The regional hotel investment and development environment is undoubtedly dynamic, buoyed by a robust pipeline of ambitious and diverse projects. Kostas Nikolaidis, senior account manager MEA for STR, maps out the hotel projects which are collectively transforming the Middle East into a world-class tourism destination.

Despite global financial and geopolitical headwinds, the Middle East continues to be a hotbed of hotel investment and development activity. Driven by ambitious visions, growing economies and significant capital investments in the tourism sector, hotel pipelines are looking highly impressive.

Mega projects and mixed-use developments

Some of the core investment trends continue to revolve around mega projects and the attractions of the world’s best luxury hotel brands. The recent openings of Six Senses Southern Dunes and Nujuma, a Ritz-Carlton Reserve at the Red Sea, mark an important milestone for Red Sea Global in Saudi Arabia. Further up the coast, Neom’s first resorts are also about to be unveiled, with a plethora of high-end brands, such as Four Seasons and Marriott Luxury Collection. Often developed with high sustainability standards, such hotel projects feature highly on the development agenda.

Further inland across Saudi’s biggest urban centers, diversification beyond luxury is an emerging trend, with the acceleration of the upscale and midscale pipeline compared to past years. Brands such as Hilton Garden Inn and Holiday Inn Express now feature prominently in the hotel development pipeline.

Finally, another key trend is the move to integrate hotels with residences, retail and entertainment components in mixed-use developments. Such projects are often found in urban centers and offer a blend of hospitality and lifestyle experiences, which are increasingly sought after by investors and developers.

Regional pipeline roundup

Saudi Arabia: the Kingdom is growing at a blistering pace, driven forward by Vision 2030 and the progressive reforms of the past few years. The Kingdom aims to diversify its economy and increase tourism’s contribution to GDP. STR data confirms that Saudi Arabia’s hotel pipeline is not just the largest in the region, but also the third-largest of any country worldwide. The Kingdom currently has 102,279 rooms in its active pipeline, ahead of key traditional hotel development superpowers the UK and Germany, which have 99,438 and 77,857 rooms underway respectively. The anticipated growth in Riyadh is especially impressive. With 29,069 rooms currently under development, Saudi Arabia’s capital city has the largest hotel pipeline in the world, ahead of second-placed London. With upcoming mega-events, such as Riyadh Expo 2030, the 2029 Asian Winter Games and FIFA World Cup 2034, there is no doubt these rooms will be required to meet high demand.

Dubai: the hotel-sector rebound continues unabated in the Emirate, with the city breaking record after record in the current post-pandemic era. EXPO 2020 spurred a huge wave of hotel openings, with more on the way, as the expansion continues. Dubai Economic Agenda D33 aims to double the size of the economy and tourism features highly as a key growth sector. As a result, Dubai is expected to grow from its current inventory of 151,424 rooms to 169,382, ahead of 2033.

Qatar: the country’s role of FIFA World Cup host in 2022 marked a milestone for its hospitality sector. Hotel room inventory in 2022 increased by a massive 24 percent, with an additional 38 hotels and 7,279 rooms entering the market. The post-World Cup period has seen sustained interest, with significant investments in both new hotels and refurbishments, aimed at capitalizing on the global exposure and legacy of the event. Looking ahead, should Qatar’s bid for the Olympics 2036 be successful, it could mark the beginning of yet another hotel development super-cycle in Qatar.

In broad terms, the Middle Eastern hotel investment and development landscape continues to be as vibrant as ever and is constantly evolving. Aided by visionary projects, diversified offerings and a commitment to sustainability, the region is set to remain a key player on the global hospitality stage. STR data underscores the robust pipeline and bright outlook, indicating that the vision of transforming the Middle East into a world-class tourism destination is rapidly becoming a reality.