Saudi hospitality sector outperforms Gulf peers in May

Saudi Arabia’s hospitality sector was the top performer across key metrics in May, even as the Middle East witnessed a decline across occupancy, average room rate (ADR) and RevPAR when compared to the same month last year, consultancy EY said in its latest MENA hotel benchmark survey report.

Jeddah’s four and five star hotels recorded the highest ADR of $351 across the Gulf region in May, leading in the highest RevPAR of $259 in the month, the survey showed.

“Due to Ramadan beginning in mid-May this year and the onset of the summer season, the overall decline in performance in the region is unsurprising,” Yousef Wahbah, MENA real estate, hospitality and construction sector leader at EY, said in the report.

“Saudi Arabia, however, benefitted from the large influx of pilgrims during the holy month,” he added.

More than two million pilgrims were expected to have visited the holy city, resulting in increased key performance indicators (KPIs) across Makkah, Madinah and Jeddah, with declines only in Riyadh, the report said.

Makkah saw an increase in occupancy by 7.3 percentage points to 61.2 percent in May this year from 53.9 percent in May 2017. The city’s ADR increased by 41.3 percent from $165 to $233, resulting in a growth in RevPAR by 60.4 percent from $89 in May last year to $143 in May 2018.

Madinah’s occupancy increased by 4.2 percentage points from 63.8 percent in May last year to 68 percent in this year, the report said.

The city’s ADR increased by 11 percent from $178 to $198, resulting in an increase in RevPAR by 18.3 percent to $135 this May.

Jeddah saw an increase in occupancy by 2.2 percentage points to 73.7 percent. The city also enjoyed a significant growth in ADR by 19.5 percent to $351.

In the UAE, Abu Dhabi enjoyed the highest increase in occupancy percentage points within the region with 8.9 percentage points, as well as the highest occupancy rate, which grew from 67.7 percent in May 2017 to 76.6 percent this year, the report said.

While the capital’s ADR decreased by 11.8 percent year-on-year (YoY), the city maintained its RevPAR of $68 from last year.

“Dubai’s hospitality market witnessed a dip across all KPIs as a result of the peak season of events and conferences coming to a close,” Wahbah said.

Occupancy in Dubai declined from 77.3 percent last year to 60.9 percent in May 2018.

ADR dropped by 0.7 percent YoY to $236, resulting in a decline in RevPAR to $184.

“The MENA hospitality market will continue to see a drop in KPIs during the summer season as business travel declines and conferences and events are at a minimum,” Wahbah said.