Saudi hospitality revenue to grow by 7.5% in next 4 years: report  

Saudi hospitality revenue to grow by 7.5% in next 4 years: report  
Hospitality growth across the GCC is driven by economic expansion, increased tourist arrivals, and numerous mega meetings. Shutterstock
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Updated 12 June 2024
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Saudi hospitality revenue to grow by 7.5% in next 4 years: report  

Saudi hospitality revenue to grow by 7.5% in next 4 years: report  

RIYADH: Saudi Arabia’s hospitality revenue is expected to see an compound annual growth rate of 7.5 percent from 2023 to 2028, propelled by government-led initiatives, according to new data. 

This growth, in line with the Gulf Cooperation Council average, is supported by various projects under the Kingdom’s Vision 2030 plan, as stated by UAE-based investment banking advisory firm Alpen Capital’s latest report. 

The report further noted that the UAE is poised to grow at a compound annual growth rate of 6.9 percent from 2023 to 2028. This growth will be driven by infrastructure modernization and easier tourist visa rules.  

Additionally, Qatar, Kuwait, Oman, and Bahrain are projected to experience even higher growth rates. 

Reflecting on Saudi Arabia’s hospitality industry, Sameena Ahmed, managing director at Alpen Capital, said: “Growth of the sector is expected to be spurred by economic recovery, thriving tourism and concerted efforts of the governments to reduce reliance on hydrocarbon revenues.”  

Alpen Capital’s report forecasts the GCC hospitality sector’s revenue to grow at a CAGR of 7.5 percent from 2023 to 2028, reaching approximately $48.1 billion by 2028.  

This growth is driven by economic expansion, increased tourist arrivals, and numerous mega meetings, as well as incentives, conferences, and exhibitions coupled with sporting events in the region.   

Additionally, the sector’s key operating metrics — occupancy rate, average daily rate, and revenue per available room — are expected to improve over the next five years. 

The occupancy rate is forecasted to increase from 64.6 percent in 2023 to 69.3 percent in 2028, while ADR is expected to grow at a CAGR of 1.9 percent. Additionally, RevPAR is forecasted to experience a CAGR of 3.3 percent over the same period. 

“The GCC is solidifying its global tourism footprint through successful hosting of major MICE, cultural and sporting events. Anticipated to attract millions of tourists, these events are poised to bolster the growth of the hospitality industry,” the report added.  

It further stated that the region has implemented several liberalized measures to boost tourist inflow, such as unified GCC visas, Dubai’s five-year multiple-entry visa, and Saudi Arabia’s instant e-visa options.  

Investments in transport infrastructure, including new airports, expansions of existing aviation facilities, and a regional rail network, are also expected to support tourism activity and increase demand for hospitality services.  

However, the sector faces challenges from global economic uncertainties and geopolitical conflicts, the report highlighted.   

Inflation and monetary policies may reduce consumer confidence, leading to decreased spending on international travel. Additionally, a shortage of skilled workers presents a significant hurdle, affecting the ability to recruit and retain trained professionals.  

Alpen Capital further emphasized the sector’s embracing of digitalization, with operators leveraging technologies like artificial intelligence, machine learning, cloud platforms, and mobile apps to personalize experiences and enhance customer engagement.   

The region is also adopting eco-friendly practices and conservation initiatives to meet the demand for responsible travel. Cultural, health, and wellness tourism are rapidly growing, reflecting shifting consumer preferences and a commitment to environmental conservation.  

“A rising trend toward sustainable tourism and responsible travel is gaining ground across the GCC’s hospitality sector due to increasing ecological awareness among consumers worldwide,” said Sanjay Bhatia, managing director at Alpen Capital.    

“Despite market competition and geopolitical uncertainties, the industry continues to strategically enhance visitor experiences and stimulate demand through innovation and consolidation. We expect to witness healthy domestic and cross-border M&A activity, as the sector advances to respond to the rising demand for accommodation and hospitality services,” he added.   

Furthermore, global property giant Knight Frank anticipates that Saudi Arabia is gearing up to expand its hospitality sector by developing 320,000 new hotel rooms by 2030.  

