Over the past two years, a combination of factors ranging from a highly volatile crude market, to a tense geopolitical situation, has led to a general slowdown in the economy in the GCC countries. This slowdown has had its repercussions on many industries, among them, hospitality. According to Smith Travel Research - a leading market research agency in the industry, “the market penetration index has gone south from +11.1 percent in 2014 to -7.8 percent in the year ended 2015 and the revenue growth index, a key benchmark to assess the health of the business, has moved from +6.3 percent in 2014 to -8 percent in 2015.”
Against this scenario of a substantially reduced demand and over-supply, is the projected addition of about 18,000 hotel rooms in Riyadh & Jeddah alone – over 50 percent of them 5 star developments, as a part of the expansion plans for major international hotel chains. One might wonder how this bodes for the industry in the times ahead. The industry is optimistic for 2016 and the years ahead, basing their optimism on the fact that a low debt, coupled with substantial foreign reserves, and a diverse investment scenario is going to help the economy bounce back, stronger than before.