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The Middle East has been investing heavily in hospitality and residential projects in recent years to attract more tourists by 2030.
In the second quarter of 2023, the Middle East had the highest number of hotels under construction, with 597 projects and 146,521 rooms.
This is a 10% and 5% increase year-over-year, respectively, according to a report by Lodging Econometrics.
A recent Knight Frank report showed that the total value of the Middle East’s investments in hospitality and residential projects reached $1.9 trillion. Saudi Arabia, the United Arab Emirates, and Egypt account for 90% of this investment.
Saudi Arabia is the leading investor in the region, with $1.2 trillion worth of projects in the pipeline. According to the global real estate consultants agency, it is followed by the UAE ($300 billion) and Egypt ($200 billion).
This investment shows the Middle East’s continued commitment to tourism. The region aims to attract 160 million annual tourists by 2030.
“The Middle East’s travel and tourism sector witnessed tremendous growth with a 46.9% increase in its contribution to GDP in 2023, which is the highest of any region in the world,” said Turab Saleem, Partner and Head of Hospitality, Tourism, and Leisure – MENA at Knight Frank.
“This growth is driven by a 14.5% increase in the number of jobs supported by the sector and a more than $107 billion increase in its overall contribution to the GDP. Moreover, the sector has also created 0.9 million new jobs,” Saleem added.
The Middle East has experienced exponential growth in the hospitality sector over the past decade, driven by a massive increase in hotel supply across all categories.
According to experts, the number of quality hotel rooms in the region has grown fivefold, from around 100,000 in 2010 to 540,000 in 2022. Occupied room nights have also increased from 27 million to 135 million.
An additional 180,000 hotel rooms are expected to enter the market in the next five years, which is forecast to increase occupied room nights to 184 million by 2028.
“Significant government budgets have played a key role in encouraging private investments and attracting foreign direct investment in the region. Today, the Middle East is expected to achieve higher growth than other regions, presenting attractive financial returns and providing long-term investment opportunities,” said Hala Matar Choufany, President of HVS Middle East for the Middle East, Africa, and South Asia.