Owned by Saudi Brothers Commercial, the Sheraton Medina Hotel and Four Points by Sheraton Medina are both scheduled to open in the fourth quarter of 2012.
Starwood Hotels & Resorts Middle East Guido de Wilde said: "Starwood's continued expansion throughout the Kingdom of Saudi Arabia underlines our commitment to continued growth in this region."
The new Sheraton Medina Hotel will comprise 297 rooms, restaurant and a meeting room.
The adjacent Four Points by Sheraton Medina will have 178 rooms, restaurant, fitness centre and a business centre.
Starwood currently operates ten hotels in Saudi Arabia under the Sheraton, Westin and Le Meridien brands.
The opening of the Four Points by Sheraton Medina will mark the debut of the brand in Saudi Arabia with the Four Points by Sheraton Jeddah and Four Points by Sheraton Al Khobar currently under development.