Global chains eye KSA hotel projects
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Growing domestic tourism, influx of tourists from Arab countries and continued expansion of religious tourism have steered development of the hospitality sector in the Kingdom.
With rising tourism business and exponential expansion of the hospitality industry, the sector is now perceived by investors as the second most attractive hospitality market and well considered as a key source of income promoting economies, creating job opportunities for the Saudi youth and raising the levels of integration between different economic sectors.
According to Saudi Commission for Tourism and Antiquities (SCTA), there are about 1,267 hotels and 2,661 furnished apartments and by 2015, number of hotels will increase, thus contributing to Saudization as hotels will aim to recruit 40% of their employees from the local population.
With 61,319 hotel rooms, Makkah features the most hotel accommodation in the Kingdom, followed by Alkhobar (12,186), Jeddah (11,500), Riyadh (10,514) and Madinah (7,890). Makkah’s hotel expansion will mark an additional 13,200 rooms coming to the market in the next three years equaling an 18% increase in supply, while Madinah would see an injection of 5,436 rooms during the same period equaling a 41% growth rate.
SCTA recorded 172% increase over 10 years in hotel numbers, which has further requirement for growth of 83% or more than 230,000 hotel rooms, ranging from serviced apartment units to luxury five-star suites.
A recent report from the Saudi Arabian Monetary Agency (SAMA) stated the GDP of Saudi domestic tourism during 2012 increased by 6.8% compared to 2011 to reach SAR70.2 bn and volume of inbound tourism spending in 2012 rose by 16.8% to SAR57.2 bn, compared to about SAR 49 bn for the previous year.
On the expenditure side of the incoming tourists to the Kingdom, the report said the spending on accommodation facilities ranked first by about SAR19.7 bn, up by 34.5% from the total in 2012, while spending on shopping came second by about SAR15.5 bn representing 27% of the total expenditure of the incoming tourist trips in 2012.
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