THE organisers of the Arabian Hotel Investment Conference (AHIC 2013) recently held an invitation only business breakfast briefing at the Ritz-Carlton in Riyadh to share their views into Saudi Arabia’s rapidly growing hotel market and offer an insight for existing and potential local investors on the key industry updates and statistics.
Hosted by Alex Kyriakidis, president and managing director of Continent, Marriott International Inc. the briefing looked at opportunities and challenges of hotels as an Asset Class in Saudi Arabia.
Kyriakidis said: “Saudi Arabia is a top priority growth market for Marriott International. STR report showed that the Saudi Arabia room supply is around 50,000 operating rooms and a further 25,000 rooms under construction, which in total represents less than 1,875 rooms per million domestic and international travellers combined, a ratio which is significantly lower than mature markets. With exponential growth projected for both inbound and domestic travel, driven by a number of large scale projects such as the expansion of the Holy Mosques in Makkah and Medinah as well as a number of economic/industrial cities throughout the country and large infrastructure projects such as railroads and airports, the potential of the Saudi Arabia market is to more than double in size by 2020.
He continued: “Our target is to grow our current portfolio of 4,056 operating and pipeline rooms to over 10,000 by 2020. Among our investors, we are seeing a new generation of analytical and business savvy entrepreneurs who have built up their own hospitality expertise and are also far more cautious since the economic crash about their investments demanding accountability, value, greater profitability and ROI from the partnership with the hotel operator.”
The discussion also showed that the approach to developing brands and segmentation within hospitality investments has shifted from an emotional (usually luxury oriented projects) to a more business oriented one, where upscale hotels also offer a good investment opportunity.
Philip Wooller, area director of Middle East and Africa of STR Global, who gave a review presentation on the whole Mena region and particularly Saudi Arabia, commented: “The Hotel Performance of some of the key cities in Saudi Arabia are comparable with the well-established cities of London, Paris, Tokyo and New York with Jeddah achieving similar occupancies and Riyadh surpassing the Average Rate. The next two to three years will see a considerable increase in hotel room supply particularly in Riyadh, Jeddah and Makkah but with the large government supported projects across the country I see no reason why demand will not keep pace with the new supply.
The event also included a session on regulation and government incentives for the hotel sector in Saudi Arabia that included a conversation between Muhammad Al-Amir, managing director of Riyada International Hotels & Resorts and Dr Salah Al-Bukayyet, deputy secretary general of Investments of Saudi Commission for Tourism and Antiquities (SCTA).
In the session, Dr Al-Bukayyet said that government plays a very important role in accelerating hotels’ growth of inbound and domestic tourism. The tourism vision of the Kingdom is based on a comprehensive framework of policies and principles of sustainability and economic feasibility, and SCTA’s mission is to facilitate this sustainable and balanced tourism development through the formulation of clear-cut policies in close partnership with industry leaders and private sector and strengthen this nascent industry to achieve a highest degree of self-sufficiency.
Jonathan Worsley, chairman, Bench Events commented: “AHIC this year has dedicated a number of pre-event business briefings in a number of significant countries in the region, to focus on current issues and opportunities in them. Saudi Arabia was on top of our list because Saudi hotel development is witnessing a sustained upswing with the numerous large scale projects and the constant flow of religious tourists into the country. Additionally, the tourism industry has consistently been a key contributor to the Saudi Arabia economy and pillar of the government’s economic diversification program.”
In line with that, the main AHIC 2013 Conference will exclusively include a symposium on Saudi Arabia. The symposium will also offer an excellent opportunity to hotel owners, developers and investors to learn how their business can benefit from the Kingdom of Saudi Arabia’s phenomenal growth.
AHIC 2013 will take place at the Madinat Jumeirah from May 5-6, 2013.