Riyadh – Mubasher: The hospitality market in Jeddah has registered an upward trend in key performance indicators (KPIs) during 2018, endorsed by a surge in the number of tourists as well as limited supply over the year; this has followed a dwindling performance in the year 2016/17.

Jeddah’s hospitality market is expected to receive over 4,000 new hotel rooms in the coming three years; this should raise the current inventory by 35% by the year 2023, according to the latest real estate report by KPMG Al Fozan & Partners, a leading audit, tax and advisory services provider in Saudi Arabia.

“Despite the forthcoming supply putting a downward pressure on the performance in the short term, we believe that the demand for hospitality units in Jeddah is likely to remain robust due to which the market is expected to recover in the medium to long term, backed by the government’s initiatives to support the development of culture, leisure and entertainment projects,” head of real estate at KPMG Al Fozan and Partners Firas Hassan commented.

KPMG expects the growing number of pilgrims to have a positive impact on the hospitality market of Jeddah. It is forecast for the market to remain subdued in the short term as a result of the bulk of supply due to deliver in 2019.

However, KPMG report said that the market is expected to witness a steady performance in the long term, backed by the government’s initiatives to support the development of culture, leisure and entertainment projects in Jeddah.

Hassan added: “Lack of three-star hotels in Jeddah, offers a solid investment option for potential investors. As the number of business travellers grows in the Kingdom, budget constraints from companies are fueling demand for three-star hotels. Further, the demand stems from tourists who cannot afford to stay in expensive four- and five-star hotels and choose to stay in unbranded hotels or service apartments due to lack of quality offering in this asset class.”