Hospitality market: Jeddah ‘boasts strong resilience’
Hospitality market: Jeddah ‘boasts strong resilience’
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.
Turkish lira hits record low, down 20 pct against dollar this year
ISTANBUL: The Turkish lira tumbled more than 5 percent on Wednesday before recovering some ground, the latest drop in a sell-off that reflects growing investor alarm over the direction of monetary policy under President Tayyip Erdogan.
The decline, exacerbated by stop-loss selling by Japanese retail investors overnight, brings the lira’s losses to more than 20 percent so far this year and puts it on track for its worst monthly performance since the 2008 financial crisis.
The sell-off has also increased expectations that the central bank may be forced to call an extraordinary meeting to raise interest rates before its next scheduled policy-setting meeting on June 7, as it has done in previous years.
“We expect the MPC to hold an interim meeting over the coming days to raise interest rates by at least 200bp,” Jason Tuvey of Capital Economics said in a note to clients.
“If policymakers refrain from tightening monetary policy, the risk of a disorderly adjustment and a sharp economic downturn (possibly recession) will mount.”
The lira was at 4.8500 at 0855 GMT from its close of 4.6746 on Tuesday. It earlier touched a record low of 4.9290. It also fell against the Japanese yen, amid talk Japanese retail investors were selling the lira as it hit stop-loss levels.
“We are bearish on the lira and always have been given its very weak external balances and with macroeconomic policy moving in the wrong direction as well,” said Kiran Kowshik, emerging markets forex strategist at UniCredit.
A self-described “enemy of interest rates,” Erdogan wants borrowing costs lowered to spur credit growth and construction, and he said last week he would seek greater control over monetary policy after elections set for June 24.
Economy officials told Reuters the government’s economic management team met at the start of this week to discuss potential measures, including possible steps by the central bank. Deputy Prime Minister Mehmet Simsek and Central Bank Governor Murat Cetinkaya attended the meeting.
Ratings agencies sounded alarm about monetary policy. S&P Global senior sovereign analyst Frank Gill told Reuters government finances could deteriorate rapidly if authorities failed to stem pressure on the currency and government borrowing costs .
Investors want to see decisive rate increases to rein in double-digit inflation, and Erdogan’s comments have reinforced long-standing worries about the central bank’s ability to do that.
Borsa Istanbul Group, the Istanbul stock exchange company, said in a statement on Wednesday it had converted its foreign currency assets into lira, aside from its short-term needs, in a step to support the Turkish currency.
The lira’s weakness was exacerbated by dollar gains against a basket of currencies, with investors awaiting the minutes of the Federal Reserve’s last policy meeting for hints on the pace of monetary tightening.
The yield on the benchmark 10-year bond rose to 15.30 percent at the opening from a last trade of 14.92 percent on Tuesday.
The main BIST 100 share index fell 0.22 percent to 103,105 points on Tuesday.