RIYADH, 5 December 2002 — The Ministry of Finance and National Economy is considering the possibility of selling government stakes in five-star hotels in Riyadh, Makkah, Madinah and Taif, official sources told Arab News.

The sources said the state-owned Inter.Continental hotels in Riyadh, Makkah and Taif and Sheraton hotels in Madinah and Hada, Taif, will be sold to private investors.

The move comes after the Council of Ministers last month approved a list of 20 major economic sectors, including the hospitality sector, for privatization.

Minister of Finance and National Economy Dr. Ibrahim Al-Assaf has said that the privatization plan will help reduce pressure on the state budget and pay off part of the public debt estimated at $180 billion.

According to the plan, state utilities and public services, including certain health, municipal and social services will be privatized.

Referring to the options for the sale of hotels, the sources said it will be done either through public auction or by establishing a company for hotels or merging the hotels with a real estate company.

“The ministry may also invite investors to purchase government shares in these hotels,” the source said, adding that the options have not yet been finalized.

However, the source pointed out that a final sell-off plan would be ready within a few months.

Al-Assaf has said that the door was open for foreign investors in all sectors not included in the “negative list”, which contains activities closed to foreign investments.

The sources told Arab News that many investors were interested in putting their money in hotel business, especially in Riyadh.

The government has built these hotels, managed by international chains, since early 1990s. The hotels were primarily intended to host foreign dignitaries and government guests.

The Finance and National Economy Ministry has financed construction of several five-star hotels in Riyadh, Makkah, Taif, Madinah, Abha and Baha.

Saad Al-Hamdan, deputy minister of finance and national economy for revenues, has said that the privatization move will not affect the hotels’ present management.

The ministry has already completed market studies under the supervision of a panel from the department for conferences and hotels. The study was based on buildings, land, furniture, equipment and trade name.

A number of investors had shown interest to purchase some of the state-owned hotels. But the ministry said it wanted to sell them all in one stroke.

Financial analysts said they expected the sale would be completed within two years.