A Wave of new projects expected to be launched in the next 24 months in Saudi Arabia will put downward pressure on daily rates and occupancy, a report said.
The kingdom’s hospitality and tourism outlook remained positive during Q3 2015, with most of the key performance indicators witnessing growth during the quarter, compared to the corresponding period of 2014, said the report by PKF Consulting, an international firm of management consultants and industry specialists. The limited delivery of new projects in Q3 was the reason for the sustained positive growth in the sector’s performance, it said. RevPAR across the kingdom’s hospitality sector has remained constant during the first quarter of 2015 and when compared to the same period in the previous year. The sector is subject to significant supply increases over the short-term. The number of keys in Riyadh and Jeddah are expected to grow by 75 per cent and 62 per cent, respectively.At the end of Q3 2015, there were 6,131 rooms under construction in Riyadh spread among 25 hotel properties, while the hotel pipeline in Makkah consisted of 16,153 rooms across 11 hotel establishments, it said. In Riyadh, hotel occupancy remained stable at 51 per cent during the third quarter in 2015, compared to Q3 2014. According to a third party report, ADR figures witnessed a 7.2 per cent year-on-year (YoY) growth in July 2015, standing at SR810 ($215), while September 2015 registered a YoY increase of 2.3 per cent, bringing ADR up to SR825 ($219). In Jeddah, occupancy rates across the hospitality sector witnessed a YoY increase of 6.4 per cent during Q3 2015 and stood at 83 per cent. The high occupancy rates in the city could be partially attributed to the large number of pilgrims who visited Jeddah as part of their pilgrimage to Makkah in September. According to third party industry reports, hotel establishments in Jeddah recorded a 5.3 per cent higher ADR in Q3 (SR1,170.8), compared to the corresponding period in 2014. With regards to the recent additions to the hotel establishments supply in Saudi Arabia, Q3 witnessed the opening of the 438-key Movenpick Hotel Riyadh as well as the 112-room Radisson Blu Plaza Hotel and Ascott Tahlia serviced apartments, both of which are located in Jeddah.With hospitality sector quickly becoming a viable career option for Saudi nationals, renowned international hotel chains, such as Accor and Hilton Worldwide, have developed new management trainee schemes, aimed at assisting Saudi locals in developing hospitality-related management skills and gaining on-the-job working experience. The newly implemented programmes are also in line with the government’s strategy of Saudisation, whose objective is to increase the number of Saudi nationals employed in the private sector.