Marriott makes Saudi hotel push despite low national occupancy

• Five new hotels planned
• In Jeddah, Mecca and Medina
• Saudi occupancy at around 50%

Hotel operator Marriott has signed a major expansion agreement in Saudi Arabia, underlining the kingdom’s push to build out its tourism sector as part of a broader economic transformation.

Yet the challenge on the ground remains filling rooms year-round. Occupancy rates hover just above 50 percent, highlighting the pressures of a highly seasonal market even as capacity continues to grow.

Under the agreement, Marriott – the world’s largest hotel operator by number of rooms – will add about 2,700 rooms across multiple properties in the kingdom, expanding its footprint as Saudi Arabia accelerates hotel development to support its Vision 2030 tourism ambitions.

In a deal with BinDawood Investment subsidiary Al Qimmah Hospitality, Marriott will operate five new hotels across Jeddah, Mecca and Madina, under four brands: the upmarket JW Marriott and affordable brands Four Points by Sheraton, Element Hotels and Four Points Flex by Sheraton.

As is often the case with hotel signings in Saudi Arabia, opening dates were not provided. 

The JW Marriott will be located in Jeddah, while the others will be in Mecca and Medina. These are Saudi Arabia’s two religious tourism cities, where a steady, annual influx of pilgrims necessitates high-volume, large-scale properties. 

Mecca received 1.6 million pilgrims last year for the annual Hajj, a multi-day religious event of about five days. The dates for the pilgrimage is determined by the Islamic lunar calendar and last year took place in early June. In the lead up to Hajj, accommodation prices rose from SAR299 a night in April to SAR1,035 a night in May. In June, prices averaged SAR640. 

The occupancy rate in May and June though, was just 48 and 59 percent respectively. 

In Medina, occupancy was more steady, averaging 76 percent in the first half of last year. 

By expanding more affordable hotel brands, operators such as Marriott can lift occupancy in the holy cities without pushing room rates higher. This is critical for Saudi tourism, where religious travel remains the core driver of demand, accounting for almost half of international visits up to September last year.

Karim Cheltout, senior vice president of development for the Middle East and Africa at Marriott International, said: “The signing of our first Four Points Flex by Sheraton marks an exciting milestone, and we see strong potential to further grow our midscale brands across the kingdom.”

As part of Vision 2030, the country wants to increase visitors on an Umrah pilgrimage – which can be undertaken at any time in the year – from 8 million to 30 million.

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