According to Thamer Alrajeeb, the cornerstone of the development of hotel investment in Saudi Arabia’s various regions lies in facilitating the financing process for investors in the sector. (Supplied)
Investor interest in Saudi hotel sector is growing, so why are there so few rooms outside cities?
Hotel industry experts shed light on planning strategies, expansion portfolios and other challenges in the sector
Updated 18 min 20 sec ago
RIYADH: In recent years, there has been a remarkable increase in the number of businesses whose owners are interested in investing in the hotel sector in Saudi Arabia. Yet at the same time, many observers continue to wonder why there are still so few hotels outside of the Kingdom’s major cities.
Amir Lababedi, Hilton’s managing director of development in the Middle East and North Africa, said: “Saudi Arabia represents our largest development pipeline in the Middle East, with plans to expand our presence to more than 75 hotels in the coming years.
“We plan to expand in locations across major primary and secondary cities across Saudi Arabia. We see potential for our mid-market Hampton by Hilton and Hilton Garden Inn brands, as well as for DoubleTree by Hilton and our lifestyle brand, Canopy by Hilton.”
Meanwhile, Radisson Hotel Group announced this week that it plans to expand its operations in Saudi Arabia and increase its investment portfolio in the Middle East to approximately half of its total investments by 2026.
There is a big demand for hotels classified as three or four stars. The local population, as well as visitors — pilgrims, tourists, and businessmen — prefers three- or four-star hotels as these are available all around and are very affordable for the general public. Commercially, their operating cost is lower and thus they generate more revenue than a five-star hotel.
Saleh Al-Habib, Executive director, Jiwar Real Estate Development
According to Saudi Minister of Tourism Ahmed Al-Khateeb: “Radisson Hotel Group’s commitment to developing new hotels in the Kingdom and opening a regional office in Riyadh is an effective contribution to strengthening the Kingdom’s steps to achieve its goal of receiving 100 million visitors by 2030.”
Mahmoud Al-Saeed, the general manager of Pereira Resorts in the Eastern Province, which is managed by Boudl Hotels and Resorts, said the company aims to cater to all sections of society.
“Given that a large segment of society prefers three-star hotels for their quality and reasonable prices, the company has created a chain of Aber hotels,” he said. “It launched the brand in 2018 to meet the needs of many with a group of modern hotels, in terms of design and concept, at affordable prices while ensuring high quality and professionalism in providing services.”
The three-star Aber hotels are “situated between hotel apartments and four-star hotels,” according to Al-Saeed. “The economic concept that Boudl is keen to present with this group of hotels has become an important matter for many travelers and those looking for a change in the usual lifestyle,” he added.
Boudl also owns the four-star Pereira hotels and the five-star Narcissus. Al-Saeed said the company has plans for expansion in major cities, and to increase the number of three-star hotels in a number of Saudi cities. These hotels are experiencing an influx of tourists from inside and outside the country, he added.
Al-Saeed, who has worked in the industry for nearly two decades, said that hotels currently face a number of challenges, particularly “in light of the precautions against COVID-19. These include the postponement of many events which usually take place in hotels and the cancellation of reservations for halls used for celebrations or official meetings, due to the coronavirus and its accompanying problems.”
He added that the authorities in Saudi Arabia are aware of the issues and are working to develop the hotel sector.
Thamer Alrajeeb, a former member of the Riyadh Chamber of Commerce and Industry’s Tourism Accommodation Committee, said investment in the tourism sector in major cities is encouraging, particularly in Riyadh in support of the Saudi Entertainment Authority initiatives. It is not profitable in other cities, however, where operations are seasonal during a period of a few months each year, usually coinciding with school holidays or good weather.
“For the rest of the year, operation is a loss for the investor,” he said.
Radisson Hotel Group announced this week that it plans to expand its operations in Saudi Arabia and increase its investment portfolio in the Middle East to approximately half of its total investments by 2026.
Alrajeeb described investing in hotels other than five-star establishments as “feasible.” He said the lower operational costs and prices are affordable to a wider range of guests but added that “many of the Ministry of Tourism’s requirements burden investors.”
