Performance

It is here that we taste the tonic to the sweetness of positivity surrounding expansion. Makarem Annakheel Village, Jeddah general manager Amir Ataya reveals that Jeddah “has seen a large delay in hotel openings during 2015, with close to 30 % of forthcoming supply being delayed for one year, and 25 % being delayed for two”.

“This trend in delays is expected to continue over the next five years,” he says.

Vincent Miccolis, area general manager, The Ascott Limited, GCC also makes pertinent points, highlighting that RevPAR in the region dropped by over 10% year-on-year. “RevPAR and GOPPAR are basically trended similarly to the price of crude oil over the past decade,” he tells Hotelier Saudi Arabia.

“The KSA hospitality market relies a lot on corporate travel for event, conventions or project, hence overall profitability has declined in line with the drop in oil price.” Having said this, he continues to say that “Jeddah has shown more resilience to economic conditions and seasonality fluctuations due to the diverse markets it caters to such as pilgrims and local families”.

When you add in the development of Jeddah economic City and King Abdul-Aziz airport extension, there is plenty of good news for Jeddah.

Riyadh and Khobar on the other hand “have been more severely affected by the decrease of corporate demand”, says Miccolis. “Forecasted performance on 2015 is expected at -15 % (RevPAR) as the city is also witnessing stronger competition with new openings,” he reveals.

Jeddah’s hotels in Q2 saw occupancy figures drop 8% year-on-year to 68%. Although occupancy is expected to drop lower due to lower corporate demand, Jeddah’s ADR levels (US $259) are benefitting from an expanded demand base.

The hospitality market witnessed growth in average rates between 2013 and 2014 as a result of the supply remaining fairly stable, according to Ataya.

“However, 2015 witnessed a slight decline in average rates and occupancy as a result of the return of tourism flows to the Egyptian destinations combined with new hospitality supply in Jeddah including serviced apartments,” he continues. “Both occupancy and ADR faltered in Riyadh due to a decrease in corporate and government demand, and full-year performance is expected to close below last year as the market sees the addition of new properties and competition intensifies.”

Becoming trendy

When it comes to trends, the obvious ones continue to leave their mark, the large number of pilgrims visiting Makkah throughout the year, directly impacting on occupancy rates in Jeddah.

However, Miccolis also reveals that “the hospitality sector is quickly becoming a viable career option for Saudi nationals”. “We have developed new management trainee schemes, aimed at assisting Saudi locals in developing hospitality-related management skills and gaining on-the-job working experience,” he continues.

Story continues below
Advertisement