Makkah's hospitality sector is expected to witness the entry of more than 24,478 hotel keys between Q2 2017 and 2019, primarily represented by five- and four-star properties, a new report said.

According to the Colliers International Saudi Arabia Q2 2017 report, branded supply in the market continues to rise with the composition in Makkah at 85 per cent as five-star hotels and 13 per cent as four-star hotels. Three-star hotels only made up 2 per cent of the composition.

In Q2 2017, Makkah experienced a 5 per cent year-on-year drop in RevPAR due to the impact of devalued currencies in key pilgrim source markets and the increased visa fees for pilgrims.

It is expected that full-year performance will also show a 6 per cent RevPAR decline from 2016 as no recovery from the two afformentioned factors impacting current demand is anticipated.

Another city expected to do well is Riyadh with a total of 7,688 rooms to open between Q2 2017 and 2019.

Despite a robust supply pipeline, delays are expected to continue allowing for improved short-term market penetration for existing hotels.

Riyadh's hospitality market performance continued to slide in terms of RevPAR in Q2 2017 from Q2 2016, due to the same underlying factors of a drop in real demand and continued rate sensitivity from the key corporate and government segments.

As oil prices and the macro-economic outlook remain stagnant, year-on-year performance is expected to see an overall RevPAR drop of 17 per cent.

The Colliers report projects continued short-term decline but nercvertheless various major upcoming developments such as KAFD and Entertainment City will positively boost the medium to long-term demand outlook. - TradeArabia News Service