Hotel supply in Saudi Arabia has slowed down according to the latest findings from Colliers International.
Recently, the Kingdom reported that it has 35,770 rooms in 81 hotels under construction, which is closely followed by the UAE with 26,989 rooms in 93 hotels.
Riyadh and Jeddah, however, have seen hotel projects ‘soften’ in Q2 2016, as five-star projects in Jeddah have been put on hold indefinitely over the past quarter.
For Jeddah, the third quarter is looking positive though, as Rocco Forte’s property branded the Assila Hotel located in Aziziyah is expected to add 146 rooms and 62 suites to the city’s inventory. Despite a robust pipeline, delays in hotel openings are expected to run well in to 2017/18.
From a long term perspective, Jeddah has the best projected hotel supply pipeline. By 2018, the city hopes to have 9,554 keys up from 4,924 (as of Q2 2016) – resulting in a CAGR of 31%.
Riyadh’s pipeline, meanwhile, has also seen a slight dip from Q1 in terms of projected supply from a CAGR of 25% to 23% as a number of projects have been put on hold.
The scenario across Khobar, Damman and Dhahran is slightly different given the impact of reduced oil prices on the existing hotels in the tri-city area is more direct, which has led to reduced corporate demand.
Findings from the Colliers International report suggest that the tri-city area is expecting little over 2,000 rooms to be developed by 2018.
Meanwhile, the projected number of keys to be added to Madinah’s inventory of hotel rooms is the lowest across all the major cities in the Kingdom with a CAGR of 10%. The existing number of rooms, according to the report, stands at 6,421 and is expected to go up to 8,371 by 2018.
The outlook for Makkah's hotel supply remains positive in tandem with the completion of the Haramain high-speed railway and an improved visa quota regime.
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