Saudi Arabia witnessing massive transformation in tourism sector, says Dur Hospitality CEO

The efforts of the Saudi Tourism Ministry are a catalyst for the massive transformation of the hospitality sector in the Kingdom, said Sultan Bader Al-Otaibi.
The efforts of the Saudi Tourism Ministry are a catalyst for the massive transformation of the hospitality sector in the Kingdom, said Sultan Bader Al-Otaibi.
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Updated 24 May 2022

Saudi Arabia witnessing massive transformation in tourism sector, says Dur Hospitality CEO

Saudi Arabia witnessing massive transformation in tourism sector, says Dur Hospitality CEO

RIYADH: The efforts of the Saudi Tourism Ministry are a catalyst for the massive transformation of the hospitality sector in the Kingdom, said Sultan Bader Al-Otaibi.

Speaking at the Future Hospitality Summit in Riyadh, the CEO of Dur Hospitality said Saudi Arabia’s tourism and hospitality sector is witnessing a massive transformation and lauded the Tourism Ministry’s efforts in this regard. 

He also said events like Future Hospitality Summit are very productive gatherings that help in learning and growing together. 

Dur Hospitality is a Saudi hospitality company established in 1976, recognized for its extensive record in managing, developing and operating a wide portfolio of hotels and residential compounds across the Kingdom of Saudi Arabia. 

 


Boeing expects demand to be back to pre-pandemic levels by 2024, says top official

Boeing expects demand to be back to pre-pandemic levels by 2024, says top official
Updated 13 sec ago

Boeing expects demand to be back to pre-pandemic levels by 2024, says top official

Boeing expects demand to be back to pre-pandemic levels by 2024, says top official

DOHA: Boeing anticipates global demand to see about 4 percent annual growth year over year for the next two decades, expecting to be back to pre-pandemic levels by 2024, said Omar Arekat, the company’s Middle East and Africa VP of commercial sales and marketing. He added that the growth for the Middle East would be slightly above that at 4.2 percent year over year.

During the Annual General Meeting of the International Air Transport Association, Arekat told Arab News that the market is growing, and there is a demand for roughly 3,000 cargo and freighters in the Gulf Cooperation Council region.

“We see that there is a recovery coming and our market is a very resilient market,” he added.

Despite a recovery, Boeing is still not quite at pre-pandemic levels, Arekat said. “We are seeing the recovery move much quicker than anticipated, especially on the regional and domestic fronts,” he informed.

Airlines returned to almost 100 percent of their operational capacity for regional and domestic travel, Arekat said. Internationally, it is growing, but it isn’t completely there yet, he added.

Based on peak season base, Boeing is 70 to 75 percent behind 2019, Arekat said.

He believed that the GCC is doing better than the rest of the world in terms of recovery. There has been strong growth in intra-regional travel, and international travel is increasing quickly, he said. “So we anticipate that we would see a recovery to 2019 levels by the year 2024,” Arekat added.

According to Arekat, the GCC region and the Middle East are important markets for Boeing.

Boeing and Qatar Airways signed a Memorandum of Understanding earlier this year for the purchase of up to 50 Boeing 737 Max aircraft, he said, adding that by 2024, the aircraft will begin being delivered.

“Qatar Airways announced a MoU for the purchase of 25 Boeing 737 Max with an option for another 25,” he said.

Arekat informed that Qatar Airways was the launch customer for 777-8 Freighter with a firm order for 34 jets earlier this year.

Boeing is currently working with Saudi Arabia on different opportunities. “The Saudi market has a lot of potential for growth,” he added.

Being a pioneer in sustainability, Boeing also plans to add the Boeing 777-200 to the sustainability program in 2023, he said. The company also has the Boeing 737 Max, which runs on sustainable fuel, and Etihad’s Boeing 787, the Greenliner. Boeing has been investing continuously in expanding its fuel-testing platform and leads the way in that area, he concluded.

“It’s in early stages right now and the demand will grow but the focus right now is on making sure that it’s affordable, and it’s available and produced widely,” he said.


Global supply chain impairs even as Saudi logistics industry shows signs of recovery

Global supply chain impairs even as Saudi logistics industry shows signs of recovery
Updated 14 min 2 sec ago

Global supply chain impairs even as Saudi logistics industry shows signs of recovery

Global supply chain impairs even as Saudi logistics industry shows signs of recovery
  • China’s COVID-19 restrictions, surge in oil prices and demand shock have shaken global services

RIYADH: China’s stringent rules to curb COVID-19, the surge in oil prices and the worldwide demand shock have shaken the tectonic plates of the international supply chain and cast a long shadow on the global logistics business.

