Deloitte says unprecedented impact of COVID-19 on Saudi hospitality sector, long-term outlook positive

Riyadh city

The COVID-19 crisis impacted the hospitality sector in an unprecedented manner in 2020, resulting in falling key performance metrics across all cities in Saudi Arabia, consultancy firm Deloitte Middle East said in a recent report.

The hospitality market has been one of the most negatively impacted by the pandemic, as the inflow of hotel guests stopped abruptly due to regional and global travel restrictions, forcing the temporary closure of some hotels.

The pandemic also led to changes in customer behavior, driving the focus on digitalization and touchless technology.

According to the report, the average daily rate (ADR) in Riyadh stood at SAR 544 ($145), while the occupancy rate was 49% in 2020, compared to 60% in 2019.

However, the occupancy rate in Makkah was only 25%, compared to 61 % in 2019. Jeddah saw an occupancy rate of 37% last year, compared to 58% in 2019.

Occupancy rates in Dammam and Al Khobar reached 53% in 2020, compared to 56 % in the previous year, indicating the impact of the pandemic was less significant due to an increase in domestic tourism.

On a global level, occupancy rates were the highest in New York at 47%, while Abu Dhabi topped in the regional market with 61%.

The long-term outlook for the Saudi hospitality market remains encouraging as the development of government-led tourism projects will undoubtedly contribute to the growth and evolution of a unique tourism industry in line with Vision 2030’s economic diversification plan, the report noted.

In a survey conducted in September 2020, Deloitte Middle East Hospitality projected that market recovery to 2019 levels is not expected until 2023 or later as the Saudi hospitality market’s recovery depends on the rollout of the vaccine to restore traveler and guest confidence.

In addition, the completion of major announced leisure and entertainment projects will accelerate the recovery process.