As the second largest Arab state (after Algeria), development in the GCC country of Saudi Arabia is unlikely to be limited by lack of space. Constituting the bulk of the Arabian Peninsula, Jeddah, Riyadh, and the religious sites of Makkah and Madinah continue to be key markets for hoteliers.

With growth in corporate demand increasing, Riyadh’s hotel RevPAR is expected to witness a 2% increase by the end of 2015 compared to 2014, while Jeddah’s hotel market has seen a slight increase in performance — RevPAR is forecasted to increase by 3% by year-end, according to Filippo Sona, director — head of hotels (MENA region) at Colliers International.

Christopher Hewett, associate director of TRI Consulting adds: “With hotels in Jeddah continuing to achieve strong performance levels with a market wide occupancy of 78.2% for the past 12 months, this has allowed hoteliers to yield marginally higher ADR, which has increased 3.5% to $274.9. RevPAR increased in line with ADR, growing 2.5% to US$ 215.0. Although Riyadh has witnessed an influx of supply over the past 12 months, the hotel market has successfully increased market-wide occupancy levels to 63% on the back of greater corporate demand in the capital. Although ADR has not followed this trend and remained on par with 2014 figures, the growth in demand resulted in a 9% increase in RevPAR to $148.9.”

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Hoteliers have already acted upon such numbers with many international operators capitalising on the religious and business demand in the country.

“Religious tourism is extremely important for our growth and presence in the market,” reports One to One Hotels and Resorts COO Philippe Harb. “The sheer density of developments around the Haram are pushing larger developments outwards and Al Aziziyah is considered a prime district for future intake of more hospitality supply and that’s where One to One Hotels & Resorts are going to be located. Hajj visitor numbers is expected to continue to grow to 5.2 million by 2025 from two million in 2013. Furthermore, there are ongoing negotiations to manage four additional hotels in KSA and increase our presence and strength in the market.”

Sami Nasser, senior vice president, operations, Middle East, Africa & India for FRHI Hotels & Resorts explains the company’s approach: “KSA continues to be a key growth market for us. It was initiated five years ago with the debut of our tri-branded (Fairmont, Raffles and Swissôtel) Makkah complex, which today collectively represents approximately 3000 guestrooms within the Abraj Al Bait, located in the Haram area of the city. This is staggering considering that it accounts for almost half of the accommodation within proximity to the holy site. Following the success of our operation in Makkah, we have announced Fairmont Jeddah (during AHIC this year), Swissôtel Jeddah, and Raffles Jeddah, all slated to open before 2020, in addition to Fairmont Riyadh, Business Gate which will open next year.”

FRHI is not the only one. Ali Hamad Lakhraim Alzaabi, founder, president & CEO of Millennium & Copthorne, Middle East & Africa also has an aggressive expansion strategy over the next 12 months, reporting: “With more than 10,000 keys in the pipeline, our outlook is positive and it’s integral to our expansion programme. The next hotel to open will be Millennium Hotel Hail, a 191-room upscale five-star property situated opposite Hail Economic City. The opening will be followed by Copthorne Riyadh by Millennium, a 145-key property with an excellent location on King Fahd Road in Riyadh.

“We have also signed several new hotels this year, underlying our position as the fastest growing operator in the Kingdom. These include four agreements with Taiba Holding Company including bringing the Biltmore brand to Riyadh and a 299-key Grand Millennium Hotel Madinah, both set to open in 2018. We have also recently signed four hotels, which will open in Knowledge Economic City in Madinah. These properties include two Millennium hotels and a Studio M and Millennium Executive Apartments, the Group’s budget and service apartment brands.”

Another company planning on making a debut is London-founded luxury operator Rocco Forte Hotels, which will make its Saudi Arabia debut with a hotel and serviced apartment complex in Jeddah. It was initially set to open in quarter one of 2015, but is now targeting quarter one of 2016. It will mark the group’s re-entry into the Middle East hospitality market.

Rocco Forte Hotels vice president of sales & marketing Christian Renz told Hotelier: “We decided to open the Assila — A Rocco Forte Hotel, in Jeddah as the city currently is a very attractive market for luxury with no European brands currently present. With 210 rooms and suites, four restaurants and bars, a large scale spa as well as 94 residences, we think we can make a big impact on this city. It is also important for us to have a presence in the Middle East, as it is one of our key markets for customer base for our ten other hotels.”

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