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Kingdom to rule in Africa and China

Kingdom Hotel Investments (KHI), the Dubai-based luxury hotel and resort acquisition and development company, will spend more than US$100 million of its own equity in the Chinese market over the next two years, Arabian Business can reveal.

Kingdom Hotel Investments (KHI), the Dubai-based luxury hotel and resort acquisition and development company, will spend more than US$100 million of its own equity in the Chinese market over the next two years, Arabian Business can reveal.

KHI, which is chaired by Prince Alwaleed bin Talal bin Abdulaziz Al Saud, plans major undertakings in the coming months in Africa, with an eye on the Chinese market, according to the firm's chief executive officer, Sarmad Zok.

“We have two projects there; one in the Shanghai area and the other in the Shenzhen area. Both are existing assets and we hope that before the year’s end we will be closing in on a transaction,” revealed Zok, who declined to provide the name of the targeted acquisitions as the company is still engaged in negotiations.

“We are, in addition to that, looking at a small existing hotel in Dubai. It will marry well with our existing Movenpick in Bur Dubai as serviced executive apartments. We will be closing that transaction in July.”

KHI is headquartered in Dubai and has 28 properties (7057 rooms) in its portfolio in 14 countries, managed and operated by Four Seasons Hotels, Fairmont Hotels and Movenpick Hotels. The company is aggressively expanding after floating 25% on the Dubai International Financial Exchange and the London Stock Exchange last March. The listing raised US$397 million and the offering was 14 times oversubscribed.

Going public is part of a plan to help the company grow faster as it branches out, according to Zok. The proceeds have been and are being used for new acquisitions and expansion and not the financing of existing assets that are under construction.

KHI has increased its stake in the Four Seasons Hotel in Damascus, acquired a 100% equity stake in a hotel in Mauritius (US$55 Million) and acquired a 100% ownership stake in the Karon beach hotel in Phuket (US$100 Million), which it is re-branding as a Movenpick.

Since going public the company has expanded its acquisition and development team significantly with offices in Johannesburg and Singapore. KHI’s investment target is to acquire six hotels per annum with Asia and Africa the prime markets. “South East Asia and Asia are markets that are prone to superior growth compared to mature Europe or North America in the forthcoming decade, and we will look to capture a share of that,” said Zok.

“Traditionally our markets have been Middle Eastern markets. This is really where we started but the dynamics of the Middle Eastern market are no different from the dynamics of other emerging markets in the world. As a company we have an established track record, a platform and a well-recognized diversified portfolio of high-quality assets in those markets. Our focus is on global emerging markets,” added Zok.

Today 50% of the company’s invested capital is in the Middle East, 27% is in Africa, 13% is in Europe and 10% is in Asia. Of the six acquisitions per annum targeted by KHI, four will be existing hotels.

KHI reported an increase of 179% in net yearly income to US$12.3 million up from last year’s figure of US$4.4 million. It realized revenue of US$58.8 million, an increase of 53% from US$38.4 million in 2004. KHI registered a gross profit of US$17.9 million in the year ending 2005, up 41% in comparison to the US$12.7 million reported in 2004.

There was a 133% increase in earnings per share to US$0.07 in 2005 up from US$0.03 in 2004. Revenue per available room is reported at US$81 for the year 2005, increased by 23% from the 2004 figure of US$66.

As Arabian Business went to press, KHI announced it had concluded a Memorandum of Understanding in Kampala, Uganda for the development of a hotel there. Prince Alwaleed is currently scouting for potential acquisitions on a 15-nation African tour.

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