https://arab.news/ra3j4
RIYADH: The Middle East is accelerating hotel development, ending the first quarter of 2026 with a record pipeline of 717 projects totaling 177,110 rooms, up 12 percent from a year earlier.
The figures were contained in a report from Lodging Econometrics, and emphasizes how, driven by ambitious national development plans, mega-projects and major events, countries across the region are seeking to establish tourism as a key driver of growth beyond oil.
The region had 335 hotels with 84,438 rooms under construction at the end of the first quarter. Another 180 projects totaling 52,788 rooms are scheduled to begin construction within the next 12 months, representing year-on-year increases of 14 percent in projects and 12 percent in rooms.
This supply boom aims to match rising demand from leisure travelers, pilgrims, business visitors, and event attendees, while elevating the visitor experience across luxury, midscale, and economy segments.
Despite this record-breaking pipeline, Nicholas Nahas, partner at management consulting firm Arthur D. Little, told Arab News the current room inventory remains insufficient.
“With the grand ambitions of Middle East countries to grow the tourism and experiences sector, the current hotel and room inventory is not enough,” he said.
“Large development projects will be needed to add more room supply and bring in international hotel operators to provide enough accommodation that appeals to the visitors that these Middle East countries aim to attract,” Nahas added.
Projects in the early planning stage climbed to a record 202 hotels with 39,884 rooms, up 36 percent in projects and 48 percent in rooms from a year earlier.
At the chain-scale level, luxury properties led with a record 207 projects totaling 45,076 rooms, up 7 percent year on year. The upscale segment reached 180 projects with 52,597 rooms, reflecting gains of 15 percent in projects and 18 percent in rooms.
The Middle East opened 11 new hotels with 2,516 rooms during the first quarter.
Lodging Econometrics forecasts another 80 hotels with 15,479 rooms will open during the remainder of 2026, bringing the annual total to 91 hotels and 17,995 rooms.
In a separate report, CoStar, a global provider of real estate data and analytics, said hotel development activity in the Middle East remained strong in the first quarter, with total rooms under contract reaching 231,941.
Commenting on the growth, JS Anand, founder and CEO of Leva Hotels, said: “The significant ramp-up in hotel room supply across the Middle East is being driven by a combination of government-led tourism initiatives, economic diversification strategies, and substantial infrastructure investments.”
He added: “Countries across the region, particularly in the Gulf, are actively reducing their reliance on oil revenues by positioning tourism, hospitality, and entertainment as key growth sectors.”
Anand noted that strong investor confidence and the growing presence of international hotel brands continue to support development across the region.
He further said large-scale destination projects, international events, improved air connectivity and visa reforms have strengthened the Middle East’s appeal to both leisure and business travelers.
Saudi Arabia leads pipeline
Sindalah is situated along the coast of Neom in northwest Saudi Arabia. Sindalah
Saudi Arabia continued to dominate the Middle East hotel construction landscape, accounting for 385 projects totaling 105,598 rooms in the first quarter, according to Lodging Econometrics.
The figures represent a 21 percent increase in projects and a 24 percent rise in rooms from a year earlier.
Riyadh led the Kingdom’s pipeline with 105 projects and 20,927 rooms, followed by Jeddah with a record 63 projects and 14,764 rooms.
Strengthening tourism is a key pillar of Vision 2030, as Saudi Arabia seeks to position itself as a leading global tourism and business hub by the end of the decade.
Having already exceeded its original target of 100 million visitors, Saudi Arabia’s National Tourism Strategy now aims to attract 150 million visitors annually by 2030.
“Vision 2030 sets objectives to grow the tourism sector from 3 percent in 20216 to a target of 10 percent of GDP in 2030, making it the second-largest sector after oil and natural resources. To meet the 10 percent target, the tourism sector will need to welcome 150 million visitors,” said Nahas.
He added that while Saudi Arabia has been a known destination for religious tourism, the expected GDP and visitor targets will require growth in the leisure tourism segment.
Nahas continued: “Activating leisure tourism will require coordination across the ecosystem of improving airline connectivity, destination promotion, destination development, experience activation — and critically expanding the hotel inventory in the country.”
Significant openings are expected in 2026 from giga-projects including Neom’s Sindalah, Red Sea Global developments such as Shura Island, Diriyah, Amaala, and urban centers including Riyadh, Jeddah and Makkah.
In May, JLL said Saudi Arabia’s hospitality sector remained resilient in the first quarter despite regional geopolitical and economic uncertainty, with occupancy reaching 66.3 percent and average daily rates rising 3 percent to SR805.5 ($215.37).
“What stands out is not just the scale, but the ambition to create entirely new destinations from the ground up,” Anand said, adding that projects such as Neom, Red Sea Global and Diriyah are reimagining tourism destinations through sustainability, design, cultural integration and experience delivery.
Regional outlook
Egypt ranked second in the regional pipeline with a record 157 projects and 33,446 rooms, representing a 26 percent increase in projects and a 16 percent rise in rooms year on year.
The UAE followed with 105 projects encompassing 25,148 rooms, underscoring its continued importance as a hospitality hub.
According to Lodging Econometrics, Oman contributed 26 projects with 4,451 rooms, while Bahrain added 12 projects totaling 1,900 rooms.
“The current hotel development boom reflects a long-term strategic vision to establish the Middle East as a leading global tourism and business destination, with supply being built ahead of expected future demand,” said Anand.
Managing rapid expansion
Industry executives said the rapid expansion also brings challenges.
Dominic Arel, vice president of operations for the Middle East at United Hospitality Management, told Arab News: “Rising operational costs are a real pressure across the board.”
Arel said guest expectations have “never been higher” and noted that sustaining a premium guest experience while protecting profit margins across a growing portfolio requires a smart balance of technology, guest offerings and cost management.
Anand said the most immediate challenge is ensuring the broader hospitality ecosystem expands at the same pace as room supply.
He added that the industry will require a significantly larger pool of skilled hospitality professionals across all levels — from operational teams to senior leadership.
“Sustaining service excellence at scale will depend heavily on training, retention, and structured career development within the sector,” Anand said.
He added that growing competition is making differentiation critical, with hotels needing to go beyond location and brand to offer a distinct identity, guest experience and value proposition.
“For the region to fully unlock its potential, there needs to be greater openness to innovation, new operating models, and entrepreneurial hospitality concepts alongside established players,” Anand said.
