28 FEBRUARY - 2 MARCH 2021
RIYADH INTERNATIONAL CONVENTION & EXHIBITION CENTER

Long-term outlook for the key hospitality markets remain positive

  • Social reforms and government led investments in infrastructure, entertainment and tourism continue to drive sector
  • Hotel occupancy increases across Riyadh, Makkah and Dammam in H1 2019

Deloitte Financial Advisory just launched the Middle East Real Estate Predictions: KSA Hospitality Market 2019 report which examines the performance of the KSA hospitality market, the evolution of the tourism industry in KSA and a regional view of global trends and disruptors.

Although the KSA hospitality market experienced a challenging year in 2019 compared to previous years, the long-term outlook for the market remains positive.

Key findings from the report include:

The overall performance in Makkah improved compared to the same period last year. Occupancy saw a 10% increase, reaching 68% in the first half of 2019, however the increase in supply continued to put pressure on ADRs which witnessed an 8% decline over the same period. The combined effect resulted in an increase in Revenue Per Available Room (RevPAR) by 1%.

The hotel market in the Dammam and Al Khobar region saw a 10% increase in occupancy, in the first half of 2019, compared to the same period last year. However, ADRs continued to soften, with a 17% decline over the same period, resulting in an overall decline in RevPAR of 8%.

Average occupancy levels in Riyadh saw a 5% increase compared to the same period last year, whilst increasing supply and competition led to a reduction in ADR by 10%, over the same period, resulting in a decline in RevPAR of 6%.

While occupancy levels in Jeddah remained stable, increasing supply and competition continued to drive reductions in ADR and consequently RevPAR, which saw a decline of 11% in the first half of 2019, compared to the same period last year. Notably, in 2018, Jeddah reported the highest ADR globally according to data from STR.

Dunia Joulani, Head of Travel, Hospitality and Leisure, Deloitte Middle East said, “Overall the long-term outlook for the key hospitality markets in KSA remain positive as diversification efforts, social reforms and government led investments in infrastructure, entertainment and the tourism sector materialise.”


Robin Williamson, Head of Real Estate Middle East, Deloitte Middle East, said: “In 2018, the Public Investment Fund (PIF) of Saudi Arabia launched several GIGA tourism and hospitality projects, which will undoubtedly contribute to the growth and evolution of a unique tourism industry in the Kingdom. However, there are a number of challenges including competition from established neighbouring tourism destinations, implementation of regulatory and social reforms, hotel staffing challenges and private sector investment. These challenges need to be addressed to ensure sustainable growth in the tourism and entertainment sectors”.

The Deloitte report also explores a number of key hospitality global trends and disruptors that will impact the hospitality market in KSA and the wider region including an increased focus on data protection and cyber security and the use of Artificial Intelligence (AI). From online chatbots to virtual assistants like Alexa and Siri, AI continues to be leveraged in new products and service delivery techniques.

This, along with the growing focus on cybersecurity, are expected to have a major impact on the hospitality market going forward. Read more...

Source: ZAWYA

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