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.


Iraq to ask US for exemptions on some Iran sanctions

Updated 37 min 19 sec ago
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Iraq to ask US for exemptions on some Iran sanctions

BAGHDAD: Iraq’s economy is so closely linked to Iran that Baghdad is going to ask Washington for permission to ignore some US sanctions on its neighbor, Iraqi government and central bank officials said.

US President Donald Trump withdrew the US from an international deal aimed at limiting Iran’s nuclear program earlier this year and reimposed trade sanctions.

Washington has said there will be consequences for countries that do not respect the sanctions.

Baghdad is in a difficult position. Iraq imports crucial supplies from ally Iran, but its other major ally is the US, which provides security 
assistance and training.

The request would mark an 
important change in political tactics for Iraqi Prime Minister Haider Al-Abadi. He initially said Baghdad would respect all the US sanctions, but faced heavy criticism from rivals.

The officials told Reuters a delegation will travel to Washington to ask for exemptions in applying the sanctions. They did not say when that trip would take place.

“The government plans to ask Washington for a waiver. It’s going to happen soon,” one central bank 
official said.

An official in Abadi’s office declined to comment. An official in the US State Department said it was discussing Iran policy with its partners around the world.

“We have given the same message to all countries around the world that the President has said, the United States is fully committed to enforcing all of our sanctions,” the official said.

“Iraq is a friend and important partner of the US and we are committed to ensuring Iraqi stability and prosperity.”

Iraqi officials fear shortages of key items if Baghdad complies with all the sanctions, which could lead to political turmoil at a delicate time in Iraqi politics.

Iraq imports a wide range of goods from Iran including food, agricultural products, home appliances, air conditioners and spare car parts. The goods element of Iranian imports to Iraq was about $6 billion for the 12 months to March 2018, about 15 percent of Iraq’s total imports for 2017.

Energy contracts between the two countries contributed to a volume of trade of $12 billion last year.

The officials said they were asking each ministry to put together a list of imports that are essential for Iraq’s economy. Those items will make up the request for exemptions.

The US sanctions that came into 
effect earlier this month target Iran’s trade in gold and other precious metals, its purchases of US dollars and its car industry. Other sanctions will come into force in November.