Middle East soars as Saudi hotel construction hits record high in 2018

UAE leads regional hotel construction with 223 projects as Saudi's 214 schemes mark new record

Saudi Arabia's record-high hotel construction projects are supporting the UAE as it drives the Middle East's hospitality sector.
Saudi Arabia's record-high hotel construction projects are supporting the UAE as it drives the Middle East's hospitality sector.

The Middle East’s pipeline of hotel construction projects included 617 schemes with 180,097 rooms as of Q3 2018, marking “another cyclical high” for the region, with Saudi Arabia’s pace of hotel development “at a record high”. Lodging Econometrics’ report found that the new pipeline project numbers are up by 8% from the same period last year, with room counts up by 15% from Q3 2017, when the pipeline respectively included 572 projects and 156,420 rooms.

In what marks “a record high” for the Middle East, close to 360 projects are currently under construction, including a total of 115,222 rooms. According to Lodging Econometrics’ report, 138 hotel projects with 35,299 rooms are “scheduled to start construction in the next 12 months”, with 119 projects – or 29,576 rooms – at the early planning stage. 

With 291 rooms per construction project, the Middle East’s average pipeline-project size is the largest in the world. Sixty-seven percent of the Middle East’s hotel construction pipeline is concentrated in “the three highest-chain scales – luxury, upper upscale, and upscale”, the hotel intelligence firm said. 

DESIGN FOCUS: Saudi Arabia's Al Joud Boutique hotel in Makkah

The Middle East’s hotel construction pipeline has “grown for five consecutive years off of the 2013 lows”, Lodging Econometrics explained. Additionally, the number of hotel projects has also “surpassed the development surge of 2007-08 led by Dubai and Abu Dhabi, which awakened hotel development in the region”. 

“However, growth trends may be starting to slow as construction starts, and new projects announced into the pipeline have been declining throughout 2018,” Lodging Econometrics’ statement continued. 

With 223 projects comprising 63,734 rooms, the UAE leads the pipeline of hotel construction in the region. Saudi Arabia’s hotel construction sector is “at a record high", according to Lodging Econometrics, with 214 projects and 76,324 rooms. Dubai continues “to dominate the construction pipeline” for hotels in the UAE and across the Middle East, with 169 projects and 50,420 rooms. 

“Other notable but distantly following [cities] are Abu Dhabi with 20 projects/5,058 rooms and [Sharjah] with 18 projects/2,671 rooms,” Lodging Econometrics’ statement continued. 

“Cities with the largest hotel construction pipelines are Riyadh with 61 projects/11,574 rooms, [Saudi Arabia’s] Provincial region with 58 projects/11,534 rooms, Jeddah with 58 projects/11,520 rooms, […] and Makkah with 37 projects/41,696 rooms. [All four] cities with the largest pipelines are in Saudi Arabia and are enjoying record highs in their pipeline project and room counts.”

READ: Ground to break on Damac's Cavalli-branded Dubai hotel in 2019

The Middle East’s hotel construction pipeline is topped by Accor Hotels’ 102 projects and 28,079 rooms, which marks “a record high for the company”. Marriott International (95 projects/21,083 rooms) and Hilton Worldwide (90 projects/25,888 rooms) follow Accor Hotels on the list. Hilton has “also reached record highs in 2018”, the hotel intelligence company said.

Its statement continued: “[Lodging Econometrics] expects that new hotel openings in 2018 will be 86 hotels/23,464 rooms, surpassing for the first time the peak of 72 hotels/19,756 rooms set in 2009. 

New records will be set in both 2019 and 2020 as [our] forecast for new hotel openings predicts that 114 hotels/27,518 rooms and 134 hotels/36,277 rooms will open in each year.”

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