In a report released in April, the consultancy firm disclosed that as much as 67 percent of the planned hotel room supply in the Kingdom would fall in the “upscale” or “luxury” categories, referring to 4-star and 5-star accommodations, respectively.     

This move aims to cater to the projected surge in tourism, with 150 million domestic and international tourists expected by 2030.    

“With a target of welcoming 150 million visitors by 2030 — a 50 percent increase from its previous goal — the government is actively exploring various strategies to attract to international travelers,” Turab Saleem, partner and head of hospitality at Tourism and Leisure Advisory in Middle East and Africa at Knight Frank, said at that time.    

Saleem noted that this includes the development of cultural and entertainment offerings nationwide, which complement existing attractions like the Jeddah F1 Grand Prix and numerous entertainment seasons.    

“Noteworthy additions include theme parks such as Boulevard World in Riyadh, alongside the licensing of 24 additional theme parks by the Saudi General Entertainment Authority over the past year,” he added.  

The consultancy’s analysis further revealed that Accor Hotel Group will slip from first to second largest hotel room operator in the country with an estimated 25,400 keys under management by 2030.   

Meanwhile, Marriott International will likely emerge as the most prominent hotel operator in the Kingdom, with around 26,200 hotel keys under management by 2030, Knight Frank disclosed.   

Furthermore, Riyadh’s winning bid to host the 2030 World Expo is projected to pump a significant economic boost of $94.6 billion into the nation’s capital, with an estimated 40 million visitors expected during the six-month-long exhibition.  

Consequently, this underscores the need to provide adequate accommodation for hotel staff. 

According to the World Trade Organization, 4-5-star hotels, on average, require one to two staff per room.   

This suggests somewhere between 232,000 and 387,000 key workers could require accommodation in this segment of the Kingdom’s hospitality market. 


Middle East M&A value surges 52% to reach $29bn in 2024: Bain & Co. 

Middle East M&A value surges 52% to reach $29bn in 2024: Bain & Co. 
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Middle East M&A value surges 52% to reach $29bn in 2024: Bain & Co. 

Middle East M&A value surges 52% to reach $29bn in 2024: Bain & Co. 

RIYADH: Saudi Arabia and the UAE led a surge in mergers and acquisitions across the Middle East in 2024, with total deal value reaching $29 billion, according to a Bain & Co. report. 

Sovereign wealth funds and government-related entities were the driving force behind the 52 percent increase from the previous year, with the Kingdom and the UAE accounting for the majority of the region’s deal value. 

The Middle East recorded the highest M&A deal value growth in 2024 compared to other regions, with North America seeing a 2 percent rise, although still posting a total of $1.2 trillion — while Europe recorded a 9 percent rise to $528 billion. 

Deals involving energy and natural resources remained dominant in the Middle East market, representing nearly 80 percent of the total value. 

The largest transaction of the year was Saudi Aramco’s $8.9 billion acquisition of Rabigh Refining and Petrochemical Co., underscoring the continued focus on energy-related deals, according to the report.

Gregory Garnier, partner at Bain & Co. and head of the Private Equity and Sovereign Wealth Fund practice in the Middle East, described 2024 as “a transformative year” for the region’s M&A activity.

“With continued support from government entities and strong cross-regional investments, particularly in Europe, the Middle East is well-positioned to continue driving high-value strategic acquisitions, especially in energy transition and technology sectors,” he added. 

The report also highlighted that advanced manufacturing and technology emerged as growing areas of investment, with technology-related M&A deals doubling in value. 

Middle Eastern investors have expanded their reach into European markets, with deal values for targets rising 120 percent in 2024.

In contrast, investment activity in the Asia-Pacific region saw a steep decline, with strategic deal values dropping by 78 percent over the same period. 

Local firms are also growing interest in joint ventures, particularly in industrial sectors such as renewable energy. 

This surge in activity in the Middle East was driven by sovereign wealth funds, economic diversification, and investor-friendly reforms, with the Kingdom and the UAE leading in energy, tech, and industrial acquisitions. 

Diversification efforts beyond oil also contributed to the region’s M&A growth, with investment strategies such as those of Saudi Arabia’s Public Investment Fund signaling a clear intent to establish a strong presence across multiple sectors. 

