Saudi Arabia Hospitality Sector Witnesses Strong Growth: AHIC

Dubai, 4th February, 2015 (WAM): The organisers of the Arabian Hotel Investment Conference (AHIC) held a briefing event in Jeddah this week, for industry leaders and professionals to discuss the positive performance that the hospitality sector has achieved in Saudi Arabia in 2014, as well as the outlook for 2015 and beyond, with a particular focus on Jeddah and the holy cities of Makkah and Medina.

The event was hosted by Makarim Annakheel Hotel and Resort in Jeddah, and the gathering was addressed by industry leaders.

Commencing with a market overview from STR Global Middle East and Africa for year-end 2014 results, the first session of the Saudi Briefing revealed that the region had reported positive performance results during December 2014, when reported in U.S. dollars. The Middle East and Africa reported a 3.9-percent increase in occupancy to 61.9 percent, a 3.2-percent increase in average daily rate to US$183.35 and a 7.3-percent increase in revenue per available room to US$113.53.

The overview presentation was given to the attendees by Philip Wooller, Area Director for Middle East and Africa at STR Global who said: “As the whole Middle East witnessed positive results in 2014, Jeddah specifically has had an overall successful end to 2014 and continues to improve its reputation as a destination for business and leisure. Demand growth was able to climb 2.9% for year-end 2014, with the supply increase of 1.9%. This resulted in positive occupancy growth achieving a level of 74.3% occupancy for the year.” Phillip added: “Room rates also achieved an increase of 8.9% to SAR968.73 for year-end, which resulted in a RevPAR increase of 9.9%. Jeddah has been able to achieve rate increases consecutively over the past 32 months, with the highest ADR achieved for the city since 2000. Jeddah also continues to increase the amount of rooms under construction, with the most recent report showing over 2,000 rooms in the pipeline (2,728).” On the holy cities of Makkah and Medina, Phillip said: “Looking at the holy cities of Makkah and Medina on a 2014 year-end basis, they achieved RevPAR increases of +4.3% and +8.6% respectively. Medina also reported a significantly higher year-end occupancy growth (+9.8%)ompared to Makkah’s +5.8%.” said Philip Wooller, Middle East and Africa Area Director of STR Global.

“These cities are driven by religious tourism, being the birthplace of Islam. In recent years there have been restrictions put in place in terms of numbers allowed in the cities, with the vast majority of restrictions due to huge redevelopment plans, primarily in Makkah. At this stage it simply can’t take any more visitors due to the redevelopment and pending infrastructure changes, so it is currently a ‘controlled demand’ environment. Medina’s hotel market is smaller in comparison, thus it has more opportunity to grow as pilgrims travel to Medina and then to Makkah.” “It is difficult to compare the two cities as their numbers are so diverse- Medina’s occupancy for the month of December increased 28.3%, in contrast to Makkah’s -0.0 flat year-over-year comparison rate.” Wooller said. “On the other hand, Makkah is still showing the higher year-end RevPAR (SAR529.04) against Medina’s SAR345.26, both driven by occupancy rather than ADR.” Organised by Bench Events and MEED, AHIC 2015 Conference will take place from 5-7 May 2015 at Madinat Jumeirah in Dubai and draw key industry participants.