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Abu Dhabi, UAEThursday 18 October 2018

Saudi Arabia drives demand for hotels with mid-market rooms

Thousands of rooms from mid-market hotel brands are ready to come on stream by the end of 2018, according to a report from the Germany-based research company Tophotelprojects.
The government push for economic diversification in Saudi Arabia makes it a key growth market for hoteliers. Jacquelyn Martin / AP Photo
The government push for economic diversification in Saudi Arabia makes it a key growth market for hoteliers. Jacquelyn Martin / AP Photo

The mid-market hotel segment in Saudi Arabia expects to get busy in the next few years as more such properties open in response to demand.

Thousands of rooms from mid-market hotel brands are ready to come on stream by the end of 2018, according to a report from the Germany-based research company Tophotelprojects.

These include 1,433 rooms from Park Inn by Radisson, 1,155 rooms from Hilton Garden Inn, about 1,800 rooms from Four Points by Sheraton and hundreds more from Starwood’s Aloft Hotels, Accor’s Mercure and InterContinental Hotels Group’s Staybridge Suites, according to a report published ahead of the three-day Hotel Show Saudi Arabia next month.

A total of 49,259 rooms from 130 hotels across various market segments from local and international brands are under development in Saudi Arabia as of this month, according to Tophotelprojects.

Hotel demand in Riyadh, Jeddah and Al Khobar is dominated by corporate and meeting, incentives and exhibitions clients, while religious tourism drives the demand in Mecca and Medina, according to Rashid Aboobacker, the associate director at TRI Consulting, a Dubai management consultancy.

Historically, these cities have been dominated by luxury hotels rather than mid-market properties.

“In addition, the demand for mid-market and budget hotels has been growing fast due to cost-cutting by corporates as well as the growing number of domestic tourists who are predominantly from the middle-income category,” he said.

“The recent boom in the development of mid-market hotels is therefore driven by both gap in the supply as well as the growth in demand.”

It also costs less to build a mid-market property than a luxury one.

In Saudi Arabia, excluding land, mid-market property ranges from US$140,000 to $180,000 per room, Mr Aboobacker said.

In the five-star category, it can cost more than $500,000 a room.

The government push for economic diversification in Saudi Arabia makes it a key growth market, according to Basel Talal, the district director of Rezidor Hotel Group Saudi Arabia.

It expects to open two Park Inn by Radisson Hotels in Mecca by next year.

These are among a pipeline of 17 hotels accounting for 3,780 rooms to be ready in the next five years in the country.

The French hotel operator Accor expects to open a four-star Novotel with 450 rooms, an Adagio Aparthotel with 77 rooms and a three-star Ibis and ibis Styles with 463 rooms by the end of next year.

Holiday Inn, part of InterContinental Hotels Group, opened two Holiday Inn properties and signed two more, including the world’s largest, Holiday Inn Makkah Abraaj Al Tayseer, last year.

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