The tourism sector in Saudi Arabia has suffered a “major shock”, but the introduction of vaccines in the country and the development of government-led mega-projects should accelerate the recovery from the effects of the coronavirus pandemic, according to Deloitte.

The Deloitte Middle East Financial Advisory report on the Saudi Arabian hospitality market said the Covid-19 crisis had “unprecedented” impacts on the hospitality sector, causing declining performance indicators in all major cities in Saudi Arabia. Arabia.

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The report found that around 2,700 hotel keys are expected to hit the Jeddah market in 2021 and 2,300 keys are expected to be delivered between 2022 and 2025.

Deloitte said Jeddah hotels need to take advantage of the development of domestic tourism in the short term to mitigate the performance impact of these additional keys.

In the medium term, the recovery of the Jeddah hotel market will depend in part on the recovery of religious tourism in Mecca, he added.

“Recovery depends on the introduction of vaccines to restore the confidence of travelers and guests and is likely to accelerate with the completion of some of the major leisure and entertainment projects announced,” said Robin Williamson, director of real estate at Deloitte Middle East.

“The Saudi hotel market has experienced a major shock and has had to adjust during a very difficult time. However, the introduction of the vaccine and the development of government-run tourism projects are expected to accelerate the recovery and return performance to much healthier levels . ” he added.

The Deloitte report also found that business demand in Riyadh is likely to remain subdued as travel expenses have been capped by many companies. Hence, the incoming supply is expected to put further downward pressure on both occupancy and average daily rate (ADR).

With around 5,300 hotel keys expected to hit the market between 2022 and 2025, the implementation of projects and initiatives related to Vision 2030 will be vital to drive market demand to accommodate this new offering.

Similar to Jeddah, there were no major hotel openings for Mecca in 2020. However, around 4,500 keys are expected to be delivered in 2021.

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While some hospitality projects in Mecca have been postponed or canceled, around 11,800 keys are still scheduled for delivery between 2022 and 2025.

Deloitte also said that the impact of Covid-19 in Dammam / Al Khobar was less significant compared to other Saudi cities, mainly due to an increase in domestic tourism that resulted in a small decrease in occupancy but a slight increase in ADR led. Approximately 3,200 more keys are expected to be delivered between 2021 and 2025.

Dunia Joulani, director of travel, hospitality and leisure at Deloitte Middle East Financial Advisory, said: “The long-term outlook for the Saudi hospitality market is encouraging as the development of government-run tourism projects will undoubtedly add to the growth and development of a unique tourism industry in the UK in line with the economic diversification agenda of Vision 2030. ”

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