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Unlocking tourism investment opportunities in the Middle East and North Africa

Written by editor

The kingdom of Saudi Arabia is placing an increasing focus on developing its tourism market in a targeted and structured manner, as it seeks to diversify away from oil.

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The kingdom of Saudi Arabia is placing an increasing focus on developing its tourism market in a targeted and structured manner, as it seeks to diversify away from oil. There is significant investment being undertaken in tourism infrastructure, including airport expansions and high-speed rail lines, as well as government-financed training programs and public-private partnerships, while visa procedures have been eased for non-religious and business visitors.

As part of the focus on “Unlocking Investment Opportunities in the Middle East and North Africa” at Arabian Hotel Investment Conference (AHIC) 2010, the participants will be discussing opportunities for hotel investment in the kingdom of Saudi Arabia.

Furthermore, being home to two of Islam’s holiest cities, Al Madinah and Makkah, which attracts millions of Muslims each year for hajj, the world’s largest annual pilgrimage, the hotel market is underpinned by Islamic tourism. There is also a high rate of domestic tourism, and the government has put in place initiatives to increase the number of Saudi’s that holiday within the kingdom.

This focus means that, according to a recent report by Business Monitor International, tourist arrivals to the kingdom are forecast to grow by 5 percent year on year to 12.91 million in 2010, having remained steady in 2009, at just over 12 million. Year on year, arrivals per annum is expected to average 6.5 percent growth through to the end of 2014.

A report in March 2009 by the World Travel & Tourism Council, forecast that in 2009 the travel and tourism sector was expected to generate US$27.2 billion (SAE 102.0 billion) of economic activity, equivalent to 7.2 percent of total Gross Domestic Product (GDP), and this is set to rise to 9.2 percent (SAE 293.4 billion or US$78.4 billion) by 2019. Direct industry employment was expected to rise from 7.3 percent of total employment in the kingdom in 2009 to 9.4 percent, equating to around 922,000 jobs by 2019.

The potential is illustrated by government plans, announced in February 2010, to build a US$13 billion “tourist city” in Al-Oqair, just south of Al-Khobar on the kingdom’s eastern coast, and on the Red Sea coast, the government has identified sites for development in Tabuk, Yanbu, Makkah, Asir, and Jizan provinces. The Saudi Commission for Tourism and Antiquities (SCTA) has stated that the planned Red Sea resorts would lead to a total of 557,000 hotel rooms being brought online, creating 413,000 jobs in the process.

A number of major international brands are already expanding their presence in Saudi Arabia. The Rezidor Hotel Group has already opened six hotels in the Kingdom, in Jeddah, Riyadh, Yanbu, Al Madinah, and Al Khobar, totalling over 1,323 rooms, and has a further four hotels, with over 1,000 combined rooms under development, across three different locations.

Kurt Ritter, president and CEO of The Rezidor Hotel Group, commented:
“Saudi Arabia is a hugely important market for us, and in 2009, we were delighted to open a further two developments in the country. The key aspect for us is the diversity of the market, allowing us to introduce different brands into the Kingdom, which include Radisson Blu and Park Inn at the moment, with a particular focus on serving religious and cultural visitors. I have no doubt that the opportunities will keep growing, which is why we have a number of additional hotels in the pipeline.”

One of the world’s largest hotel companies, Wyndham Hotel Group, is also expanding its presence in the region. In November 2009, the hotel group signed an agreement for the first Wyndham®-branded hotel in the Middle East, the Wyndham Riyadh located in Saudi Arabia. That property will join the company’s growing portfolio of 28 hotels already operational in the Middle East, including Ramada Worldwide’s largest hotel, the 998-room hotel in the holy city of Makkah.

Eric Danziger, president and CEO of Wyndham Hotel Group, commented:
“The Middle East plays a significant role in Wyndham Hotel Group’s global growth strategy. We are so pleased to already have a significant presence in the Kingdom of Saudi Arabia and numerous properties throughout the region. We have focused our efforts in the market, and in the last year, we announced some of our newest developments including the 299-room Ramada®Plaza Kuwait hotel and the 183-room Ramada Hotel and Suites Amman hotel. We also celebrated the signing of an agreement for the Ramada Encore Doha hotel, a first in the Middle East for the brand.”

Kurt Ritter and Eric Danziger will be speaking on the “Leaders” Panel – Global and MENA Hotel Investment Opportunities at AHIC 2010 (Day 2, Sunday, May 2, 2010)

Jonathan Worsley, chairman of Bench Events which co-organizes AHIC, commented:
“The hotel investment market in Saudi Arabia is extremely exciting, with a need for quality product, ranging from high-end luxury resorts to mid-market and budget hotel developments. The government is working hard to put in place measured tourism expansion plans, but it is important that investors understand what opportunities are there and how they are accessed, and our line-up of speakers will be able to offer significant insight on that front.”

The Saudi Commission for Tourism and Antiquities (SCTA), the national authority responsible for the planning and development of domestic tourism, is also leading government efforts to promote more inbound travel and will be represented at AHIC by Dr Salah K AlBukkayet, Vice President – Investment.

Platinum sponsors: Ministry of Tourism Brazil, The Rezidor Hotel Group and Wyndham Hotel Group

Emerald sponsors: The Address Hotels and Resorts, Hilton Worldwide, IHG, Jones Lang LaSalle Hotels, Jumeirah Group, Moroccan Tourism Development Agency (SMIT)

Gold sponsors: Accor Hospitality, Anantara Hotels, Resorts & Spas, Bell Pottinger, Corinthia Hotels, Expedia, Golden Tulip Hotels & Resorts, Hamilton Hotel Partners, Hodema Consulting Services, Horwath HTL, Kempinski Hotels & Shaza Hotels, Langham Hotels International, Molinaro Koger, Rotana, Schletterer Wellness and SPA design, Siemens, Starwood Hotels & Resorts Worldwide, TRI Hospitality Consulting, Viceroy Hotel Group, WATG

The focus for the Arabian Hotel Investment Conference 2010, taking place from May 1-3, 2010, is “Unlocking Investment Opportunities in the Middle East and North Africa,” and the event brings together over 500 of the top hotel investment industry professionals through an interactive program that includes panels, breakfast briefings, and breakout sessions.

The debates will be led by a selection of industry leaders, including:

• HE Sheikh Mubarak Abdulla Al Mubarak Al Sabah, chairman of Action Hotels
• HE Saif Mohammed Al Hajeri, chairman of Abu Dhabi National Hotels
• HE Dr. Rajiha Abdul Ameer Ali, minister of tourism, Sultanate of Oman
• Peter Baumgartner, chief commercial officer of Etihad Airways
• Gerald Lawless, executive chairman of Jumeirah Group
• Kurt Ritter, president and chief executive officer of The Rezidor Hotel Group
• Mark Wynne-Smith, CEO EMEA of Jones Lang LaSalle Hotels
• Sarmad Zok, chief executive officer of Kingdom Hotel Investments

The AHIC 2010 Leadership Award will also be presented to Sheikh Sultan Bin Tahnoon Al Nahyan, Chairman of the Abu Dhabi Tourism Authority and Chairman of TDIC.

For more information please contact: Alisdair Haythornthwaite, phone: +971 56 690 1725, email: [email protected] , or Rosemary Youssef, phone: +971 50 354 8805, email: [email protected] .

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