Saudi Arabia Tourism Faces Uneven Hotel Rates as Makkah and Riyadh Diverge

Written By: Abhirup Gan

Abhirup Gan

I'm Abhirup Gan, a Mass Communication graduate and digital marketing professional. Driven by a passion for storytelling, I create insightful, research-led content that explores tourism trends, destination stories, and hospitality developments with depth and clarity. Through my writing, I hope to inspire readers to discover not only where to travel, but the stories, cultures, and experiences that make every journey meaningful.

See Full Bio

September 4, 2026 11:18 AM

Image generated with Ai

Market conditions for hotels in the Saudi Arabia tourism sector differ in terms of whether visitors go to the cities of Makkah, Madinah, Riyadh, and Jeddah. The average daily rate for tourists who travelled to the religious city destinations was higher than those tourists visiting the commercial cities because hotel prices in the latter were lower. There was a growth of 24% in Makkah and 5.7% growth in Madinah. The Average Daily Rate for Riyadh fell by 6%, while for Jeddah, it declined by 7%. The difference in the rates is due to differences in demand from travellers and hotel supply in the different tourist and business cities of Saudi Arabia.

Makkah Leads Hotel Rate Growth

Makkah recorded the strongest ADR growth among the four destinations, with rates increasing by 24%.

The city is one of Saudi Arabia’s most important religious tourism destinations and receives visitors travelling for pilgrimage and religious purposes. Hotel demand is closely linked to visitor flows around religious travel periods.

The strong ADR increase reflects the importance of Makkah within Saudi Arabia’s accommodation market. Hotels provide a wide range of accommodation options for domestic and international visitors, from properties near major religious sites to establishments located farther from the central areas.

The continued development of hospitality infrastructure is also expanding accommodation capacity across the city as Saudi Arabia develops its tourism sector.

Makkah’s hotel market therefore remains strongly connected to religious travel demand, creating a different pricing environment from commercial destinations.

Madinah Maintains Positive Hotel Rate Momentum

Madinah also recorded an increase in ADR, rising 5.7%.

Like Makkah, Madinah is a major destination for religious travellers and forms an important part of pilgrimage itineraries. Visitors frequently combine stays in the two cities, creating interconnected travel demand between the destinations.

The increase in hotel rates indicates continued accommodation demand in Madinah despite the wider changes taking place across Saudi Arabia’s hospitality market.

Tourism development in the city includes hotel accommodation and visitor services designed to support religious travellers as well as visitors exploring Madinah’s historic and cultural attractions.

The combination of religious travel and wider visitor activity gives Madinah a distinct position within Saudi Arabia’s tourism landscape.

Riyadh Hotel Rates Decline as Supply Expands

Riyadh recorded a 6% decline in ADR, marking a different trend from the country’s two leading religious destinations.

The capital is Saudi Arabia’s principal commercial and business centre, attracting corporate travellers, investors and visitors attending conferences and major events.

The decline in average hotel rates has occurred as mid-scale room deliveries increase. Additional hotel inventory is expanding accommodation choices and creating greater competition across the market.

The increase in supply is taking place as Saudi Arabia continues to develop its hospitality infrastructure and broaden its tourism offering.

For leisure travellers, Riyadh provides museums, cultural attractions, restaurants, shopping and major entertainment venues. The capital is also becoming an increasingly important stop for visitors combining urban experiences with wider journeys across the Kingdom.

Jeddah Experiences Similar Rate Softening

Jeddah recorded a 7% decline in ADR, also reflecting softer hotel pricing as new mid-scale accommodation enters the market.

The Red Sea city has a diverse visitor profile that includes business travellers, leisure tourists and visitors using Jeddah as a gateway to western Saudi Arabia.

Jeddah’s coastal location adds a leisure dimension to its commercial role. The city’s historic Al-Balad district, Red Sea waterfront and growing hospitality offering provide different experiences for visitors.

As additional hotel rooms enter the market, accommodation providers are operating within a more competitive environment.

The rate decline in Jeddah contrasts with the increases recorded in Makkah and Madinah, demonstrating how hotel performance can differ significantly between Saudi destinations.

Geopolitical Conditions Affect Long-Haul Travel

Saudi Arabia’s inbound tourism market also remains sensitive to regional geopolitical developments.

Changes in regional conditions can influence long-haul leisure bookings from Europe and North America. International travel campaigns therefore have an important role in communicating destination conditions and travel information to prospective visitors.

Long-haul travellers planning holidays in Saudi Arabia can visit multiple destinations during one trip, including Riyadh, Jeddah, Makkah and Madinah, depending on their travel purpose and itinerary.

The country’s expanding tourism infrastructure is creating more opportunities for multi-destination travel across its cities and regions.

Saudi Tourism Market Continues to Develop

The tourism and hospitality market of Saudi Arabia is demonstrating divergent performances according to types of destinations. The 24% ADR rise in Makkah and 5.7% increase in Madinah point towards an improved pricing environment in religious tourism destinations. However, the 6% drop in Riyadh and 7% fall in Jeddah demonstrate the effect of growing mid-market hotel stock in major commercial centres. It shows that there is an ongoing evolution in the structure of Saudi Arabia’s accommodation market through the addition of new hotels and further development of tourism demand. Makkah and Madinah continue to play the role of pillars for religious tourism, whereas Riyadh and Jeddah keep attracting business, cultural and leisure tourists.