The troika has exposed not only the fault lines in companies’ distribution strategies but also the lack of resilience among logistics firms to cope with the vagaries of the global economy.

“China is sadly passing through another lockdown, impacting our volumes. The challenge has nothing to do with us; it is from China itself,” Abdulaziz Busbate, country general manager of DHL Saudi Arabia, told Arab News.

The leading logistic firm has seen a 20 percent rise in the cost of operations since the outbreak of the universal pandemic. The same holds true even for smaller supply chain companies. 

“Before the pandemic, it took about $2,000 to import one container from China. Now it takes almost $7,000. Product prices are increasing daily,” said Muhammad Omer, co-founder and CEO of Aiduk Trading, a Riyadh-based company established in 2015.

According to Bloomberg Economics, a leading macroeconomic research service, China’s supply chain significantly dropped since April and is expected to worsen. What’s even worse? China’s port activity has fallen back to 2020-lockdown levels.

Global inflationary winds

The Russia-Ukraine conflict has impacted inflation rates of many food, commodities and raw materials. Countries neighboring Russia and Ukraine have been hit the hardest — Lithuania, Estonia, and Latvia have endured inflation rates of 14 percent, 12 percent and 10 percent, respectively.

“The combination of the war and the supply and demand imbalances, especially in energy, will push up base metals, precious metals and energy together,” Paul Christopher, head of global market strategy at the Wells Fargo Investment Institute, told Bloomberg Television.

According to Jadwa Investments’ inflation report, the Kingdom’s inflation is expected to rise 2.4 percent in 2022 as the Russia-Ukraine war, COVID-19 lockdowns in China and higher food consumption will add to the price pressure.

“Inflation globally is impacting us as well as the increase of fuel prices,” Busbate added. 

Abdulaziz Busbate, country general manager of DHL Saudi Arabia.

The lockdowns in parts of China are adding more challenges to the already affected global supply chains, resulting in higher import costs from key trading partners such as Saudi Arabia.

Although the Kingdom’s inflation rate is expected to increase to 2.7 percent in 2023 — a 0.5 percentage point increase from 2022 — it will achieve the lowest inflation levels among the G20 economies and the third lowest worldwide, following Japan and Switzerland.

Within the G20, the Kingdom outperformed its peers, decreasing the annual inflation rate from 3.1 percent in 2021 to 2.2 percent in 2022.

Changing market dynamics

According to Busbate, the sector is seeing a growing demand in the business-to-consumer segment.

“During COVID-19, we took advantage of our e-commerce and B2C services as most people wanted to purchase online, while consumer behavior has completely changed in this current scenario,” he said.

DHL Saudi Arabia had a successful year in terms of revenues in 2020, thanks to a remarkable increase in their B2C operations. 

Mohammed Omer, co-founder and CEO of Aiduk Trading.

Aiduk Trading also booked a significant increase in sales during the pandemic as people could not go out, and the online delivery market was booming.

“The industry of last-minute delivery during the pandemic was working day and night delivering goods to different consumers,” the CEO of Aiduk told Arab News.

However, business-to-business demand decreased heavily in 2020 as most industries were negatively affected by the pandemic.

“In 2020, we were 90 percent performing in B2C, while B2B was nearly 10 percent,” DHL’s Busbate said.

In 2021, businesses started to get back on track, and the B2B volume increased to 40 percent of their operations.

The company nearly doubled its crew in the call center to accommodate the number of calls they received and increased its drivers’ network by about 60 percent to deliver their shipments daily, pointed out Busbate.

Wading off the headwinds

Starting in 2015 with a 1,000- square-meters warehouse, Aiduk’s warehouse today is more than 20,000 square meters, offering e-commerce fulfillment services to their clients.

Meanwhile, DHL built three gateways in the major cities of Riyadh, Jeddah and Dammam, investing more than $50 million in the Kingdom since 2014.

A gateway is a point at which freight moving from one territory to another is interchanged between transportation lines.

The gateway in Jeddah is around 15,000 square meters, while Riyadh is about 12,000 square meters.

The German logistics behemoth is in no mood to stop as it plans to invest $8.5 million in its expansion plans in Riyadh.

The new expansion is expected to come into operation by the end of the year, said Busbate.

DHL today has a 58 percent market share in the Kingdom, managing around 20,000 shipments daily.

Turnaround strategy

According to Riyadh-based Saudi Market Research, the Kingdom plans to inject $147 billion into the development of the transportation and logistics industry to turn the country into a transportation hub.

