beyond
As Saudi Arabia continues its transformation into a global tourism powerhouse, the hotel sector is set for even stronger performance in the coming quarters. The 63% occupancy figure from Q1 sets a promising tone for the rest of 2025.
With numerous cultural festivals, entertainment events, and global conferences on the horizon, hotel bookings are expected to rise steadily. Industry experts anticipate even higher growth in Q2 and Q3, particularly as the Kingdom expands its entertainment and sporting calendar.
The current hospitality momentum not only boosts investor confidence but also supports job creation and economic diversification — aligning perfectly with the broader goals of Vision 2030.