PIF completed three joint ventures focused on solar and wind projects last year, reinforcing the country’s commitment to diversifying its energy investments. 

The sovereign wealth fund entered joint ventures with Envision Energy and Vision Industries to manufacture wind turbine components, and with JinkoSolar and Vision Industries to establish a solar cell and module production facility.

Additionally, PIF partnered with China Energy Engineering Corp., ACWA Power, and Saudi Aramco Power Co. to construct a 2 gigawatt solar power plant. 

The Middle East’s strong M&A performance contrasts with a period of sluggish dealmaking worldwide. 

According to Bain & Co., global M&A activity has remained historically low relative to gross domestic product over the past three years, as high interest rates and regulatory hurdles constrained dealmaking. 

Germany was among the countries to experience a decline in M&A activity, posting a 7 percent drop, while India saw deal value decrease by 16 percent year-on-year. 

However, the report suggests that 2025 could mark a turning point as these inhibitors ease and companies increasingly turn to M&A and divestitures to navigate shifting profit pools amid technological disruption and a post-globalization economy. 


UAE’s non-oil sector continues ‘robust’ growth in January: S&P Global

UAE’s non-oil sector continues ‘robust’ growth in January: S&P Global
Updated 05 February 2025
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UAE’s non-oil sector continues ‘robust’ growth in January: S&P Global

UAE’s non-oil sector continues ‘robust’ growth in January: S&P Global
  • Price pressures eased, with input costs rising at their slowest rate in 13 months
  • Non-oil companies raised their selling prices for the first time in four months

RIYADH: The UAE’s non-oil economy maintained steady growth in January, driven by a rise in new orders, ‘favorable market conditions,’ and easing cost pressures, according to S&P Global. 

The Emirates’ Purchasing Managers’ Index stood at 55, slightly down from December’s nine-month high of 55.4. 

A PMI reading above 50 indicates growth in the non-oil sector, while a below 50 signals contraction. 

The sustained expansion of non-oil business activity across the Middle East, including the UAE, highlights the region’s economic diversification efforts. Saudi Arabia posted a PMI of 60.5 in January, its highest level in a decade. Kuwait recorded a PMI of 53.4, followed by Egypt at 50.7, and Qatar at 50.2. 

“The UAE PMI signalled another good month for the non-oil private sector in January, with the headline figure falling only slightly from December’s nine-month high,” said David Owen, senior economist at S&P Global Market Intelligence. 

He added: “Robust expansions in activity and new business, as well as lower input cost inflation, suggest the economy is in a healthy position.” 

S&P Global said non-oil businesses in the UAE experienced a sharp rise in sales volume, primarily driven by strong domestic demand. 

Price pressures also eased, with input costs rising at their slowest rate in 13 months. The slowdown in inflation enabled firms to increase their purchases of inputs at the start of the year. 

The PMI survey said favorable market conditions and strong client relationships led to faster delivery times among UAE non-oil businesses in January. 

However, companies only recorded a modest increase in staff numbers, though the pace of hiring was the fastest since August. 

“A persistently low rate of employment growth suggests that firms are lacking the ability to hire in order to tackle backlog issues,” said Owen. “Input resources similarly remain weak, which seems to be aggravating capacity pressures as work-in-hand rose at the quickest pace in eight months in January.” 

Despite the positive trends, surveyed firms were less optimistic about their future outlook, with only 9 percent expecting growth over the next 12 months. 

According to these firms, intense competition in the UAE’s non-oil sector was a key factor in dampening confidence. 

“The broad decline in business confidence over the past few months will therefore be a surprise to some. Notably, total confidence was at its lowest level since December 2022,” said Owen. 

He added: “Strong competition and cash flow concerns arising from heavy backlogs have appeared to sow doubt among firms that they can continue to boost their revenues, underlining efforts to reduce the gap between output and input prices.” 

The survey said continued capacity strain was due to heightened demand and administrative challenges, such as slow client payments. 

The rate of backlog accumulation accelerated to its fastest pace in eight months, it added.

Due to strong demand pressures, non-oil companies in the UAE raised their selling prices for the first time in four months. 

S&P Global said business conditions in Dubai’s non-hydrocarbon sector remained promising, with the emirate’s PMI reaching 55.3 — slightly below December’s nine-month high of 55.5. 

