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Spike in Jeddah hotel keys supply weighs on room rates

Saudi Arabia, April 11, 2018

An increase in the number of available keys with the entry of new brands weighed on room rates and revenue performance of hotels in Jeddah last March, preliminary data from industry monitor STR show.
“Preliminary March 2018 data for hotels in Jeddah, Saudi Arabia, indicates mostly negative performance due to a spike in supply,” STR said, noting that room supply rose 12.9 percent during the month, while demand slipped 0.9 percent.
Occupancy levels were also 12.3 percent lower to 48.8 percent, as STR analysts commented that “occupancy levels have been declining significantly over the past two years due to supply growth.”
A report from JLL Mena indicated that 1,700 new keys will enter the Jeddah hotel market this year, similar to last year’s number, with most of hotels projects at advanced stages of construction.
Among those expected to enter the market this year include Salsabil by Warwick with 144 keys and the Park Inn by Radisson with 84 keys, plus the expansion of existing operators such as Carlson Regidor with the Radisson Blu Hotel & Residence Corniche with 100 keys, Movenpick with Movenpick Hotel & Apartments Al-Tahlia Jeddah with 164 keys and Rotana with the Centro Al-Salama with 189 keys.
For the month in review, average daily rate (ADR) in Jeddah hotels was down 5.6 percent to 674.54 Saudi riyals while revenue per available room (RevPAR) was 17.2 percent lower to 329.17 riyals.
ADR is an industry metric used to indicate the average realized room rental per day, while RevPAR is employed to make an assessment regarding a hotel’s operations and its ability to fill its available rooms at an average rate.

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