Saudi Arabia’s hotel development sector continues to expand at record levels even as Houthi military attacks have created significant security concerns and disrupted travel to the country. According to Lodging Econometrics, the kingdom currently has 401 hotel projects in development, representing a 15% increase from the previous year and totaling 109,320 additional rooms, a 16% increase in capacity. These figures represent over half of all hotel projects planned across the Middle East and more than half of the region’s planned room additions.
The expansion continues despite mounting challenges from regional military activity. A Houthi missile strike on Riyadh’s primary airport earlier this month resulted in 13 fatalities and prompted airport closures and cancellations of major events. The attacks have also increased insurance costs for businesses operating in the country and raised concerns about the safety of international visitors. Despite these developments, hotel developers and operators report no canceled projects attributed to the attacks.
Industry participants acknowledge that while construction continues, the attacks have inflicted damage to Saudi Arabia’s reputation as a secure travel destination. The kingdom’s hotel growth strategy now relies heavily on domestic tourism and religious travel, rather than the international visitor growth that the government’s Vision 2030 development program envisions. Market participants are betting that this domestic-focused approach can sustain the industry until regional military tensions decrease, though the timeline for such de-escalation remains uncertain.
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