Saudi hospitality market is expected to witness improved infrastructure, as well as an increase in the number of hotel rooms and construction activity, in light of the agreement between the Tourism Development Fund and local banks to finance SR160 billion ($42.6 billion) tourism projects, said JLL, one of the world's leading real estate investment and advisory firms.
The pact comes in line with Vision 2030, it stated in the Q3 KSA real estate market performance report. During the third quarter, Riyadh saw the delivery of 400 keys, thus bringing the total stock to 16,000. Meanwhile, only 84 keys were added to Jeddah’s hotel stock, which took the total slightly to 14,000, it stated. Around 700 and 200 keys are expected to be delivered over Q4 in Riyadh and Jeddah respectively, said the JLL report. According to the expert, Riyadh's performance levels traded higher than any of the other Saudi cities. Occupancy rates in the year-to-date in August decreased by 300 bp to register 51 per cent year-on-year, while average daily room rates (ADR’s) dropped only 1 per cent to register $153. Revenue per available room’s (RevPar’s) too fell 7 per cent to reach $78. Meanwhile, Jeddah saw more significant annual declines. As such, occupancy rates dropped significantly to reach 38 per cent, while ADR’s and RevPar’s declined 33 per cent and 62 per cent to hit $181 and $61 respectively. While the hospitality industry remains challenged in the short term, in the long-term however, and in light of the Tourism Development Fund agreement, construction activity in the sector will speed up as the kingdom strives to boost infrastructure, and increase the number of hotel rooms in line with Vision 2030.