Jeddah hotel occupancy falls amid rising supply

Rising capacity and dwindling demand saw Jeddah's hotel occupancy rate plunge in April. (Shutterstock)
Updated 11 May 2018
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Jeddah hotel occupancy falls amid rising supply

  • Occupancy rate slumps 13.5% year on year in April
  • Abu Dhabi occupancy rises 2.7% despite lack of significant events

LONDON: Hotel occupancy in Jeddah fell to its lowest level in 14 years in April, with weakening demand combining with a surge in new supply.

Occupancy slumped 13.5 percent year on year to 53.5 percent last month, according to hospitality research firm STR. Demand fell 4.8 percent year on year, while the supply of hotel rooms was up 10.1 percent.

The fall in demand had a knock-on effect on revenue per available room (RevPAR) for the city’s hotels, which fell 9.4% to SR439.90 for the month, its lowest reading since 2008. The fall came despite a 4.7 percent year-on-year increase in average daily rates to SR822.06.

“Heavy investments in the region, which led to a 15.8% increase in supply for 2017, are making it difficult for hoteliers to stabilize RevPAR,” STR said in a statement yesterday.

Fellow market research firm TOPHOTELPROJECTS predicts a total of 84 hotels — comprising 27,281 rooms — will open in Saudi Arabia in 2018, with the majority opening in Riyadh, Jeddah, Makkah and Al-Khobar.

Hotels in Abu Dhabi meanwhile enjoyed higher occupancy levels last month, according to STR, despite a lack of major events in the emirate during the month to drive bookings.

Occupancy rose 2.7 percent to 80 percent in April, as demand rose 6.9 percent and supply increased 4.1 percent.

“The absolute occupancy level would be the highest for an April in the market since 2008,” the firm said.

But the ADR slipped 3.3% to 432.12 dirhams (SR,440.93), resulting in a 0.7 percent decline in revenue per RevPAR to 345.88 dirhams.

“ADR decreases have been common in the market with supply growth a factor in that trend,” STR said.

Abu Dhabi is targeting to attract 8.5 million tourists a year by 2021 and has been ramping up efforts to promote the emirate as a culture and heritage destination, especially with the opening of Louvre Abu Dhabi, the only regional presence of the famous French museum, in late 2016.

The emirate expects to welcome 5.5 million hotel guests this year, up from about 5 million in 2017.


Auto parts suppliers warn hard Brexit may set UK back 25 years

Updated 17 October 2018
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Auto parts suppliers warn hard Brexit may set UK back 25 years

  • Europe’s carmakers’ lobby ACEA and suppliers’ association CLEPA, along with BMW and brakes maker Brembo, jointly warned that a no-deal exit would be catastrophic for the industry
  • Roberto Vavassori: The recovery of Britain’s auto sector in the 20 years since the decline of British Leyland and its successor Rover Group was based on investment from around the world

BRUSSELS: Failure to secure a trade deal for Britain when it exits the EU next year could set the UK auto sector back two decades, leading parts suppliers said on Wednesday as they urged leaders to reach agreement at a summit in Brussels.
Europe’s carmakers’ lobby ACEA and suppliers’ association CLEPA, along with BMW and brakes maker Brembo, jointly warned that a no-deal exit would be catastrophic for the industry.
The “just-in-time” industry model relied on frictionless trade between Britain and mainland Europe, they said.
“If we are continuing to be taken hostage by this situation, the flourishing UK auto industry could come back to the situation it was at 20-25 years ago,” said Roberto Vavassori, a management board member at Brembo and president of CLEPA.

 

The recovery of Britain’s auto sector in the 20 years since the decline of British Leyland and its successor Rover Group was based on investment from around the world, he said.
Vavassori said he felt “betrayed” that Brembo’s manufacturing in Coventry, UK, would be a different prospect post-Brexit from the time of its investment 15 years ago.
ACEA said contingency planning by its members included temporary production shutdowns and scouting for warehouse space to stockpile parts.
“No amount of contingency planning can realistically cover all the gaps left by the UK’s withdrawal from the EU on WTO terms,” ACEA said, referring to a no-deal scenario in which Britain would have no preferential access to EU markets.
Some 1,100 trucks arrive in Britain every day from elsewhere in the country with parts for the UK auto sector, and storage space to cover more than a day or two of production was not feasible.
The EU leaders’ meeting from Wednesday had hoped to reach a provisional Brexit deal before signing off on a withdrawal agreement at a special Brexit summit
in November.
The talks, stalled since Sunday, are stuck over the issue of how to avoid a hard border between the British province of Northern Ireland and the Irish Republic.
BMW said that its survey of
Brexit preparedness showed only 10 percent of British automotive suppliers and 41 percent of EU suppliers considered they were well prepared for Brexit, with many having little or no experience of customs clearing.
Stephan Freismuth, customs manager at BMW, said that at the Channel tunnel and ports such as Dover there was no customs
infrastructure and, in some cases, no space for trucks awaiting checks to park.

FACTOID

Some 1,100 trucks arrive in Britain every day from elsewhere in the country with parts for the UK auto sector.