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

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.


South Korea seeks arrest of Samsung heir in succession probe

Updated 04 June 2020

South Korea seeks arrest of Samsung heir in succession probe

  • Jay Y. Lee faces a return to jail just a little over two years after being released from detention

SEOUL: South Korean prosecutors have requested an arrest warrant against Samsung Group heir Jay Y. Lee, they said on Thursday, in the investigation of a controversial 2015 merger and alleged accounting fraud in a suspected bid to aid his succession plans.
The move spells fresh trouble for Lee, who, if arrested, faces a return to jail just a little over two years after being released from detention in February 2018.
Lee already faces trial on a charge of bribery aimed at winning support to succeed ailing group patriarch Lee Kun-hee, and which involved former President Park Geun-hye, and spent a year in detention until the bribery case was suspended in 2018.
Prosecutors said they sought Lee’s arrest on suspicions of stock price manipulation and audit rule violations, among other offenses.
In a statement, Lee’s lawyers expressed “deep regret” at the prosecution’s decision to seek his arrest, adding that he had fully cooperated with the investigation while Samsung was going through management crises.
Prosecutors have been investigating suspected accounting fraud at drug company Samsung Biologics after the Korean financial watchdog complained the firm’s value had been inflated by $3.7 billion in 2015.
Prosecutors contend the violation helped boost the value of its major owner, Cheil Industries, which counted Lee as its top shareholder, and merged with Samsung C&T, a de facto holding firm, Yonhap news agency said.
Samsung requested an outside review of the investigation to weigh the validity of the indictment and the Seoul Central District Prosecutors’ Office is following the necessary procedures, it said in a statement.
Last month, prosecutors questioned Lee, 51, over the latest investigation. He also apologized for a series of controversies around his succession planning.
Lee’s year in detention followed separate charges that he bribed Park to win government support for the 2015 merger which helped tighten his control of South Korea’s top conglomerate.