He said it is possible to meet the needs of visitors with average levels of financial solvency, particularly outside the three cities of Riyadh, Jeddah, and Dammam. This can be done by investing in hotel suites in particular, which are characterized by low startup costs, “allowing for their rental prices to be more commensurate with the solvency of a wide range of travelers.”
The cornerstone of the development of hotel investment in Saudi Arabia’s various regions lies in facilitating the financing process for investors in the sector while fulfilling the Ministry of Tourism’s requirements, Alrajeeb said, adding that the focus should be on efforts that contribute to raising quality in the sector and meeting the needs of customers.
Fadil Munakeal, manager of the Jabal Omar Jumeirah hotel in Makkah, stressed the importance of providing products and services that correspond to a hotel’s star rating, which he said reflects positively on investment in the sector. He urged the Ministry of Tourism to continue its supervision and follow up efforts to achieve reliability in the sector and improve the image and perception of all types of hotels.
Munakeal, who is also a member of the Hotels Committee of the Makkah Chamber of Commerce and Industry, urged the owners of less expensive establishments, particularly in the three-star and lower categories, to invest in modern marketing techniques and direct them at particular target groups. They must also develop products and services that meet the needs of these target audiences, he added.
He said many domestic tourists, particularly families, prefer to stay in hotel apartments because they have a negative perception of some hotels with fewer than four stars.
Saleh Al-Habib, executive director of Jiwar Real Estate Development, said: “There is a big demand for hotels classified as three or four stars. The local population, as well as visitors — pilgrims, tourists, and businessmen — prefers three- or four-star hotels as these are available all around and are very affordable for the general public.
“Commercially, their operating cost is lower and thus they generate more revenue than a five-star hotel.
“This is a popular choice for almost all classes of society, especially the middle and lower-middle classes. The availability of such hotels and semi-luxurious apartments is numerous. With affordable tariffs, they meet the needs of families, business travelers, as well as those seeking leisure.”
Al-Habib, who is also a member of the Saudi Association for Tourist Accommodation Facilities, said that both locals and expatriates are interested in establishing hotels and furnished apartments in areas such as Abha, Al-Baha, Tabuk, Hafar Al-Batin, Al-Majma’ah and Al-Kharj.
“These interested entrepreneurs are working closely with the National Tourism Fund,” he added.
ThePlace: Al-Arfa’a Fort, a historical landmark built in the 13th century in Taif
The interior is characterized by distinctly organized structures for rulers and their workers
Updated 29 sec ago
Al-Arfa’a Fort, located in the northeast of Taif governorate, is a historically significant landmark that details the features of social and cultural life over many centuries.
It was built in the 13th century AH on the historical Al-Arfa’a Mountain, after which it was named.
It is one of the most famous forts in the Kingdom given its major role in trade, where it protected roads for nomads and served as a fortress for military leaders.
The first floor of the three-story fort is built out of stone, while the second and third are built with mud.
The interior is characterized by distinctly organized structures for rulers and their workers.
At the edge of Al-Arfa’a Fort, a mirqab — watchtower — is built in a circular shape and adorned with a crown of pure white quartz.
It contains openings and several wells that provide water throughout the year.
Saudi Arabia in ‘critical phase’ of tackling COVID-19, says ministry spokesman
Dr. Mohammed Al-Abd Al-Aly stressed the importance of receiving the necessary vaccine doses and booster shots
Updated 16 January 2022
JEDDAH: Saudi Arabia’s confirmed cases of COVID-19 are rapidly increasing due to the omicron variant, with cases having more than doubled since the beginning of the year.
In a press conference on Sunday, Saudi Health Ministry spokesman Dr. Mohammed Al-Abd Al-Aly said the country was currently going through a critical phase in tackling the spread of COVID-19.
He stressed the importance of people receiving the necessary vaccine doses and booster shots.
