The Middle East hospitality sector continued to demonstrate remarkable resilience in the first quarter of 2026, with hotel development activity reaching record levels despite ongoing geopolitical tensions linked to the US-Iran conflict. According to the latest findings from Lodging Econometrics, the region’s hotel construction pipeline expanded to an all-time high of 717 projects representing 177,110 rooms, underlining sustained investor confidence in long-term tourism and hospitality growth across the Gulf and wider Middle East.
The figures represent a 13 per cent year-on-year increase in projects and a 12 per cent rise in room inventory compared with the same period in 2025. The growth comes even as regional markets continue to navigate operational and economic uncertainty triggered by geopolitical instability that intensified in late February.
Industry analysts note that many of the developments currently advancing through the pipeline were planned and financed well before the escalation of regional tensions. Nevertheless, the continued momentum signals that hospitality investors remain committed to the Middle East’s long-term tourism ambitions, supported by government diversification strategies, mega infrastructure projects, and expanding international visitor demand.
According to the report, 335 projects comprising 84,438 rooms were actively under construction across the region at the close of Q1 2026. A further 180 projects accounting for 52,788 rooms are scheduled to commence construction within the next 12 months, reflecting annual growth of 14 per cent in projects and 12 per cent in room count.
The strongest expansion was recorded in the early planning segment, which surged to a record 202 projects and 39,884 rooms. This represented a 36 per cent increase in projects and a 48 per cent jump in rooms year-on-year, highlighting continued appetite among developers and investors to pursue new hospitality opportunities despite geopolitical headwinds.
Luxury hospitality continues to dominate the regional pipeline. The luxury segment reached a record 207 projects with 45,076 rooms, marking a 7 per cent annual increase. Upscale hotels also recorded substantial gains, ending the quarter with 180 projects and 52,597 rooms, up 15 per cent in projects and 18 per cent in rooms compared with Q1 2025.
Saudi Arabia remained the undisputed leader in regional hotel development activity, accounting for 385 projects and 105,598 rooms. The Kingdom posted year-on-year growth of 21 per cent in projects and 24 per cent in room inventory as it continues to accelerate tourism infrastructure development under Vision 2030 initiatives.
Egypt ranked second in the regional pipeline with record totals of 157 projects and 33,446 rooms, reflecting annual increases of 26 per cent in projects and 16 per cent in rooms. The United Arab Emirates followed with 105 projects and 25,148 rooms, while Oman recorded 26 projects with 4,451 rooms. Bahrain completed the top five regional markets with 12 projects and 1,900 rooms.
Among cities, Riyadh emerged as the region’s leading hospitality development market, with 105 projects and 20,927 rooms in the pipeline, representing year-on-year growth of 21 per cent in projects and 19 per cent in room count. Jeddah followed with a record 63 projects and 14,764 rooms, while Cairo registered 61 projects and 12,192 rooms.
Makkah posted one of the strongest growth performances among major cities, reaching 34 projects and 22,329 rooms, up 42 per cent in projects and 28 per cent in rooms year-on-year. Muscat rounded out the leading regional markets with 13 projects and 2,149 rooms.
The Middle East also continued to add new hotel supply during the quarter, with 11 hotels and 2,516 rooms opening across the region in Q1. Lodging Econometrics forecasts that an additional 80 hotels comprising 15,479 rooms will open before the end of 2026, bringing total projected openings for the year to 91 hotels and 17,995 rooms.
Looking further ahead, the consultancy expects the region to open 98 hotels with 20,372 rooms by the end of 2027, reinforcing the view that the Middle East hospitality sector remains one of the world’s most active and strategically important hotel development markets despite ongoing geopolitical uncertainty.
The sustained expansion reflects growing confidence in the region’s long-term tourism fundamentals, particularly as countries across the Gulf continue investing heavily in aviation, entertainment, mega-events, cultural tourism, and infrastructure diversification aimed at reducing economic dependence on hydrocarbons.
