25 September 2017

ATM Preview - II


KHI looking at Iran, China
May 2006 59

KINGDOM Hotels Investments (KHI) is seeking to expand into major emerging markets, including Iran, Saudi Arabia and the growth economies of India and China, the company’s Sarmad Zok told media on the sidelines of the Global Travel & Tourism Summit last month.

“We are definitely tapping into India, China, Pakistan and Central Europe. Our plan is to grow our portfolio significantly in the emerging markets with the brands we have developed strong affiliations with,” Zok told eTurbo News.
The Riyadh-based company, whose largest shareholder is Prince Walid bin Talal bin Abdulaziz (58.4 per cent), is focused on developing hotel real estate primarily in emerging markets. It carries out construction, acquisition, finance and asset management functions across all areas of the hotel industry. It owns 28 properties – mostly managed by Fairmont, Moevenpick Four Seasons – and  in 13 countries across the Middle East, Africa and Asia and through local partnerships controls over $1.5 billion of real estate in the region.
Zok said the higher growth rate of emerging markets compared to developed ones is what makes them attractive. “Our business model is high growth emerging markets leveraging capital. Risk of addition to supply in already established markets can be equally high as in politically challenged destinations and markets.”
He indicated the company would likely take its Four Seasons, Fairmont and Movenpick are going into China, which he called a market large enough to take hotel lodging on the luxury, first-class levels.
“It depends on the opportunities. We are driven by opportunities that provide us with attractive, sustainable return and capital employed. Whether we find that or not in China will determine if we penetrate this emerging market.”
While he ruled out investing in Iraq, other markets the company is considering are Iran (“because there are no high-quality hotels in Tehran as yet”) and Saudi Arabia, which Zok described as having a tremendous tourism potential. “It is the largest tourism destination in the Middle East today. They get over 10 million visitors a year for religious tourism, obviously. Outbound, they spend about $7 billion a year. Trying to get a share within that outbound back into Saudi Arabia is the tourism office’s objective,” he said.




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