With more than SR20 billion ($5.3 billion) worth of hotel projects in the pipeline, Saudi Arabia's hospitality industry is poised for the highest supply growth during the medium-term, said a report.

The Saudi hotel sector is currently in an expansionary phase due to a significant influx of upcoming projects, stated the kingdom's top lender National Commericial Bank (NCB) in its review.

Ranked as 62th most competitive out of 140 countries and seventh in the region by WEF‘s latest Travel & Tourism Competitiveness Report, Saudi Arabia is anticipated to experience propelled growth in its hospitality sector.

With a range of infrastructure projects stemming from favourable public spending policies, ambitious SCTA targets, combined with solid market fundamentals, the Kingdom owns the largest hotel pipeline in the region and is expected to witness the highest supply growth during the medium-term.

The hotel industry is one of the fastest growing non-oil sectors in the Kingdom, and the second best performing real estate market this year after residential real estate, stated the NCB report.

The Saudi hotel sector has traditionally concentrated around primary cities and has been dominated by the mid-market grade hotels.

The Kingdom is expected to face an increase in the presence of international brands with substantial deliveries at the select service and economy class categories.

Hilton Worldwide, Marriott International, and Starwood poise to become major market players, owning some of the highest number of projects in the pipeline, said the NCB report.

In addition, the dispersion of internationally-branded select service hotels such as Wyndham and IHG are expected to restructure and upgrade the economic class market category, it added.

NCB pointed out that the expansionary activity had already reflected positive injections in the market, as RevPAR grew 11.1 per cent on a country level this year.

Jeddah, it stated, stands as the most lucrative market in the kingdom with the highest growth in terms both occupancy and RevPAR over the last five years.

The Saudi lender said Madinah‘s market was catching up with demand as room rates are increasing while maintaining high occupancies.

Pressure on Makkah‘s market is gradually evening out by significant supply deliveries, such as Jabal Omar Development, to be ranked as one of the largest hotel developments in the world consisting of around 27 hotels, and Jabal Kaaba to deliver a cluster of hotels rounding up to 8,500 rooms,said the NCB in its review.

After periods of contraction in Riyadh‘s market, it has stabilized more recently; landmark properties such as Damac Towers by Paramount hotels and Kempinski Burj Rafal are underway to reignite previously lagging demand levels,the report added.-TradeArabia News Service