AHIC to focus on growth opportunities in Saudi Arabia

Haj pilgrims flock to Makkah

As part of the focus on ‘Unlocking Investment Opportunities in the Middle East and North Africa’ at the Arabian Hotel Investment Conference (AHIC) 2010, participants will discuss opportunities for hotel investment in the Kingdom of Saudi Arabia with some of the industry’s major players as well as Dr Salah AlBukkayet of the Saudi Commission for Tourism and Antiquities (SCTA) in attendance.

Saudi Arabia is placing an increasing focus on developing its tourism market, in a targeted and structured manner, as it seeks to diversify away from oil. There is significant investment being undertaken in tourism infrastructure, including airport expansions and high-speed rail lines, as well as government financed training programmes and public-private partnerships, whilst visa procedures have been eased for non-religious and business visitors. 

Furthermore, being home to two of Islam’s holiest cities, Al Madinah and Makkah, which attracts millions of Muslims each year for Haj, the world’s largest annual pilgrimage, the hotel market is underpinned by Islamic tourism. There is also a high rate of domestic tourism, and the government has put in place initiatives to increase the number of Saudis who holiday within the kingdom.

This focus means that, according to a recent report by Business Monitor International, tourist arrivals to the kingdom are forecast to grow by five per cent year-on-year to 12.91 million in 2010, having remained steady in 2009, at just over 12 million. Year-on-year, arrivals per annum are expected to average 6.5 per cent growth through to the end of 2014.

A report in March 2009 by the World Travel & Tourism Council, forecast that in 2009 the travel and tourism sector was expected to generate $27.2 billion of economic activity, equivalent to 7.2 per cent of total GDP, and this is set to rise to 9.2 per cent by 2019. Direct industry employment was expected to rise from 7.3 per cent of total employment in 2009 to 9.4 per cent, equating to around 922,000 jobs, by 2019.

The potential is illustrated by government plans, announced in February 2010, to build a $13-billion ‘tourist city’ in Al-Oqair, just south of Al-Khobar on the kingdom’s eastern coast. And on the Red Sea coast, the government has identified sites for development in Tabuk, Yanbu, Makkah, Asir and Jizan provinces.

The SCTA has stated that the planned Red Sea resorts would lead to a total of 557,000 hotel rooms being brought online, creating 413,000 jobs in the process.

A number of major international brands are already expanding their presence in Saudi Arabia. The Rezidor Hotel Group has already opened six hotels in the kingdom, in Jeddah, Riyadh, Yanbu, Al Madinah and Al Khobar, totalling more than 1,323 rooms, and has a further four hotels, with 1,000-plus combined rooms, under development across three different locations.

Kurt Ritter, president and CEO of The Rezidor Hotel Group, said: “Saudi Arabia is a hugely important market for us and in 2009 we were delighted to open a further two developments in the country. The key aspect for us is the diversity of the market, allowing us to introduce different brands into the kingdom, which include Radisson Blu and Park Inn at the moment, with a particular focus on serving religious and cultural visitors. I have no doubt that the opportunities will keep growing, which is why we  have a number of additional hotels in the pipeline.”

Kurt Ritter will be speaking on the ‘Leaders’ Panel – Global and Mena Hotel Investment Opportunities’ at AHIC 2010 day two.

The SCTA, the national authority responsible for the planning and development of domestic tourism, is also leading government efforts to promote more inbound travel, and will be represented at AHIC by Dr Salah K AlBukkayet, vice president – investment.

The conference is being held from May 1 to 3 at the Madinat Jumeirah, Dubai, UAE.

* As part of the same focus the country panel will look at the direction of tourism and hotel investment in Oman, as well as featuring government representatives from Egypt and Morocco.

Oman has one of the fastest growing tourism sectors in the world, but the focus on development, following the creation of the new Ministry of Tourism in 2004, has been on sustainable growth leveraging the sultanate’s rich cultural heritage.

According to a March 2009 report by the World Travel & Tourism Council, the travel and tourism sector is set to achieve annualised growth of 7.8 per cent per annum, in real terms, over the next 10 years, to reach almost $7 billion by 2019.

Despite a broader trend of dampened international travel demand during the economic downturn, Oman saw a year-on-year increase of 5.8 per cent in international passenger arrivals in 2009, exceeding 2.5 million. The Ministry of Tourism is aiming to attract 12 million visitors per year by 2020.