Saudi Hotel Sector Shows Resilience Amid Travel Disruptions
Saudi Arabia’s hotel sector has remained resilient despite broader international travel disruptions, supported by religious tourism, sustained domestic travel, and revenue and cost optimisation, according to JLL’s KSA Hotels Market Dynamics Q2 2026 report.
The strongest performance was recorded in the Holy Cities, where Hajj and Umrah demand continued to support occupancy. Makkah’s occupancy rose 4.0 percentage points year on year to 68.2%, while RevPAR increased 8.7%. Madinah recorded the Kingdom’s highest occupancy at 75.1%, with RevPAR declining 2.4% despite softer average daily rates.
Saud Al Sulaimani, Country CEO and Head of Capital Markets – KSA at JLL, said: “Saudi Arabia’s hospitality market continues to demonstrate long-term structural resilience as domestic leisure travelers and religious pilgrims provide stable occupancy foundations. As the Kingdom advances its Vision 2030 objectives, strategic investments in infrastructure and asset diversification are transforming the sector. These measures will elevate the Kingdom into a premier, multi-faceted destination, poised to attract a highly diverse, international audience far beyond its traditional pilgrimage markets.”
Commercial markets faced greater pressure. Riyadh recorded the steepest decline, with occupancy falling 9.2 percentage points to 47.6% and RevPAR dropping 23.2%, amid weaker corporate demand and increased competition. Jeddah was more resilient, with occupancy down 0.9 percentage points to 66.4%, while RevPAR fell 7.2% due to lower ADR.
Hotel supply continued to expand, particularly in the Holy Cities. Makkah added around 1,100 rooms in Q2, while Madinah added approximately 220, bringing combined hotel stock in the two cities to 354,800 rooms. Riyadh added around 490 rooms and Jeddah approximately 180.
JLL said rising supply will increase competition and place greater emphasis on asset quality, differentiated guest experiences, brand positioning, revenue optimisation, cost efficiency and technology-enabled operations. Although overall tourism declined by around 5-7% during the first five months of 2026, the long-term outlook remains positive, supported by Vision 2030, infrastructure investment, improved connectivity, entertainment expansion and continued tourism development.
For a developer: The resilience of Saudi Arabia's hotel sector, especially in the Holy Cities, indicates a stable foundation for investment. The ongoing expansion in hotel supply and strategic investments aligned with Vision 2030 suggest opportunities for developers to capitalize on the growing demand for high-quality, diversified hospitality assets.
Key figures: Makkah occupancy 68.2%, RevPAR +8.7%; Madinah occupancy 75.1%, RevPAR -2.4%; Riyadh occupancy 47.6%, RevPAR -23.2%; Jeddah occupancy 66.4%, RevPAR -7.2%.