Saudi hospitality prices decline by up to 12% amid increased supply

15/04/2026 01:13 AST

Serviced apartments and other hospitality facilities in Saudi Arabia saw their first year-on-year decline in the fourth quarter of 2025, while hotel prices experienced their steepest drop in five quarters.

This indicates that the market is entering a phase of rebalancing between supply and demand, particularly with the accelerating pace of expansion in the tourism sector's capacity, according to available data.

Average prices between apartments, hotels
The average price of serviced apartments and other hospitality facilities reached approximately SR207 ($55.16), a 6 percent decrease, according to the Financial Analysis Unit at Al-Eqtisadiah newspaper, based on data from the General Authority for Statistics.

The data showed that the average price of hotels reached SR389, marking the steepest decline in five quarters at 12 percent, reflecting the continued price gap between the two types of accommodation.

Increased supply puts pressure on the market
This decline is primarily attributed to the surge in the total number of licensed tourist facilities to a record high of 5,900, including approximately 3,000 serviced apartments and 2,800 hotels. This surge in activity coincides with a rapid increase in investments in the sector, intensifying competition among operators and impacting pricing levels.

The occupancy rate for serviced apartments remained stable at 56 percent during the fourth quarter, compared to the same period last year.

Hotels saw a slight improvement, with their occupancy rate reaching 57.3 percent, indicating increased demand with a slight bias towards hotels.

The average length of stay also reached record highs, averaging 2.2 nights for serviced apartments and 3.8 nights for hotels, reflecting improved accommodation quality and longer stays for visitors.

The labor market reaches a record high
The number of workers in tourism activities rose to 1.03 million, including 247,000 Saudis and 783,000 non-Saudis. The female participation rate reached approximately 13.3 percent, indicating the sector's expansion.

Geographically, the Makkah region accounted for 56 percent of the total number of hotels, with approximately 1,600 hotels and 2,200 tourist facilities. Riyadh followed with approximately 1,200 facilities.

Makkah also accounted for 72 percent of hotel rooms, with approximately 355,000 rooms, and about 64 percent of the total number of tourist rooms, with 380,000 rooms, out of a total of 596,000 rooms in the Kingdom.

Riyadh has the highest room rates
In terms of prices, Riyadh had the highest average hotel room rate at approximately SR845, followed by Tabuk at SR786.

Prices in the rest of the regions ranged between SR235 and SR452, while expenses for serviced apartments ranged between SR94 and SR261.

Arab News