Saudi Arabia’s strategic location has attracted foreign players into the Kingdom’s logistics industry.

For instance, the US logistics giant FedEx has announced its decision to invest $400 million into domestic logistics operations to attract other foreign players to contribute to the vast developments, said the report.

The Kingdom is already the leading transportation and logistics operator in the Middle East and North Africa, earning $27.6 billion annually.

Also fueling the Kingdom’s supply chain ambitions is the development of new trade zones such as Jazan Economic City, NEOM Airport, SPARK zone, and the Red Sea Gateway Terminal.

The forecast exceeds the Kingdom’s pre-pandemic levels and is expected to continue its growth until 2025, when the industry reaches $50 billion in value.


Pylon targets emerging markets, aims to be the first MENA gigacorn

Pylon targets emerging markets, aims to be the first MENA gigacorn
Updated 33 min 15 sec ago

Pylon targets emerging markets, aims to be the first MENA gigacorn

Pylon targets emerging markets, aims to be the first MENA gigacorn
  • Becoming a gigacorn is more important than achieving exponential growth or high earnings: CEO

RIYADH: Every startup’s dream is to hit a $1 billion valuation to become a unicorn. But, with the global need for a sustainable future, startups are itching to join the new gigacorn club.

Entry to this elite club requires a company to offset one gigaton of the 52 global gigatons of carbon dioxide emissions. Egypt’s infrastructure startup Pylon has drawn up plans to become a gigacorn.

In an exclusive interview with Arab News, Pylon CEO and co-founder Ahmed Ashour said that becoming a gigacorn was even more important than achieving exponential growth or high earnings.

“That’s quite a tough goal, so we believe that it will take us eight to 12 years to offset 2 percent of the world’s emissions,” Ashour added.

The firm offers software as a service in the electricity and water industry to help companies manage their operations better by reducing revenue loss and providing a tech-based system.

Business model

The company offers its services with a subscription revenue model that encourages its clients to use it without requiring a large budget.

“What we do is provide a smart grid infrastructure at the subscription model, which translates into installing our solution and giving the utility to operate that network in a smart way,” Ashour informed.

The company also offers financial services that play a huge role in its business model, giving Pylon a fintech side to make it even more interesting.

“The most important feature is the collection of the revenue because, at present, the utility market annually loses around 40 percent of its revenue,” the CEO added.

Ashour explained that digitalizing the collection of revenue in utility companies was extremely important as the global market lost almost $400 billion worth of revenue.

Revenue loss is the result of poor collection methods or utility theft which Pylon can also detect using its technology. Ashour also claimed that customers saw a 45 percent increase in revenue after using their services.

Although its operations can be tempting to pronounce Pylon as a fintech startup, Ashour insisted to label it as an infrastructure cleantech company.

Growth and expansion

Seeing around 250 percent growth year over year in 2021, the company is eyeing several markets in different parts of the world to help it accomplish its gigacorn dream.

At present, Pylon operates in Egypt and the Philippines with 12 utility companies using its services. It is eyeing markets such as Brazil and Indonesia, while studying the Saudi market. Although all these markets will help Pylon reach its goals, Ashour discussed that Egypt and the Philippines will probably have the highest impact in terms of its carbon emission goal.

“We work with covering all the big players when it comes to the private sector here in Egypt, or the majority of them, as well as five of the nine public sector companies, in addition to the Philippines for now,” he added.

Pylon is aiming to repeat its 2021 performance this year with plans to reach a penetration rate of 10 percent in emerging markets.

After raising $19 million in a seed funding round, the company has been studying multiple markets as well as penetrating the countries mentioned earlier.

“We’re studying the market, and we believe that there is a very good opportunity there which will add value to both, Saudi Arabia as well as Pylon, of course,” Ashour added.

Using the investment it received, Pylon started discussing partnerships in Africa as well as operations in Jordan and Nepal.


Wall Street set for gains as traders scale back rate hike expectations

Wall Street set for gains as traders scale back rate hike expectations
Updated 24 June 2022

Wall Street set for gains as traders scale back rate hike expectations

Wall Street set for gains as traders scale back rate hike expectations
  • US stock indexes eye first weekly gain in four
  • Bank stocks mixed after Fed’s stress test results
  • Futures up: Dow 0.68 percent, S&P 0.72 percent, Nasdaq 0.77 percent

REUTERS: Wall Street’s main indexes were set to open higher on Friday as signs of slowing economic growth and falling commodity prices eased expectations over how aggressively the Federal Reserve will raise interest rates to rein in inflation.

