Hotel rates in Saudi Arabia are falling as a wave of newly licensed properties comes to market faster than demand can absorb it, first-quarter data from the kingdom’s General Authority for Statistics (GASTAT) shows.
The average daily rate for a hotel room dropped 11.4% year on year to SAR423 ($112.8) in the first quarter of 2026, down from SAR477, while hotel occupancy slipped 2.2 percentage points to 60.8%.
The softening follows a sharp expansion in supply. Licensed tourism hospitality facilities climbed 22.7% year on year to 6,122, from 4,988 in the first quarter of 2025. Hotels accounted for 2,963 of those, with serviced apartments and other hospitality facilities making up the larger share at 3,159, or 51.6% of the total.
The serviced apartment segment is holding up better than hotels. Occupancy there rose to 51.6% from 50.7%, and rates dipped only 1.2% to SAR206. Guests are also staying longer across both categories: average hotel stays lengthened to 4.2 nights from 4.1, and serviced apartment stays to 2.2 nights from 2.1.
The sector’s institutional footprint continues to grow. Tourism establishments with employees reached around 177,031 in the quarter, up 9.0% year on year, and total employment in tourism activities rose 6.5% to 1,047,313. Saudi nationals made up 250,094 of the workforce, or 23.9%, with non-Saudis numbering 797,219.
GASTAT compiled the figures from administrative records and secondary data. Saudi Arabia is targeting 150mn annual visits by 2030 under its Vision 2030 diversification programme.
Why it matters for the trade
The numbers describe a market where supply is running ahead of demand, and that is good news for buyers. Falling rates and softening hotel occupancy against a 22.7% jump in licensed properties mean negotiating leverage is shifting towards tour operators, DMCs and corporate bookers, particularly where new inventory is concentrated in Riyadh and Jeddah.