The number of hotel construction projects in the Middle East has surged to 607 projects, encompassing 147,088 rooms, by the end of the second quarter of 2024. This surge reflects the robust growth of the tourism and hospitality sectors in the UAE, Saudi Arabia, and Egypt.
The hotel construction pipeline in the region saw a modest 2.0 percent increase in the second quarter compared to the same period last year. Luxury and upscale chains accounted for 77 percent of the total projects, according to a report by Lodging Econometrics. The report, titled 'Q2 2024 Middle East Hotel Construction Pipeline Trend Report,' highlighted that the UAE, along with four other countries, represents 94 percent of the projects and 95 percent of the rooms in the Middle East's total pipeline.
While the UAE has 87 projects and 22,831 rooms in its construction pipeline, Saudi Arabia leads with an all-time high of 320 projects and 79,756 rooms. Egypt also reached record highs in the second quarter with 107 projects and 26,185 rooms. Oman and Qatar have 28 and 27 projects, respectively, with 5,009 and 6,482 rooms.
In the first half of 2024, 35 new hotels with 6,308 rooms opened in the Middle East, with an additional 66 new hotels and 13,723 rooms scheduled to open by year-end. Lodging Econometrics forecasts a slight increase in new hotel openings in 2025 to 102 hotels with 25,914 rooms, and further growth in 2026 with 121 new hotels and 24,766 rooms expected to open.
Cavendish Maxwell's latest report projects that Dubai's hospitality sector, with around 15,000 new rooms expected by the end of 2027, is not only thriving but is also a crucial component of the emirate's economic diversification strategy. Despite its strong position as a global tourism hub, the industry faces challenges such as rising construction costs and increased competition, necessitating a focus on innovation and sustainability.
Lodging Econometrics' report noted that nearly 300 projects with 80,867 rooms are currently under construction throughout the Middle East. Projects scheduled to start construction in the next 12 months have seen a significant rise, with 145 projects and 34,706 rooms, marking a 42 percent year-over-year increase in projects and a 45 percent increase in rooms. The report also states that projects in early planning at the close of the second quarter stand at 162 projects with 31,515 rooms.
The analysis revealed that three chain scales dominated the Middle East's total pipeline in the second quarter, accounting for 77 percent of projects and 79 percent of rooms. Luxury chains lead with 162 projects and 36,342 rooms, followed by upscale chains with 158 projects and 42,956 rooms, and upper upscale chains with 148 projects and 36,213 rooms.
In Dubai, the four-star category experienced the most significant growth compared to the previous year, with 436 new rooms delivered, marking a remarkable 216 percent increase over H1 2023. The five-star segment also saw impressive gains, with 1,681 new rooms coming online, representing a 111 percent rise. 'Overall, high-end accommodations remain prevalent, with approximately 67 percent of the inventory classified as luxury, upper upscale, or upscale as of June 2024. Midscale and economy hotels made up 27 percent and 5.0 percent of the inventory,' the report stated.
The cities leading in project counts at Q2 are Riyadh with 89 projects and 17,784 rooms, Jeddah with 58 projects and 12,248 rooms, and Cairo with 39 projects and 8,789 rooms. Doha follows with 24 projects and 5,794 rooms, and Makkah with 22 projects and 14,353 rooms.