Global financial markets have been roiled this month on worries that rapid rate hikes by major central banks could cause a sharp economic downturn, with the benchmark S&P 500 confirming a bear market last week as it recorded a 20 percent drop from its January closing peak.

Data on Thursday showed US business activity slowed considerably in June, driving investors to scale back bets on where interest rates may peak.

Sliding commodity prices also quelled worries about red-hot inflation, with copper prices heading for their biggest weekly fall in a year and crude oil set for a second weekly decline.

“Conversations about the US economy likely slowing which could lessen the hawkishness of the Fed, combined with lower commodity prices and bond yields — these are reasons investors are mentioning to justify why we could experience a near-term bounce,” said Sam Stovall, chief investment strategist at CFRA Research in New York.

“Yet, I do not think that it’s the final bottom.”

The Fed’s commitment to fight high inflation is “unconditional,” Chair Jerome Powell told lawmakers on Thursday, a day after saying it was not trying to provoke a recession but that was “certainly a possibility.”

The main stock indexes looked set to notch their first weekly gain in four, with health care, real estate and utilities — among sectors considered as safer bets during times of economic uncertainty — outperforming so far in the week.

Market heavyweights such as Apple Inc. and Tesla rose 0.9 percent and 0.5 percent in premarket trading. Rising interest rates have hurt shares of the mega-cap growth companies as their valuations rely more heavily on future earnings.

At 08:45 a.m. ET, Dow e-minis were up 208 points, or 0.68 percent, S&P 500 e-minis were up 27.5 points, or 0.72 percent, and Nasdaq 100 e-minis were up 90.25 points, or 0.77 percent.

The University of Michigan’s survey on US consumer sentiment in June and new home sales data will be published later in the day.

FedEx Corp. rose 3.4 percent after the parcel delivery company issued a stronger-than-expected full-year profit forecast despite softening global demand for shipping.

Bank stocks were mixed after the Federal Reserve’s annual “stress test” exercise showed that the lenders have enough capital to weather a severe economic downturn.

Citigroup Inc. slipped 0.9 percent and Bank of America Corp. edged lower, while Morgan Stanley gained 1 percent.

Zendesk Inc. soared 28.1 percent after the software company said it would be acquired by a group of buyout firms led by Hellman & Friedman LLC and Permira in a deal valued at $10.2 billion.


Saudi Arabia strengthens position as largest Arab economy: Report

Saudi Arabia strengthens position as largest Arab economy: Report
Updated 24 June 2022

Saudi Arabia strengthens position as largest Arab economy: Report

Saudi Arabia strengthens position as largest Arab economy: Report

RIYADH: Saudi Arabia’s share of the Arab economy grew 0.4 percentage points in 2021, as it retained its position as the region’s largest economic player.

The Kingdom recorded a domestic output of $833.5 billion last year, the equivalent of 29.7 percent of the entire Arab region, according to a report of the Arab Corporation for Investment and Export Credit Guarantee, Dhaman.

The UAE was the second largest Arab economy, with $410 billion — 14.6 percent of the total, while Egypt ranked third, with a production of $402.8 billion.

Dhaman Director General Abdullah Ahmed Al-Sabeeh expects continued growth in 2022, especially after the value of foreign projects imported to the region increased by 86 percent to reach $21 billion during the first quarter of 2022, compared to the same period in 2021.

The report showed that the Arab economy as a whole, outperformed the eighth largest economy in the world, Italy, with a gross domestic product of $2.1 trillion.

Foreign direct investment grew in the region, with inflow increasing by 43 percent year-on-year, equal to about $53 billion.

This brought the FDI total to around $1.58 trillion.

Those inflows represent 6.3 percent of incoming flows to developing countries and 3.3 percent of global flows.

More than 96 percent of the increased inflows are concentrated in just five countries, led by the UAE with $20.7 billion, and followed by Saudi Arabia with $19.3 billion.

Egypt came in third place with a value of $5.1 billion, followed by Oman in fourth place with a value of $3.6 billion, Morocco in fifth place with $2.2 billion worth of inflows, Dhaman annual monitoring data showed.

FDI balances received by Arab countries increased by the end of 2021 from $958 billion to more than $1 trillion in 2021, according to UNCTAD data.

For the total amount received, Saudi Arabia topped the Arab ranking with $261 billion, representing 26 percent of the Arab total, followed by the UAE with $171.6 billion, and Egypt with $137.5 billion.