Saudi Arabia to see sharp increase in luxury hotels

Visitors are seen at the 71st floor of the Gevora Hotel, the world's tallest hotel, in Dubai. The emirate remains the dominant regional market for luxury hotels, but Saudi Arabia is catching up, according to hospitality analysts. (Reuters)
Updated 27 February 2018
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Saudi Arabia to see sharp increase in luxury hotels

LONDON: Saudi Arabia is expected to see a “significant” increase in the number of luxury hotels in the kingdom by 2022, potentially threatening the dominance of the UAE in the high-end market, according to a new report.
The supply of luxury hotels in Saudi Arabia is anticipated to increase annually at 18 percent (compound annual growth rate) from 2018, far exceeding the 10 percent growth rate expected in the UAE, according to research published by real estate advisory firm Colliers International.
Luxury hotel supply in both Oman and Kuwait is due to grow by 11 percent, while Bahrain will see 9 percent growth.
The report also suggests that the luxury sector in Saudi Arabia is also more resilient than the country’s overall hotel market.
Last year, the luxury hotel market in Riyadh saw a 9 percent growth in the revenue per available room measure (RevPar), despite the overall market declining, the report said.
Saudi Arabia recorded a 5.2 percent decline in overall hotel occupancy in 2017, with a 4.4 percent drop in average daily rate (ADR), and a 9.3 percent decline in RevPar compared to the previous year, according to data provider STR Global.
Craig Plumb, head of research, Mena at JLL, told Arab News there were other factors that would also help the growth of Saudi Arabia’s hotel sector, potentially helping it catch up with the UAE.
“Recent announcements of major investment in the tourism sector, along with the relaxation of visa requirements to permit tourist visas for more nationalities, are expected to have a major positive impact on the hotel market within Saudi Arabia,” he said.
“While these changes will have only a partial impact on market conditions in 2018, there is little doubt that the Saudi market will close some of the gap with the UAE over the medium to long term,” he said.
Taimur Khan, senior analyst at Knight Frank, also noted efforts underway to encourage more tourism and hotel visitors.
“In Saudi Arabia there is positive sentiment for the medium to long-term due to various initiatives being put in place as part of Vision 2030 and the NTP which look to present the Kingdom as a more leisure-friendly destination,” he told Arab News, before noting that the country still struggles with only a limited pool of potential visitors.
“In Saudi Arabia the demand pools are limited to business tourism and religious tourism, this is one of the main challenges. However, there are strategies which have been devised to diversify target segments such as easing of visa restrictions,” he said.
The UAE currently leads the GCC luxury hospitality sector, with 73 percent of existing luxury hotel stock in the region and 61 percent of the region’s current luxury pipeline.
Within the UAE, 35 percent of last year’s pipeline for hotels consisted of luxury projects, with most concentrated in Dubai. This compares to luxury developments accounting for only 14 percent of projects in Saudi Arabia, 20 percent in Kuwait, 19 percent in Bahrain and 11 percent in Oman.
There are also signs that the budget to mid-market hotel sector is expanding in the UAE.
“While the market remains dominated by the luxury sector, an increasing number of budget and mid market brands are scheduled to enter the market over the next two years,” said Plumb.
“The addition of more mid-market projects is expected to act as a drag on the average performance of the UAE market, with ADR and RevPar expected to decline from current levels over the next two years,” he said.


Palestinians in financial crisis after Israel, US moves

Updated 22 March 2019
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Palestinians in financial crisis after Israel, US moves

  • A Ramallah-based economics professor said the Palestinian economy more generally, remain totally controlled by and reliant on Israel
  • Israeli-Palestinian peace efforts have been at a standstill since 2014

RAMALLAH, Palestinian Territories: The Palestinian Authority faces a suffocating financial crisis after deep US aid cuts and an Israeli move to withhold tax transfers, sparking fears for the stability of the West Bank.
The authority, headed by President Mahmud Abbas, announced a package of emergency measures on March 10, including halving the salaries of many civil servants.
The United States has cut more than $500 million in Palestinian aid in the last year, though only a fraction of that went directly to the PA.
The PA has decided to refuse what little US aid remains on offer for fear of civil suits under new legislation passed by Congress.
Israel has also announced it intends to deduct around $10 million a month in taxes it collects for the PA in a dispute over payments to the families of prisoners in Israeli jails.
In response, Abbas has refused to receive any funds at all, labelling the Israeli reductions theft.
That will leave his government with a monthly shortfall of around $190 million for the length of the crisis.
The money makes up more than 50 percent of the PA’s monthly revenues, with other funds coming from local taxes and foreign aid.

While the impact of the cuts is still being assessed, analysts fear it could affect the stability of the occupied West Bank.
“If the economic situation remains so difficult and the PA is unable to pay salaries and provide services, in addition to continuing (Israeli) settlement expansion it will lead to an explosion,” political analyst Jihad Harb said.
Abbas cut off relations with the US administration after President Donald Trump declared the disputed city of Jerusalem Israel’s capital in December 2017.
The right-wing Israeli government, strongly backed by the US, has since sought to squeeze Abbas.
After a deadly anti-Israeli attack last month, Prime Minister Benjamin Netanyahu said he would withhold $138 million (123 million euros) in Palestinian revenues over the course of a year.
Israel collects around $190 million a month in customs duties levied on goods destined for Palestinian markets that transit through its ports, and then transfers the money to the PA.
Israel said the amount it intended to withhold was equal to what is paid by the PA to the families of prisoners, or prisoners themselves, jailed for attacks on Israelis last year.
Many Palestinians view prisoners and those killed while carrying out attacks as heroes of the fight against Israeli occupation.
Israel says the payments encourage further violence.
Abbas recently accused Netanyahu’s government of causing a “crippling economic crisis in the Palestinian Authority.”
The PA also said in January it would refuse all further US government aid for fear of lawsuits under new US legislation targeting alleged support for “terrorism.”

Finance Minister Shukri Bishara announced earlier this month he had been forced to “adopt an emergency budget that includes restricted austerity measures.”
Government employees paid over 2,000 shekels ($555) will receive only half their salaries until further notice.
Prisoner payments would continue in full, Bishara added.
Nasser Abdel Karim, a Ramallah-based economics professor, told AFP the PA, and the Palestinian economy more generally, remain totally controlled by and reliant on Israel.
The PA undertook similar financial measures in 2012 when Israel withheld taxes over Palestinian efforts to gain international recognition at the United Nations.
Abdel Karim said such crises are “repeated and disappear according to the development of the relationship between the Palestinian Authority and Israel or the countries that support (the PA).”
Israel occupied the Gaza Strip and the West Bank, including now annexed east Jerusalem in the Six-Day War of 1967 and Abbas’s government has only limited autonomy in West Bank towns and cities.
“The problem is the lack of cash,” economic journalist Jafar Sadaqa told AFP.
He said that while the PA had faced financial crises before, “this time is different because it comes as a cumulative result of political decisions taken by the United States.”
Abbas appointed longtime ally Mohammad Shtayyeh as prime minister on March 10 to head a new government to oversee the crisis.
Abdel Karim believes the crisis could worsen after an Israeli general election next month “if a more right-wing Israeli government wins.”
Netanyahu’s outgoing government is already regarded as the most right-wing in Israel’s history but on April 9 parties even further to the right have a realistic chance of winning seats in parliament for the first time.
Israeli-Palestinian peace efforts have been at a standstill since 2014, when a drive for a deal by the administration of President Barack Obama collapsed in the face of persistent Israeli settlement expansion in the West Bank.