Back to business

An increase in hotel developments, rising oil prices and continued government support, means Saudi Arabia is back on the business traveller’s trail

  • E-Mail
By  Sarah Campbell Published  July 9, 2005

|~|Le-Meridien-Al-KhobarL.jpg|~|Hotels such as Le Gulf Meridien Al Khobar have seen an increase in domestic tourists.|~|Among hoteliers in Saudi Arabia there is an air of hesitant confidence for the year 2005. The continued boom in oil prices, and the knock-on investment in peripheral industries such as transportation, communications and finance, has meant that Saudi Arabia is most definitely back on the map for business travellers this year. And it shows. Hotel occupancy has bounced back in Riyadh, according to figures from the HotelBenchmark Survey by Deloitte. For February and March of this year, RevPAR for the city finally crossed the $100 mark, while occupancy for March reached 77.6%, an increase of 7% year on year. International hotel chains continue to announce Saudi expansion plans, while the country’s Supreme Commission for Tourism (SCT) has stepped up the pace with its plans to develop the local tourism industry. This looks like a wise move. Some 60% of the population in Saudi Arabia is aged 21 years or under, and the SCT’s new tourism plans will provide new jobs all targeted at the young and energetic, as well as a new range of interests in Saudi Arabia. The SCT brought its largest ever representation to Arabian Travel Market (ATM) 2005. Part of the delegation included the promotional bodies of five regions: Riyadh, Aseer, Abha, Hail and Taif. During ATM, Riyadh unveiled plans to host its first ever summer festival this year. Based on the model of the Dubai Shopping Festival, the Riyadh festival will include 150 different attractions, with hotels offering discounted rates at properties across the city. “Under the patronage of Riyadh Chamber of Commerce and Industry, a Riyadh Tourist Festival is being held from June 15 until July 7 as a novel experiment in domestic tourism,” says Sameh Elnashar, director of marketing, Al Faisaliah Hotel, A Rosewood Hotel, in Riyadh. “This initiative will probably mark the start of a series of events to be held annually during the summer period to somehow encourage its citizens and also the expatriate community.” Elnasher is confident that such initiatives being undertaken by the SCT are a positive move towards creating a year-round market for Saudi Arabia. “The SCT continues to move ahead with plans to promote Saudi Arabia as a tourist destination both domestically and on an international level. The Kingdom has a lot to offer to visitors, from archaeological wonders and historic sites, to modern attractions, scenic beauty and remarkable wildlife,” he says. Riyadh Riyadh has certainly benefited from an increase in arrivals for the first half of 2005, although most international inbound travellers visit the city on business, so it will be interesting to see what benefits the Riyadh festival will bring to the city’s hotels. “Al Faisaliah Hotel registered an increase of over 20% in occupancy during the period January to April 2005 against the same period in 2004. Our main market, the corporate sector, continues to produce over 60% of total rooms business,” explains Elnasher. “We hope that the present business trend will continue and lead us to achieve an occupancy of 60% by end of 2005, which will be a remarkable achievement and a 16% increase on 2004,” he adds. A similar story is told by other five-star properties across the city. The InterContinental Riyadh recently opened the new Club InterContinental wing offering state of the art facilities, free internet, and a roof top Club InterContinental lounge, all tailored towards the business traveller. “The lounge consists of an outdoor terrace, a private meeting room with built in screens and internet connectivity, separate private internet rooms with new flat screens, and there is a special dedicated room with ensuite available on request on the Club InterContinental lounge for guests who have a late departure,” explains Erik Huyer, executive assistant manager, InterContinental Riyadh. In addition to the Club lounge, the hotel offers other facilities geared towards the business traveller, and unique to the InterContinental Riyadh, including a 9-hole golf course set in the hotel’s grounds. “Business compared to last year has seen a positive growth. There is more confidence, investment opportunities are increasing rapidly, the oil price remains stable around US $45-50 a barrel, and the regional economies are doing well. The market is continuing to expand and next year looks to have further growth,” Huyer predicts. The Four Seasons Hotel Riyadh at Kingdom Centre, now in its third year of operations, has also witnessed occupancy growth. The hotel attracts both business and domestic tourism guests. “Four Seasons Hotel Riyadh at Kingdom Centre reported excellent