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.