LONDON: Saudi Arabia is expected to see a “significant” increase in the number of luxury hotels in the kingdom by 2022, potentially threatening the dominance of the UAE in the high-end market, according to a new report.
The supply of luxury hotels in Saudi Arabia is anticipated to increase annually at 18 percent (compound annual growth rate) from 2018, far exceeding the 10 percent growth rate expected in the UAE, according to research published by real estate advisory firm Colliers International.
Luxury hotel supply in both Oman and Kuwait is due to grow by 11 percent, while Bahrain will see 9 percent growth.
The report also suggests that the luxury sector in Saudi Arabia is also more resilient than the country’s overall hotel market.
Last year, the luxury hotel market in Riyadh saw a 9 percent growth in the revenue per available room measure (RevPar), despite the overall market declining, the report said.
Saudi Arabia recorded a 5.2 percent decline in overall hotel occupancy in 2017, with a 4.4 percent drop in average daily rate (ADR), and a 9.3 percent decline in RevPar compared to the previous year, according to data provider STR Global.
Craig Plumb, head of research, Mena at JLL, told Arab News there were other factors that would also help the growth of Saudi Arabia’s hotel sector, potentially helping it catch up with the UAE.
“Recent announcements of major investment in the tourism sector, along with the relaxation of visa requirements to permit tourist visas for more nationalities, are expected to have a major positive impact on the hotel market within Saudi Arabia,” he said.
“While these changes will have only a partial impact on market conditions in 2018, there is little doubt that the Saudi market will close some of the gap with the UAE over the medium to long term,” he said.
Taimur Khan, senior analyst at Knight Frank, also noted efforts underway to encourage more tourism and hotel visitors.
“In Saudi Arabia there is positive sentiment for the medium to long-term due to various initiatives being put in place as part of Vision 2030 and the NTP which look to present the Kingdom as a more leisure-friendly destination,” he told Arab News, before noting that the country still struggles with only a limited pool of potential visitors.
“In Saudi Arabia the demand pools are limited to business tourism and religious tourism, this is one of the main challenges. However, there are strategies which have been devised to diversify target segments such as easing of visa restrictions,” he said.
The UAE currently leads the GCC luxury hospitality sector, with 73 percent of existing luxury hotel stock in the region and 61 percent of the region’s current luxury pipeline.
Within the UAE, 35 percent of last year’s pipeline for hotels consisted of luxury projects, with most concentrated in Dubai. This compares to luxury developments accounting for only 14 percent of projects in Saudi Arabia, 20 percent in Kuwait, 19 percent in Bahrain and 11 percent in Oman.
There are also signs that the budget to mid-market hotel sector is expanding in the UAE.
“While the market remains dominated by the luxury sector, an increasing number of budget and mid market brands are scheduled to enter the market over the next two years,” said Plumb.
“The addition of more mid-market projects is expected to act as a drag on the average performance of the UAE market, with ADR and RevPar expected to decline from current levels over the next two years,” he said.
Saudi Arabia to see sharp increase in luxury hotels
Saudi Arabia to see sharp increase in luxury hotels
Saudi minister at Davos urges collaboration on minerals
- The reason of the tension of geopolitics is actually the criticality of the minerals
LONDON: Countries need to collaborate on mining and resources to help avoid geopolitical tensions, Saudi Arabia’s minister of industry and mineral resources told the World Economic Forum on Tuesday.
“The reason of the tension of geopolitics is actually the criticality of the minerals, the concentration in different areas of the world,” Bandar Alkhorayef told a panel discussion on the geopolitics of materials.
“The rational thing to do is to collaborate, and that’s what we are doing,” he added. “We are creating a platform of collaboration in Saudi Arabia.”
The Kingdom last week hosted the Future Minerals Forum in Riyadh. Alkhorayef said the platform was launched by the government in 2022 as a contribution to the global community. “It’s very important to have a global movement, and that’s why we launched the Future Minerals Forum,” he said. “It is the most important platform of global mining leaders.”
The Kingdom has made mining one of the key pillars of its economy, rapidly expanding the sector under the Vision 2030 reform program with an eye on diversification. Saudi Arabia has an estimated $2.5 trillion in mineral wealth and the ramping up of extraction comes at a time of intense global competition for resources to drive technological development in areas like AI and renewables.
“We realized that unlocking the value that we have in our natural resources, of the different minerals that we have, will definitely help our economy to grow to diversify,” Alkhorayef said. The Kingdom has worked to reduce the timelines required to set up mines while also protecting local communities, he added. Obtaining mining permits in Saudi Arabia has been reduced to just 30 to 90 days compared to the many years required in other countries, Alkhorayef said.
“We learned very, very early that permitting is a bottleneck in the system,” he added. “We all know, and we have to be very, very frank about this, that mining doesn’t have a good reputation globally.
“We are trying to change this and cutting down the licensing process doesn’t only solve it. You need also to show the communities the impact of the mining on their lives.”
Saudi Arabia’s new mining investment laws have placed great emphasis on the development of society and local communities, along with protecting the environment and incorporating new technologies, Alkhorayef said. “We want to build the future mines; we don’t want to build old mines.”
