Source: Colliers International

There is a limited supply of quality internationally branded economy hotels in the Kingdom of Saudi Arabia. Findings from Colliers International research shows that there are currently 7 notable cities without any such hotel stock, representing a significant gap in the market.

The forthcoming supply of internationally branded economy hotels is strong, with 1,182 rooms expected to be delivered to the market across KSA by 2015. These rooms will include well established brands such as Ibis, Centro, Premier Inn and Holiday Inn Express.

Colliers International's investigation found evidence that the market could potentially absorb an additional 34,882 economy hotel rooms over and above forthcoming supply over the next five years, spread across major and secondary cities.

Attractive investment opportunities lie in wait as economy hotels operate with a very cost-efficient structure characterized by a less volatile and sustainable pricing strategy. Based on the current profitability ratios of existing economy hotels, new developments prove to be a lucrative investment, with potential IRR ranges between 18% and 21%.

Colliers International Hospitality division is a global network of specialist consultants in hotel, resort, marina, golf, leisure and spa sectors, dedicated to providing strategic advisory services to owners, developers, governments and institutions to extract best values from projects and assets. The foundation of our service is the 'hands-on' experience of our people combined with the intelligence and resources of a global practice. With 8 years experience in the Saudi Market and sophisticated financial modeling, we assist clients in making strategic decisions.

The team can advise throughout the key phases and lifecycle of projects:

  • Destination/Tourism/Resort Strategy
  • Market & Financial Feasibility Study
  • Development Consultancy & Highest and Best Use Analysis
  • Operator Search & Contract Negotiation
  • Project Monitoring (Assistance with Pre-Opening Expenses and Business Plan)
  • Asset Management/Operational & Financial Performance Review
  • Site and Asset Investment Strategy/Brokerage
  • RICS Valuations/Corporate Finance/IPOs

Filippo Sona
Head of Hotels | MENA
+971 55 899 6102
Colliers International

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