KSA hotel recovery pegged for Q4 2020, says expert

Published: 14 September 2020 - 9:45 a.m.

After several months of disruption and uncertainty, authorities around the globe are easing their restrictive lockdown measures. However, for the travel industry there does still remain various elements of doubt and there appears to be no clear definitive timeline when the restrictions placed on travellers and the industry suppliers who operate in this sector will end.

Nonetheless, if FCM’s clients provide any crystal ball indication, then the recovery we are all seeking could be on the horizon. Our consultants in the region have spent the last couple of months focussing on repatriation and booking air charter flights using our own in-house supplier, AVMIN, amongst others, but in the last few weeks this has shifted to requests for future travel to various countries that have opened their borders. We’re seeing a steady increase in client enquiries, but we’re aware this could change overnight, and we want to see how things develop throughout the third quarter. The oil sector is obviously crucial to the Saudi market and it’s not so easy to be managing rigs via a Webex, Zoom or Skype call. Thus, we have seen an increase in requests not only in Saudi but other countries in the region from similar clients in the energy and marine sector.

We expect to see hotel demand recovery starting in Q4 2020 and this will hopefully continue in 2021. Changes in customer policies to consolidate and reduce leakage has seen an increase in hotel demand via the FCM Saudi teams. In Saudi Arabia, once the expected recovery begins in Q4 2020, the markets are expected to continue benefiting from the ongoing tourism initiatives and the numerous upcoming mega projects as well as domestic tourism. The Saudi government has been vocal in promising to use all policies to safeguard the local economy from jobs, industries and livelihoods. This will also help drive green shoots further one hopes.

According to our customer research and forecasting within the region, in Saudi Arabia, Riyadh is expected to see occupancy at just under 50 percent with Jeddah and Makkah at 35 percent, albeit these three cities are down between 25 percent and almost 45 percent compared to 2019.

In 2021, we expect Saudi hotel occupancy to increase further between 10 percent and 20 percent in these markets. There are various other reports out this month within the region that are in line with our own research.

One noticeable area that is significant to FCM Saudi in the region, is average daily rates have fallen by approximately 35 percent in comparison to this time last year. That trend backs up our recent white paper on running a hotel RFP to address these differences in previously contracted corporate hotel rates and what is trending currently.

Time will tell when travel will return to more meaningful, pre-COVID-19 levels. For now, though, it appears those with critical travel needs in certain sectors are starting to speak for themselves and perhaps this is the start of the green shoots of recovery our industry is yearning for.

On the flip side, while there are green shoots, the future does remain uncertain as COVID-19 continues to grip us globally with no definitive vaccine found just yet.

If we were to get a second wave in the pandemic that brought back lockdown restrictions in Saudi and beyond, it could really change how the Saudi market and many others recover. We at FCM wait to see what will happen, continue to support customers and keep them informed of what suppliers in the hospitality and aviation sectors are doing to safeguard their travellers.

Ciarán Kelly is the managing director of FCM Travel Solutions (Middle East & Africa Regional Network), parent company of Flight Centre Travel Group in the UAE and brings more than 17 years of experience from the global travel industry, gained from working in Europe, the Middle East and Africa.

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