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.


For Iranians, economic crisis looms larger than US tensions

Updated 19 May 2019
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For Iranians, economic crisis looms larger than US tensions

  • Iran’s 80 million people struggle to buy meat, medicine and other staples of daily life
  • Many pointed to the economy, not the possible outbreak of war

TEHRAN: Across Iran’s capital, the talk always seems to come back to how things may get worse.
Battered by US sanctions and its depreciating rial currency, Iran’s 80 million people struggle to buy meat, medicine and other staples of daily life.
Many pointed to the economy, not the possible outbreak of war, as Iran’s major concern. Iran’s rial currency traded at 32,000 to $1 at the time of the 2015 nuclear deal. Now it is at 148,000, and many have seen their life’s savings wiped out.
Nationwide, the unemployment rate is 12 percent. For youth it’s even worse, with a quarter of all young people unemployed, according to Iran’s statistic center.
“The economic situation is very bad, very bad. Unemployment is very high, and those who had jobs have lost theirs,” said Sadeghi, the housewife. “Young people can’t find good jobs, or get married, or become independent.”
Sores Maleki, a 62-year-old retired accountant, said talks with the US to loosen sanctions would help jumpstart Iran’s economy.
“We should go and talk to America with courage and strength. We are able to do that, others have done it,” Maleki said. “We can make concessions and win concessions. We have no other choice.”
But such negotiations will be difficult, said Reza Forghani, a 51-year-old civil servant. He said Iran needed to get the US to “sign a very firm contract that they can’t escape and have to honor.” Otherwise, Iran should drop out of the nuclear deal.
“When someone refuses to keep promises and commitments, you can tolerate it a couple of times, but then certainly you can’t remain committed forever. You will react,” Forghani said. “So I don’t think we should remain committed to the deal until the end.”
Yet for Iran’s youth, many of whom celebrated the signing of the 2015 nuclear deal in the streets, the situation now feels more akin to a funeral. Many openly discuss their options to obtain a visa — any visa — to get abroad.
“Young people have a lot of stress and the future is unknown,” said Hamedzadeh, the 20-year-old civil servant. “The future is so unknown that you can’t plan. The only thing they can do is to somehow leave Iran and build a life abroad.”