Non-oil firms in Dubai saw robust activity expansion in response to greater new business inflows. 

Cost pressures also eased, with input price inflation slipping to a three-month low. 

Employment and inventory levels saw fractional increases, reflecting a subdued outlook for future business activity. 

Regarding future expectations, business confidence in Dubai’s non-oil sector dropped to its lowest level in over four years. 


Saudi Fund for Development approves grant for King Salman Hospital in Pakistan — PM

Saudi Fund for Development approves grant for King Salman Hospital in Pakistan — PM
Updated 05 February 2025
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Saudi Fund for Development approves grant for King Salman Hospital in Pakistan — PM

Saudi Fund for Development approves grant for King Salman Hospital in Pakistan — PM
  • Project will be built in Hazara district with SFD grant of $40 million
  • Riyadh also approves $1.2 billion oil deferred oil payment facility

ISLAMABAD: Prime Minister Shehbaz Sharif said on Feb. 6 the Saudi Fund for Development had approved a $40 million grant to build the King Salman Hospital in Pakistan’s northwestern Khyber Pakhtunkhwa province.

The announcement comes a day after Pakistan signed an agreement with SFD to defer by one year a $1.2 billion payment on the country’s oil imports.

SFD has supported more than 40 projects and programs valued at approximately $1.4 billion to finance energy, water, transportation and infrastructure projects in Pakistan since the Fund’s establishment in 1975.

“There are other SFD projects like the King Salman Hospital with an investment of $40 million” Sharif said while addressing a federal cabinet meeting in which he thanked Saudi authorities for approving the $1.2 billion oil facility. “These are grants and the hospital will be fully built with this in Hazara [district].”

The Saudi facility to defer oil payments can help Islamabad boost its foreign reserves ahead of the first review of a $7 billion International Monetary Fund bailout, due in March. The agreement comes as Pakistan continues to navigate a tricky economic recovery path and implement tough conditions attached to the IMF loan program.

“Our brother Crown Prince Mohammed bin Salman sent a delegation yesterday [Feb. 4] and our oil facility which was for 10 months in 2023 ended in December 2023,” Sharif added. “Now, it has been renewed and they have provided us with $1.2 billion annually for our oil facility.”

On Monday, Pakistan also finalized a loan agreement for a Gravity Flow Water Supply Scheme in the Mansehra district of KP under which the SFD will provide $41 million to enhance access to clean drinking water for at least 150,000 people, according to Sharif’s office.

The SFD has also proposed a partnership with the Pakistan government to offer training programs for young Pakistanis and impart “modern and relevant” skills to help them meet labor market demands in Saudi Arabia.

Pakistanis constitute one of the largest migrant communities in Saudi Arabia with an estimated 2.64 million working there as of 2023. While 97 percent of them are blue-collar workers, there is a growing demand for skilled labor in the Kingdom as it seeks to modernize its economy under the Vision 2030 scheme.


Oil Updates — prices decline amid rising US crude inventories, Sino-US tariff war

Oil Updates — prices decline amid rising US crude inventories, Sino-US tariff war
Updated 05 February 2025
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Oil Updates — prices decline amid rising US crude inventories, Sino-US tariff war

Oil Updates — prices decline amid rising US crude inventories, Sino-US tariff war

SINGAPORE: Oil prices slid on Wednesday as rising stockpiles in the US and market worries about a new Sino-US trade war offset President Donald Trump’s renewed push to eliminate Iranian crude exports.

Brent crude futures were down 39 cents, or 0.51 percent, at $75.81 a barrel by 7:27 a.m. Saudi time. US West Texas Intermediate crude (WTI) lost 26 cents, or 0.36 percent, to $72.44.

Oil on Tuesday traded in a wide range, with WTI falling at one point by 3 percent, its lowest since Dec. 31, after China announced tariffs on US imports of oil, liquefied natural gas and coal in retaliation to US levies on Chinese exports.

Prices rebounded, however, after Trump restored the “maximum pressure” campaign on Iran to curtail its nuclear program he enacted in his first term that cut Iranian crude exports to zero.

Weighing down the market on Wednesday was the higher-than-expected US crude inventories data overnight, said Jun Rong Yeap, a market strategist at IG.

