Saudi Market value surpasses $3 billion mark for the 4th week in a row
In recent weeks, Saudi Arabia has witnessed a notable increase in hotel spending, while other sectors have experienced a decrease. This trend is primarily attributed to a surge in tourism-related activities driven by the Kingdom's Vision 2030 initiatives and seasonal factors such as pilgrimage and leisure events.
According to data from the Saudi Central Bank (SAMA) for the week ending July 19, 2025, hotel spending rose by 2.1%, reaching a total of SR12.19 billion ($3.25 billion). This growth contrasts with declines in key sectors, including transportation (-0.6%), furniture (-3.7%), communications (-12.5%), the clothing and footwear sector (-13%), and miscellaneous goods and services (-9.9%).
The hospitality sector's growth aligns with broader growth in Saudi Arabia's tourism sector. In Q1 2025, Saudi hotel occupancy climbed to 63%, up from 60.9% in Q1 2024, with international tourists spending SR49.37 billion, a 10% increase year-on-year. The Kingdom's aggressive expansion of licensed hospitality facilities (a 78% year-on-year increase in Q1 2025) and investments in tourism infrastructure such as NEOM and the Red Sea project have bolstered demand for hotels.
Pilgrimage traffic and seasonal events significantly contribute to higher hotel occupancy and spending. For instance, Jeddah, a major hub for pilgrims, experienced a 7.2% dip in POS transactions, totaling SR1.76 billion, while Makkah, the holy city, had a 4.5% decrease, totaling SR507.03 million.
Despite the hospitality sector's growth, other sectors' spending declines reflect a broader reduction in overall point-of-sale transactions. For the week ending July 12, 2025, overall transactions decreased by 8.2%, indicating a short-term shift in consumer spending patterns away from other categories toward hospitality.
Geographically, Riyadh had a 6% decrease in POS transactions, reaching SR4.20 billion. Tabuk, another city, saw a 9.1% decrease in transactions, with 4.16 million deals. Abha, on the other hand, experienced a 1.1% decrease, totaling SR207.48 million. The food and beverages sector, which includes restaurants and cafes, saw a 6.6% decrease, totaling SR1.73 billion, with the sector having the biggest share of total POS value.
The smallest decline was seen in spending on building materials, which decreased by 0.2% to SR330.02 million. Spending on jewelry dipped by 11.7% to SR269.61 million. The sector with the third-highest total POS value, despite a 9.9% decline, was spending on miscellaneous goods and services, totaling SR1.36 billion.
In summary, the rise in hotel spending amid declines in other sectors is driven by a strong, ongoing tourism push linked to Saudi Arabia's Vision 2030 goals, seasonal pilgrimage and events increasing hotel demand, and significant growth in hospitality infrastructure and international visitor spending, as evidenced by SAMA transaction data and government statistics.
- The growth in the hospitality sector in Saudi Arabia, as shown by the increase in hotel spending, has been influenced by the Kingdom's Vision 2030 initiatives and a surge in tourism-related activities.
- The decline in spending in sectors like transportation, furniture, communications, clothing and footwear, and miscellaneous goods and services contrasts with the growth in the hospitality sector, indicating a shift in consumer spending patterns.
- The broad growth in Saudi Arabia's tourism sector, evident in the increase in hotel occupancy and international tourist spending, is also bolstered by the Kingdom's investments in tourism infrastructure projects like NEOM and the Red Sea project.
- seasonal factors such as pilgrimage and leisure events contribute to higher hotel occupancy and spending, with cities like Jeddah and Makkah experiencing a dip in POS transactions due to the increase in such activities.
- The food and beverages sector, despite a decrease in spending, still holds the biggest share of the total POS value, suggesting that it remains a significant aspect of Saudi Arabia's economy and culture.
