Although Saudi Arabia has been opening new avenues to boost tourism and visitor numbers, the hotel sector in Jeddah remained relatively subdued in February with further declines in performance expected, according to property expert JLL.

Occupancy rates in February remained stable at 48 per cent compared to the same month in 2018, with average daily room rates (ADR) dropping 12 per cent year-on-year to $167.

In turn, revenue per available room (RevPAR) dropped 10 per cent and reached $80 over the same period.

Hotel performance is expected to soften further over the remainder of the year as more keys are expected to be delivered to the market, JLL noted.

Two upscale branded hotels were handed over in Q1 2019: Movenpick Hotel Tahlia Jeddah and Hyatt House Jeddah Sari Street, adding approximately 160 and 100 keys respectively. These properties bring the total supply of quality hotel keys in Jeddah to 11,700.

A further 3,800 keys are expected to enter the market by 2020. Scheduled completions include Ibis and Adagio on Al Malik Road, the new Jeddah Marriot in Al Bawadi, Crowne Plaza Jeddah, and two Choice hotels brands.

While some properties are at an advanced stage of construction, some delays are expected as demand remains soft.

Looking ahead, demand for the growing leisure and entertainment sector will likely see Jeddah witness new operators entering the market. Furthermore, the progression of giga-projects such as the Red Sea Project, comprising 14 luxury hotels in its first phase will boost and diversify demand in the hospitality market. - TradeArabia News Service

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