Hospitality market: Jeddah ‘boasts strong resilience’

Updated 09 February 2016
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Hospitality market: Jeddah ‘boasts strong resilience’

JEDDAH: Jeddah’s hospitality market is expected to witness the entry of more than 5,333 hotel keys between 2016 and 2018, primarily represented by 5- and 4-star properties, each accounting for 51 percent and 31 percent of total forthcoming supply, respectively.

These predictions are made in a report released by Colliers International, a leader in real estate services industry.
It said that the fourth quarter of 2015 witnessed the opening of three internationally branded serviced apartments, all of which are operated by The Ascott Ltd., namely the Ascott Tahlia (125 keys), the Ascott Sari (52 keys), and the Citadines Al-Salamah (136 keys).
Jeddah has seen a large delay in hotel openings during 2015, with close to 30 percent of forthcoming supply being delayed for one year, and 25 percent being delayed for two. This trend in delays is expected to continue over the next 5 years.
Jeddah’s hospitality market witnessed growth in average rates between 2013 and 2014 as a result of the supply remaining fairly stable. However, 2015 witnessed a slight decline in average rates and occupancy as a result of the return of tourism flows to the Egyptian destinations combined with new hospitality supply in Jeddah (including serviced apartments).
Jeddah boasts strong resilience to seasonality fluctuations due to the diverse market segments it caters to. This relative stability supports a stable and healthy occupancy performance throughout the year, according to the report.
New hotels in Riyadh that can differentiate themselves through more innovative and exciting design or services concepts are expected to see better occupancy performance versus competing hotels, said Colliers International.
As the decline of the oil price continues, corporate demand in the overall market in Riyadh is expected to see continued slow growth in the short term. As a result, hoteliers are expected to continue targeting the domestic family market by providing new differentiated products catering to their needs and preferences, states the Colliers report titled “Quarterly Report — Saudi Arabia | Hotels Q4 2015.
Branded hotel supply in Riyadh is expected to grow at an average annual rate of 28 percent, with 4-and 5-star room stock accounting for 50 percent and 46 percent of supply, respectively. While this forecasted growth rate appears considerably high, it is likely to be affected by further delays, Colliers said.
Corporate demand growth slowed in the second half of 2015. This trend is expected to continue through to 2016 due to slowing economic activity countrywide, said the report.
Older hotels in the market will potentially face difficulties in maintaining their historically high rates as new, more modern properties enter the market, it added.
Branded hotel supply within Alkhobar, Dammam and Dhahran is expected to grow at an annual rate of 16 percent between 2016 and 2018. Furthermore, hotel development is concentrated within the 4- and 5-star segments, each accounting for 45 percent and 37 percent of total forthcoming supply.
Delays in project delivery are still expected, following the trend during 2015 where 36 percent of forthcoming supply had been delayed for one year, and 38 percent had been delayed from previous years.
Hotel markets in AlKhobar and Dammam cater to both corporate and leisure demand, and have seen favorable performance between 2013 and 2014. However, 2015 witnessed a stronger decline in average rates, attributed to the lower corporate demand from oil companies in AlKhobar, as well the decline in the euro which encouraged Saudi leisure tourists to travel abroad, stated the report.
As a result of declining oil prices, demand for accommodation from the corporate segment  which is the market s primary demand source  has shifted from 5- to 4-star properties, in effort to reduce costs, forcing 5-star establishment to reduce their prices to remain competitive within the market.
If oil prices continue to decline, it is expected that demand for hospitality accommodation will shift toward establishments with more affordable room rates.
The report also said that Makkah is expected to reach 25,519 branded hotel keys by 2018 despite delays in hotel openings seen in the past. The expected supply in 2018 is more than double that seen in 2015. Of the total forthcoming hotel supply until 2020, Millennium Hotels & Resorts and Hilton Worldwide represent 22 percent and 12 percent, respectively.


German industry groups warn US on tariffs before Trump-Juncker meeting

Updated 22 July 2018
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German industry groups warn US on tariffs before Trump-Juncker meeting

  • Washington imposed tariffs on steel and aluminum imports from the EU, Canada and Mexico on June 1
  • Trump is threatening to extend them to EU cars and car parts

BERLIN: German industry groups warned on Sunday, before European Commission President Jean-Claude Juncker meets US President Donald Trump this week, that tariffs the United States has imposed or is threatening to introduce risk harming America itself.
Citing national security grounds, Washington imposed tariffs on steel and aluminum imports from the EU, Canada and Mexico on June 1 and Trump is threatening to extend them to EU cars and car parts. Juncker will discuss trade with Trump at a meeting on Wednesday.
“The tariffs under the guise of national security should be abolished,” Dieter Kempf, head of Germany’s BDI industry association said. Juncker should tell Trump that the United States would harm itself with tariffs on cars and car parts, he told Welt am Sonntag newspaper.
The German auto industry employed more than 118,000 people in the United States and 60 percent of what they produced was exported. “Europe should not let itself be blackmailed and should put in a confident appearance in the United States,” he added.
German Economy Minister Peter Altmaier told Deutschlandfunk radio on Sunday he hoped it was still possible to find a solution that was attractive to both sides. “For us, that means we stand by open markets and low tariffs,” he said
He said the possibility of US tariffs on EU cars was very serious and stressed that reductions in international tariffs in the last 40 years and the opening of markets had resulted in major benefits for citizens.
EU officials have tried to lower expectations about what Juncker can achieve, and played down suggestions that he will arrive in Washington with a novel plan to restore good relations.
Altmaier said it was difficult to estimate the impact of any US car tariffs on the German economy, but added: “Tariffs on aluminum and steel had a volume of just over six billion euros. In this case we would be talking about almost ten times that.”
He said he hoped job losses could be avoided but noted that trade between Europe and the United States made up around one third of total global trade.
“You can imagine that if we go down with a cold in the German-American or European-American relationship, many others around us will get pneumonia so it’s highly risky and that’s why we need to end this conflict as quickly as possible.”
Eric Schweitzer, president of the DIHK Chambers of Commerce, told Welt am Sonntag the German economy had for decades counted on open markets and a reliable global trading system but added: “Every day German companies feel the transatlantic rift getting wider.”