Jeddah hotels record increase in demand and profit

Jeddah hotels recorded a RevPAR increase of 15% in June, compared to the same month in 2011, according to the new HotStats report, but revenues in Riyadh fell as the city entered the "summer slowdown".

Average occupancy reached 85.4% in Jeddah, up by 5.8%, while ARR was also up 7.2% to US $226.63.

The survey of four- and five-star hotels by TRI Hospitality Consulting showed that Gross Operating Profit Per Available Room (GOPPAR)  for the city was up by 13.8% to $147.95, while RevPAR averaged US $193.62.

Peter Goddard, managing director of TRI Hospitality Consulting in Dubai, said: “Jeddah achieved the highest occupancy and profitability in the region in June as hotels capitalise on the strong summer demand. Jeddah is a summer holiday destination for domestic travellers as well as the summer seat of the Saudi government.

“The GOPPAR level of US$147.95 achieved by hotels in June is the highest in the city in the past three years. Jeddah is well positioned to perform well throughout the remainder of the year and into early 2013 as the domestic demand is continued to be strong until the Levant is safe to travel. In addition, Jeddah hotels will also benefit from the limited future supply anticipated to enter the market in the short term.”

Meanwhile, Riyadh recorded a drop in RevPAR of 9.8%, due to ARR falling 9.6% and occupancy levels contracting slightly. GOPPAR levels fell further, to US129.80, due to a payroll increase of 2.2%.

Goddard said: “The lower performance levels of Riyadh hotels in June reflect the annual performance cycle in which performance levels and profitability reduces in the summer months. The corporate and government segments which are the backbone of demand in the capital drop significantly, resulting in hotels applying discounts on rates to attract business.”