results for the first quarter of this year, surpassing last year’s [figures] in all departments and strengthening the hotel’s position as the market leader in the Saudi capital,” claims the hotel’s general manager, Bahram Sepahi. “The stability we have seen since the start of 2005 helped restore confidence in Riyadh within the international business community. Business levels on all fronts are up 30% over the year before,” he explains. With business levels showing marked growth, it is little surprise then that Rezidor SAS has chosen Riyadh as one of its first locations for the debut of its Park Inn ‘no fuss’ business brand. The hotel company currently manages four properties in Saudi Arabia and is hoping its market presence and experience will help establish its mid-tier brand. The Park Inn Olaya Riyadh will feature 212 guestrooms and one restaurant. “Riyadh is an excellent choice for the Park Inn brand; it is the capital city and an influential business hub that attracts a variety of corporate travellers,” says Jean Marc Busato, vice president of Rezidor Middle East. “It has one of the world’s largest airports and is also one of the world’s fastest growing cities. Park Inn provides all the fundamental requirements for travellers,” he adds. Further hotel growth in Riyadh includes a 200-room Novotel property from Accor, set to also open in 2007. The Holy cities of Makkah and Madinah remain Saudi Arabia’s fastest growing hotel market, and perhaps one of the world’s most unique. Over two million pilgrims make the annual visit to Makkah for Hajj. With hotel rooms booked months in advance, there is never a spare room to be found during the six-week Hajj period. In a bid to spread out demand, the SCT widened the window on Umrah visas, now enabling those travelling on Umrah to enter the Kingdom during a 10-month period. In total, around 400,000 people visit Makkah for Umrah. The new visas has eased the burden, but still hotels in Makkah and Madinah experience extreme highs and lows in occupancy figures each year, with properties now looking to new markets to fill the off-peak season. “Our main market is Iran during the low season,” explains Yasser El Sherbiny, deputy director of sales, Sheraton Makkah. “For the first time, we are also getting business from Belgium, after a sales trip conducted by our general manager, Omar Bouglid. “Umrah is now open for ten months, [and with a lot of] offers and packages being pushed for the low seasons, it is now almost eight months of the year that the hotels are running a high occupancy,” El Sherbiny adds. Hotel development in Saudi Arabia is probably at its highest in Makkah. The city is clearing 75 small hotels from beside the Haram on Ibrahim El Khalil Street, and a number of new projects are now under construction. The largest of these developments is the new Zam Zam Tower development, a 1,240-residential suite property set to bring a Shariah-compliant form of timeshare to the city, to be managed by Accor. The French hotel company signed a management contract with the owners of Zam Zam Tower in October 2004. Zam Zam Tower will provide an Islamic alternative to the holiday ownership system. “It is the same principle as timeshare except there is only one property and there is no exchange system,” says Christophe Landais, regional director, Accor Middle East. “Accor is a company attracted by innovation, and we were impressed by the quality of the Munshaat development in the Holy city of Makkah. The Zam Zam Tower is a good project, well located and with excellent exposure.” The 1,240-unit property will offer luxury suites ranging from studios capable of accommodating four persons up to two-bedroom Royal suites suitable for families of six. Members will be able to purchase units of time under a system called Sokouk Al-Intifa’a. This will enable them to return to the same apartment each year, exchange for another time of year, let friends and family use, or invest with Accor and make a premium. A percentage of the total inventory will be available for Accor to market, with competitive hotel rates linked to market demands. Accor already has 1,000 rooms in Saudi Arabia and has had a presence in the country for the past five years. Future plans include a possible second venture with Munshaat Real Estate in Madinah. “Makkah is the fastest growing market in Saudi Arabia. A second property in Madinah would complete the circle,” Landais adds. Zam Zam Tower is located close to the Holy Mosque. It is part of the seven-tower Al Beit development, which will also include one independently managed hotel, and five residential towers. A shopping complex and convention centre are also under construction. Radisson SAS is also set to manage a property in Madinah — the Al Madinah Paradise Radisson SAS Resort, due to open in 2007. Located 7km from the Haram, the resort will target the religious tourism market, offering traditional, Arabic-style accommodation