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In Dubai and Saudi Arabia, new hotels are filling up faster than they're built

Three towering luxury hotels are set to open in a new destination called Leyja, in Neom district by the Gulf of Aqaba in Saudi Arabia

A view of Saudi capital Riyadh.
A view of Saudi capital Riyadh. (AFP)

The next few weeks are set to be quite busy in the Gulf with Dubai Watch Week starting 16 November, Abu Dhabi’s Formula 1 race scheduled for 18 November and COP 28 beginning on 30 November.

While hotels and restaurants are filling up as the weather cools down, some community and family events are being canceled because of the Israel-Hamas war. Some Halloween events were toned down or canceled, but many still went on with full fanfare.

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In Saudi Arabia, the Saudi investment summit unofficially nicknamed “Davos in the Desert” kicked off with dance and singing performances. Asked how the war would affect travel to the kingdom, many attendees were upbeat. “We are concerned of the situation, but so far our numbers are in the right direction,” said Gloria Guevara Manzo, chief special adviser for the Saudi Ministry of Tourism. She noted that the finance event, the Future Investment Initiative, attracted 6,000 people. “We haven’t seen an impact yet.”

On the hospitality front, Habitas, a  company that started out in luxury camping, is planning a trio of towering hotels jutting out of rocky mountains in northwest Saudi Arabia. The newly announced projects are part of the kingdom’s trillon-dollar push to open up its borders and economy to tourists, and will be located within the Neom district by the Gulf of Aqaba, just across from Egypt’s Sinai Peninsula, in a new destination called Leyja. Each of the 40-room properties will have a different focus: adventure, wellness and nature.

The properties will be in addition to Habitas hotels planned for elsewhere in Saudi Arabia, financed with $400 million from the Saudi Tourism Development Fund, Habitas CEO Oliver Ripley says. Neom approached Habitas with designs already in hand, Ripley says. In Leyja, guests will arrive at the welcome centre at the mouth of the wadi, or valley. “You go through your little welcome ceremony, and you set your intention and purpose.” And then they have to walk. A lot. From the welcome centre, the first hotel is a hike of 3.5km, which takes about 45 minutes to an hour. “You're not being dropped off in your car and greeted by the front door guys,” Ripley says. “You have to walk. And it's one of the most dramatic and immersive and also humbling walks.”

Saudi Arabia aims to have 70 million international tourists a year by 2030. Earlier this week, luxury hotel brand Six Senses announced it would add a property in Al-Ula to its Saudi portfolio.

In Dubai, the hotel business in booming just a few years after the city had an oversupply problem so bad that the government created a commission to manage it and basically ordered builders to stop building. Now, things have turned around: Dubai welcomed more than 11 million overnight visitors this year through August, with average occupancy at 75.5%, according to the Dubai tourism department.

Some of the latest figures from CoStar show that even as thousands of more hotel rooms are being built, the number of people who want to book them is growing faster. The number of hotel rooms in Dubai is up 27% compared with 2019, but the demand for those rooms is up 33%. In Riyadh, the numbers are even more stark: supply is up 20% and demand is up 32%. All that supply, however, is part of the reason why room rates are falling—6% year over year in Dubai.

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