Local travelers anchor the kingdom’s tourism in 1Q 2026

A sharp drop in international arrivals during the first quarter of 2026 was largely offset by surging domestic travel, boosting the resilience in the Kingdom's hospitality sector amid regional volatility.

By the numbers: The number of tourists was up 8% y-o-y to 37.2 mn in 1Q, but the topline figure masks a divergence, according to Gastat figures (pdf). Inbound tourism dropped 13% to 8.3 mn visitors, hit by regional headwinds and airspace closures. This dragged international tourism spending down 7% to SAR 48 bn.

Stepping into the breach were domestic travelers. Local tourism surged 16% to 28.9 mn tourists, who injected SAR 34.7 bn into the local economy — an 8% jump in domestic spend.

Why it matters

Total tourism spending slipped some 2% to SAR 82.7 bn during the quarter, but local leisure appetite prevented a wider sector contraction. The data shows that Saudi’s deep domestic market can absorb significant shocks to inbound international traffic, alleviating the risk from capital deployments currently flowing into the sector.

The capacity expansion

This shift in the traveler mix follows a period of aggressive capacity expansion. The total number of licensed hospitality facilities in the Kingdom jumped 34.2% y-o-y to over 5.94k in 4Q 2025, a separate Gastat report (pdf) showed.

Hotel operators adjusted their yield strategies. The average daily room rate in the fourth quarter dropped 11.7% to SAR 389. The pricing flexibility edged hotel room occupancy up to 57.3% by the end of the year, laying the groundwork for the domestic surge in early 2026.

Operators are hiring aggressively to staff the rapidly expanding footprint. Total employment in tourism activities crossed the 1 mn mark 4Q. Still, the sector remains heavily reliant on expatriate labor. Saudization in tourism currently hovers at just 24% — some 247k Saudi nationals, meaning the vast majority of the payroll keeping these new hotels running goes to foreign workers.

What tourists spent on

High-end assets captured the holiday spend: The domestic demand in 1Q wasn't limited to budget staycations but targeted premium assets during the Ramadan and Eid school holidays. Several luxury properties in Makkah pushed past 97% — and up to 100% — occupancy during peak Ramadan days. The coastal and leisure corridors saw similar spikes, with occupancy climbing to 82% in featured Red Sea ultra-luxury resorts and 85% in Jeddah resorts.