I couldn't find riad in any general dictionary, but Wikipedia tells us there has been a recent surge in interest in this building style in parts of Morocco frequented by tourists. Perhaps the word is in the process of becoming more familiar to English-speakers, and may be taken up by more dictionaries in due course.
As it is, the word can be found in many books about Morocco, and (for what it's worth) the publishers often do not print it in italics. It seems the word originally referred to the courtyard itself, but has now come to be applied to the type of building too.
I've decided to accept this word, in part because I think it's a useful addition to the language, and not just in the context of Morocco, since buildings with internal courtyards are common in many parts of the world, especially hot countries. In Melaka in Malaysia, the style became popular when Dutch colonial rulers imposed a window tax. And nowadays in many countries, people running bars and restaurants count themselves extremely lucky if they possess an internal courtyard in which they can legally permit their patrons to smoke.