He also urged people to follow preventative measures such as wearing face masks, washing their hands, and maintaining social distance during the critical phase, with the ministry saying: “Our immunization is our life.”
Saudi Arabia confirmed 5,477 new COVID-19 cases on Sunday and one new death.
Al-Abd Al-Aly said although Saudi Arabia was witnessing a jump in confirmed infections, the number of critical cases was lower compared to the previous year’s and that this was a result of the vaccine’s effectiveness and national efforts to prevent the spread of COVID-19.
Testing hubs and treatment centers set up throughout the country have helped millions of people since the pandemic outbreak.
Taakad centers provide COVID-19 testing for those who show no or mild symptoms or believe they have come into contact with an infected individual.
Tetamman clinics offer treatment and advice to those with virus symptoms such as fever and breathing difficulties.
The ministry also announced on Sunday that it had begun administering the COVID-19 vaccine to children aged between five and 11.
Health officials began administering the COVID-19 jab late last year after the Saudi Food and Drug Authority approved the use of the Pfizer-BioNTech vaccine for this age group. Priority was given to those considered vulnerable and at high risk from the virus.
The ministry, which has 587 vaccine centers throughout the Kingdom, urged people who had not yet received a jab to register to receive one through its Sehhaty app.
People urged to be vigilant as more thunderstorms, snow forecast for Saudi Arabia
The Kingdom’s civil defense called on everyone to be wary of the severe conditions
The weather warning have been issued until Tuesday
Updated 16 January 2022
RIYADH: Weather warnings have been issued for several regions across Saudi Arabia lasting until Tuesday, with a significant drop in temperatures, the country’s General Directorate of Civil Defense said Sunday as it urged people to be vigilant.
The authority warned of thunderstorms with light to medium rain and brisk winds that may lead to torrential flows in the capital Riyadh, the Eastern Province, Baha, Asir, Makkah, Tabuk, the Northern Borders, and Madinah.
It also forecast snow in the mountains of Tabuk, parts of Al-Jawf, and the Northern Borders.
Civil defense spokesman Lt. Col. Mohammed Al-Hammadi called on everyone to be wary of the severe conditions, to stay away from places that could flood, and to follow the authority’s instructions and updates announced through news outlets and social media.
The directorate said that most regions would experience a significant drop in temperatures, reaching between zero and 5 degrees Celsius.
The warnings were issued based on data received from the National Center of Meteorology.
Al-Hammadi added that civil defense was ready to implement the necessary plans and measures for weather-related incidents.
Saudi civil defense issued a similar warning a week earlier, with Gulf countries having been on alert since the start of the year due to heavy rains that have caused torrential flows and a significant drop in temperature in recent days.
Saudi and Egyptian forces continue joint warfare maneuvers
The Tabuk 5 exercise began on Jan. 6 in the Kingdom’s northwestern region
Updated 16 January 2022
JEDDAH: The Royal Saudi Land Forces continued a joint exercise with the Egyptian Armed Forces in the Kingdom’s northwestern region, the Saudi Ministry of Defense said on Sunday.
The Tabuk 5 exercise, which began on Jan. 6, is “an extension of the joint exercises between the two countries to raise the level of integration, unify the areas of military cooperation and enhance the capabilities of the forces participating in the maneuvers,” the ministry said.
During the past days, the joint forces conducted the preliminary stages of training, which included many activities, events and lectures to unify training concepts, coordinate efforts, and achieve integration between the participating forces.
The director of the fifth edition of the exercise, Maj. Gen. Khalid Mohammed Al-Khashrami, said everything is proceeding according to plan, adding the participants implemented a number of joint training tasks in regular and irregular operations, as well as training in planning and coordinating joint operations and modern warfare methods.
They also carried out ambushes, raids, and reconnaissance using a drone, air incursions, combat in built-up areas, and implemented landing and pick-up exercises, tactical parachute jumping, and free jumping, he said.
Al-Khashrami added that during the coming days, the participating forces will begin several tactical maneuvers, firing with live ammunition, using advanced warfare methods and increasing operational and military coordination.