Wednesday 11, October 2017 by Georgina Enzer

Riyadh & Jeddah face hospitality performance headwinds

Knight Frank has released the Riyadh and Jeddah Hospitality Market Review, Winter 2017 edition. The report provides insights on current market trends alongside commentary on the outlook of both markets.

The hospitality markets in Jeddah and Riyadh have faced headwinds in terms of performance throughout the first half of 2017, attributable to economic conditions and recent additions to supply.

The Kingdom’s hospitality sector is likely to see an increase in Saudi-national participation in light of the recent regulatory changes to residency and dependent fees. In the short to medium term, the tourism industry is anticipated to be a major source of employment for young Saudis with an additional 375,000 hospitality related jobs anticipated by 2020.

In both cities the supply composition remains heavily imbalanced in favour of five star hotel developments, which indicates that there are significant opportunities for developers in the quality midscale segment over the coming years.

Given the opacity of the market, financial forecasting is often challenging, particularly in Jeddah in which project delays are systemic.

Leisure related initiatives such as ‘Entertainment City’ will help to present the Kingdom as a more leisure friendly destination and diversify the existing demand base.  

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