Corporate Tourism Fuels Saudi Arabia’s Hospitality Growth in Q3
Saudi Arabia’s hospitality sector has experienced significant growth in the third quarter of 2023, driven by the burgeoning corporate and business tourism segments. As the Kingdom continues its economic diversification efforts under Vision 2030, the hospitality industry is playing a critical role in attracting international attention and investment. With a blend of corporate, religious, and leisure tourism, Saudi Arabia is carving out a unique position in the global market.
Strong Performance Across Key Metrics
Year-on-year comparisons up to September 2023 reveal a robust upward trajectory in the Kingdom's hospitality key performance indicators (KPIs). Occupancy rates increased by 5.9 percentage points, while the average daily rate (ADR) surged by 18.4%. Revenue per available room (RevPAR) saw the most dramatic improvement, with a 31.2% rise.
What’s even more impressive is the comparison with pre-pandemic levels. When measured against figures from 2019, the sector recorded a 1.2 percentage point increase in average occupancy, a 9.6% growth in ADR, and an 11.8% rise in RevPAR. These numbers highlight the sector's resilience and its ability to adapt to shifting global dynamics.
Jeddah Leads the Way
At the city level, Jeddah emerged as a standout performer. The coastal metropolis saw a year-on-year increase in average occupancy rates of 7.3 percentage points. While its ADR experienced a minor dip of 0.1%, RevPAR still grew by 12.7%. This growth is attributed to the city’s appeal as a destination for both corporate events and religious tourism, given its proximity to Mecca.
Other major cities, including Riyadh and Dammam, have also benefited from increased business activity. Riyadh, as the Kingdom’s capital, remains a hub for corporate tourism, hosting conferences, trade exhibitions, and government-led events that draw international delegations.
The Role of Corporate Tourism
Corporate tourism has been a cornerstone of Saudi Arabia’s hospitality growth in 2023. The Kingdom has successfully positioned itself as a global destination for business travelers by hosting high-profile events, including investment summits, technology conferences, and international trade shows.
The rise of mega-projects like NEOM, The Red Sea Project, and Qiddiya has further fueled corporate interest. These ambitious initiatives not only attract global attention but also bring in an influx of executives, engineers, and industry experts, all of whom require accommodation, transportation, and other hospitality services.
Taimur Khan, Head of Research for the MENA region at CBRE in Dubai, commented on the sector’s success: “Corporate and religious tourism have been significant drivers of growth in Saudi Arabia’s hospitality KPIs for the year ending September 2023. With upcoming events like the Riyadh and Jeddah Seasons, we anticipate this strong performance will persist.”
The Broader Impact of Vision 2030
Saudi Arabia’s Vision 2030 initiative has been instrumental in reshaping the Kingdom’s economy and enhancing its appeal as a global destination. Hospitality, a key pillar of this vision, is benefiting from massive government investment in infrastructure, marketing, and international partnerships.
Religious tourism, anchored by the Hajj and Umrah pilgrimages, has historically been a strong driver of hospitality revenue. However, the Kingdom’s recent focus on corporate tourism and leisure tourism is diversifying revenue streams and reducing dependence on seasonal travel.
Furthermore, the government has made significant strides in streamlining visa processes and enhancing accessibility. The introduction of the eVisa and the launch of new airline routes have made it easier than ever for international travelers to visit Saudi Arabia.
Related: Gulf Air Expands Network with Seasonal Flights to AlUla
Riyadh and Jeddah Seasons: A Bright Outlook
Looking ahead, the Riyadh and Jeddah Seasons promise to sustain the momentum in Q4. These flagship events are expected to attract millions of visitors with their mix of cultural, entertainment, and business programming. The Riyadh Season alone has become a global phenomenon, drawing celebrities, international brands, and tourists from around the world.
In addition to these events, the Saudi government’s efforts to attract global sporting events, such as the Formula 1 Grand Prix and major golf tournaments, are further enhancing the Kingdom’s international profile.
Sustaining Growth Amid Global Challenges
While Saudi Arabia’s hospitality sector is flourishing, challenges such as inflation and rising operational costs remain. However, the sector’s ability to innovate and adapt—combined with government support—positions it well for sustained growth.
The Kingdom’s strategic focus on long-term investments, coupled with a diversified tourism strategy, ensures that the hospitality industry will remain a cornerstone of economic development for years to come.
