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Makkah hotel sector to receive over 11,000 keys

MAKKAH, November 8, 2016

Makkah's hospitality sector is expected to witness the entry of more than 11,000 hotel keys between 2016 and 2018, primarily represented by five- and four-star properties, a new report as unveiled.

According to the Colliers International Saudi Arabia Q3 report, branded supply in the market continues to be upmarket with no existing three-star branded supply (at present five-star branded supply is the vast majority with 89 per cent of supply).

AccorHotels is the key branded operator in Makkah and is projected to remain as such by 2018, with a total of 7682 keys.

In Q3 2016, Makkah experienced a 22 per cent year-on-year drop in RevPAR as a result of drop in Umrah pilgrim visitation, which is due to stricter visa quotas, construction to expand the two Holy Mosques as well as significant infrastructure improvements.

Despite these setbacks, the full-year 2016 RevPAR performance is projected to increasely slightly by 1 per cent on the back of a stronger market performance in the month of Ramadan in 2016.

Another city expected to do well is Jeddah, which has been projected to remain the strongest performer among the kingdom's hotel markets. The long-term outlook is also positve as the King Abdulaziz Airprot expansion (2017) and the Jeddah Economic City (2020/21) are expected to reinvigorate hotel demand in the city.

Despite a robust supply pipeline, delays are expected to continue allowing for improved short-term market penetration for existing hotels. Developing mid-market hotels and trendy food and beverage concepts tailored to the rising millenial population are differentiated products that could improve the dsetination's overall appeal.

Occupancy dropped year-on-year due to decreased corporate demand in Q3 2016 and is expected to reflect in the full-year 2016. However, RevPAR increased on the back of leisure and transient demand segments' spend which is generally higher than corporate spend. Jeddah's hotel market performance is expected to continue at its current performance levels in 2017.  - TradeArabia News Service




Tags: hotel | Makkah | Jeddah | rooms |

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