The deal follows Lonrho's sale to Stakis of its British Metropole chain and almost completes the mining to African trading conglomerate's withdrawal from hotels.
The sale, which should be completed within a month, excludes two hotels in the Bahamas and Barbados because they include casinos. The prince is a devout Muslim.
Analysts welcomed the deal, which they said vindicated Lonrho's decision not to demerge the hotels arm on the stock market after a year of hotel flotations. Paul Slattery, hotels analyst at Dresdner Kleinwort Benson, said: "They were right not to float."
For Prince Al-Waleed, the Princess acquisition adds to a stable comprising the George V in Paris, 25 per cent of the Four Seasons chain and 50 per cent of Fairmont Hotel Management, the San Francisco-based hotel group into which the Princess hotels will be injected.
Buying the Princess five-star hotels is the latest in a prodigious spending spree by the Prince who has stakes in Citicorp, Euro Disney and London's Canary Wharf office development.
The prince sprang to prominence in the late 1980s, when he asked Forbes magazine why he wasn't included in its annual list of the world's richest people.