in landscaped gardens and will feature 212 guestrooms as well as 10 villas. West coast Over on the Red Sea coast of Jeddah, tourism development is also underway. The SCT recently signed a SR2.08 million (US $500,000) contract with an international consultancy firm to prepare a plan for tourism development projects in the area. The agreement aims at setting a long-term plan for tourism development on the Red Sea coast and islands having a total costal length of 1,800 km. This is the first phase of a project to establish tourist resorts on the Red Sea. Meanwhile, US hotel chain Rosewood has announced its third property in Saudi Arabia, the Corniche, A Rosewood Hotel, in Jeddah. Owned by Danat Al Corniche Co. Ltd., the 101-room property will open at the end of 2005. Radisson SAS, keeping up the pressure of its Saudi expansion plans, opened the Radisson SAS Royal Suite Hotel in Jeddah, featuring 57 luxury suites, in May. The one-, two- and three-bedroomed suites all have a unique style in interior decoration. The property is situated in the heart of the city, on the main highway to Madinah and is 15 minutes away from the King Abdul Aziz International Airport. More established hotels on the west coast are also enjoying a period of growth. The InterContinental Jeddah has seen business levels rise over the past year, following an 18-month renovation of the property. “Year-to-date, business is far better than last year, and we expect a very good summer on the Red Sea west coast,” says Erik Weinmann, director of sales & marketing at the hotel. Weinmann is confident that the new hotels set to open in Jeddah will have a positive impact on his business, as the city expands. “More and more openings will lead to increased competition, but will also create a positive demand growth. The Saudi government is pushing for tourism and the market will follow,” he says. Further tourism developments abound for the country, although most of them are targeted at the domestic market. In Al Khobar, on the east coast, the City Fanar project is under development. Built around a 300,000m² man-made lagoon, the mixed-used development will feature hotels, entertainment, shopping, dining and marinas. Al Khobar is a popular destination with the domestic market. “Our main market is Saudi Arabia, which is contributing 61% of room business, and after that other GCC countries, which contributes 15%. The UK market is growing, compared to previous years, by contributing 9%,” remarks general manager of Le Gulf Meridien, Al Khobar, Michael Nugent. Le Gulf Meridien, Al Khobar, has launched a program to promote the Eastern province as an attractive tourist destination within Saudi Arabia, as well as within other GCC countries. According to Mohamed Osman, director of sales and marketing, Le Gulf Meridien is now focusing more on local tourism and encouraging weekenders from other cities, such as Riyadh and Jeddah. To drive this forward, the hotel has appointed, a director of sales in Riyadh and a sales manager in Jeddah, which will help the hotel to secure a permanent exposure in both these important feeder markets. The Jeddah-based sales manager will also be in charge of promoting Le Gulf Meridien and the Eastern Province within other western region cities. Plans also exist to expand the Hajj terminal at the King Abdul Aziz International Airport in Jeddah. The terminal currently lacks the capacity to serve the growing number of Hajj pilgrims arriving by air each year. With its close proximity to the Mediterranean and Europe, and to the east, the GCC and Asia, there are further plans to develop aviation links, with Thai Airways and British Midland both set to open new markets for the Kingdom. In order to facilitate a growing number of domestic travellers, a new domestic airline is also under discussion. Saudi Arabian tourism may appear something of an enigma compared to the transparently commercial tourism markets of the west. However, there is no doubting that its cautious approach to tourism development appears to be working; with its two largest markets, religious tourism and business travellers, both set to show year on year growth. Hotels in its main markets may have every right to feel confident for the future, as Bahram Sepahi from Four Seasons remarks: “There is a great deal of enthusiasm in the hospitality sector for the work of the SCT and the strategic and sustainable growth of tourism that is likely to follow. “Makkah and Madinah continue to be at the centre of interest from the part of international hotel operators, especially with the governate’s plans to restructure the areas in the immediate vicinity of the holy mosques to allow for more high-end hotels and apartment buildings. “The steady growth in demand for hotel rooms in Saudi Arabia’s other major cities is liable to tempt developers into investing in mega mixed-use projects.”||**||

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code