Hotels across Saudi Arabia’s Riyadh fully booked despite soaring prices

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Hotels and rental facilities across Saudi Arabia’s capital are at full capacity this week as Riyadh gears up to host the LEAP technology conference, with accommodation prices soaring to more than $25,000 per night, according to an Al Arabiya report.

More than 200,000 people are expected to attend the event, which will cover artificial intelligence (AI), smart city technologies, the impact of digitization and AI on the workforce, strategic transformation, and more.

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As Riyadh continues to host major global events that attract hundreds of thousands from around the world, the city is struggling to meet the demand for hotels.

Riyadh hotel prices soar

With the most guests arriving from other Saudi cities or abroad, hotel occupancy rates have reached 100 percent, with daily room rates ranging between $2,933 to $3,999, according to the report.

To ensure room prices are reasonable, authorities in Saudi Arabia must put a cap on the soaring prices, factoring in availability, quality of services, and the costs compared to accommodation in other countries, Dr. Mohammed Makni, Assistant Professor of Finance & Investment at Imam Muhammad ibn Saud Islamic University, told Al Arabiya in an interview.

Makni said it is unreasonable for the prices of low-rated hotels and apartments to be as high as they currently are simply as a result of increased demand.

According to one hotel employee, hotels have had to increase their prices to cover the costs of employees needed to accommodate such a large number of guests.

He also said the hotel’s revenue management department uses AI to determine the prices and costs for each room, as it sets a minimum price for the daily rental prices and a maximum.

He explained that the AI tool then determines the appropriate price for each room based on supply and demand.

A need for investments

Meanwhile, according to the assistant professor, investments in the hotel sector are needed to meet increased demand.

“There is still a great need for more investments in this sector to increase supplies so that hotels can accommodate the number of individuals and companies who are coming from countries around the world to Riyadh,” Makni told Al Arabiya.

“There is a human tsunami coming to Saudi Arabia, whether for tourism, investment or residence, which has led to more demand and inflation in the prices of hotel rooms and apartments.”

He also said growth in the hotel sector must happen in parallel with the rise in the number of global events happening in Riyadh.

“The [hotel] sector is very important in aiding the growth of other activities and increasing the rates of economic activity. The sector witnesses occupancy rates during various occasions such as the Riyadh season, holidays, and annual exhibitions with some hotels and apartments reaching nearly 100 percent capacity. This huge demand is what led to the exaggerated rise in the prices of accommodation.”

International guests

The week of March 4 to 7 – the days during which LEAP will run – has seen the largest number of reservations linked to guests coming from outside of Saudi Arabia, an employee at a popular Riyadh hotel told Al Arabiya.

Giant technology firms participating in the exhibition have booked dozens of rooms and made reservations at the hotel’s halls and restaurants to hold meetings, the employee said.

Moreover, the Ministry of Tourism had issued strict requirements for hotels classified as five stars – given that their price ranges are higher than low-ranked hotels – because they are expected to provide guests with the highest standards of service, cleanliness, and quality, the employee said.

For example, he explained, the sanitary and personal supplies available in every room must be 100 percent organic and the hotels must use violet ray machines specialized in detecting bacteria, viruses, and germs during their cleaning services.

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