Crude stocks rose by 5.03 million barrels in the week ended Jan. 31, according to market sources, citing American Petroleum Institute figures.

Gasoline inventories rose by 5.43 million barrels, and distillate stocks fell by 6.98 million barrels, the API reported, according to the sources.

Official US government oil inventory data is due to be released at 6:30 p.m. Saudi time on Wednesday.

Rising crude and fuel stockpiles in the world’s biggest oil consumer signal consumption weakness, adding to investor worries about the impact of tarrifs on the global economic and energy demand outlooks.

The impact of China’s retaliatory tariffs on US energy imports will be limited “given that neither global supply nor demand of these commodities are changed by China’s tariffs,” analysts at Goldman Sachs said in a note on Tuesday.

Both countries will be able to find alternative markets, the note said.

As for Iran, Trump on Tuesday restored his “maximum pressure” campaign on Iran that includes efforts to drive its oil exports down to zero in order to stop Tehran from obtaining a nuclear weapon.

While Trump said he was open to a deal with Iran, he signed a presidential memorandum re-imposing Washington’s tough policy on Iran. The plan could impact about 1.5 million barrels per day of oil that the country exports, analysts at ANZ said on Wednesday, citing shiptracking data.

“The clampdown on Iran may be what is needed to stabilize bearish sentiments for oil prices for now and there may room for further recovery, at least in the near term,” said IG’s Yeap. 


Saudi Arabia’s Debt Capital Market set to reach $500bn by end of 2025: Fitch Ratings

Saudi Arabia’s Debt Capital Market set to reach $500bn by end of 2025: Fitch Ratings
Updated 04 February 2025
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Saudi Arabia’s Debt Capital Market set to reach $500bn by end of 2025: Fitch Ratings

Saudi Arabia’s Debt Capital Market set to reach $500bn by end of 2025: Fitch Ratings

RIYADH: Saudi Arabia’s Debt Capital Market is expected to hit $500 billion by the end of 2025, fueled by the Kingdom's economic diversification efforts under Vision 2030, according to Fitch Ratings.

In its latest report, Fitch highlighted several factors contributing to this growth, including the government’s need for deficit funding, maturing obligations, and continued reforms.

The DCM, which involves the trading of securities like bonds and promissory notes, serves as a key mechanism for raising long-term capital for both businesses and governments.

Fitch also noted that the DCM in the Gulf Cooperation Council region had surpassed the $1 trillion mark by November 2024, bolstered by strong oil revenues. The agency predicts continued growth, with the GCC region expected to remain one of the largest emerging-market issuers of dollar-denominated debt through 2025.

“Saudi Arabia’s sukuk market maintains a strong credit profile, with 97.4 percent of Fitch-rated Saudi sukuk rated investment-grade and 98 percent of issuers holding a stable outlook. Notably, no Fitch-rated Saudi sukuk or bonds defaulted in 2024,” said Bashar Al-Natoor, global head of Islamic finance at Fitch Ratings.

He added: “2025 has started strong, with a growing pipeline of issuances. We expect the market to surpass $500 billion by year end, driven by Vision 2030 initiatives, robust government support, and favorable funding conditions.”

Fitch’s analysis further said that Saudi Arabia became the largest dollar-denominated debt issuer in emerging markets (outside of China) and the world’s largest sukuk issuer in 2024. The Kingdom’s DCM grew by 20 percent year on year in 2024, reaching $432.5 billion in outstanding debt.

The report also emphasized the increasing importance of environmental, social, and governance debt in the region, with $18.6 billion in outstanding ESG-related bonds in 2024.

Saudi banks have significantly expanded their international DCM activities since 2020, aligning with their growth strategies and foreign-currency requirements. Additionally, corporates are diversifying their funding sources, moving beyond traditional bank loans, according to Fitch.

In another report, Fitch projected that global ESG sukuk issuances will exceed $50 billion in outstanding debt by 2025, driven by major Islamic finance markets like Saudi Arabia and Indonesia. The agency noted a 23 percent year-on-year growth in global ESG sukuk, which reached $45.2 billion in 2024, outpacing the 16 percent growth in global ESG bonds.