20 January 2016
JEDDAH: With the development of economic cities (ECs) occupying a pivotal position in the Saudi economy, the role assumed by the private sector in sharing major part of the work has become all the more important.
In fact, the objective of ECs is to grow the national economy and the private sector is developing each city, which will serve as an anchor and a growth engine for the city, around which other businesses will be located, says Bader bin Hamoud Al-Bader, CEO of Dur Hospitality Co.
"And these businesses and industrial sectors will be the demand generators for the hospitality sector developments to be located in these cities," Al-Bader told Arab News in an interview, adding that Dur currently has a project with Knowledge Economic City in a joint venture project to develop 200 key hospitality development projects.
The text of the interview:Q: What future do you see for the hospitality sector and how much worth is this sector in the Kingdom?
A: The hospitality sector in Saudi Arabia is significantly booming with 108 upcoming four- to five- star hotel projects featuring 23,000 rooms, placing the Kingdom among the world's top 10 countries for hotel projects under development. This industry is expected to continue its growth, in light of the efforts exerted by the Saudi Commission for Tourism and National Heritage (SCTNH) to make tourism a unique industry in the Kingdom by developing tourism, as well as archaeological and heritage sites for attracting internal and external travelers to the Kingdom. This is in addition to the government's heavy investment in improving transport infrastructure in major cities to attract more business tourists and increase the flow of domestic tourists. Thus, hospitality is a vital and productive sector that contributes to the diversity of the national economy, as per the strategy adopted by the Saudi government. Accordingly came Dur Hospitality's renewed vision and updated investment inclinations that focus on developing the hospitality industry with both its hotel and residential sectors, especially economy hotels. There is considerable potential for the economy hotel segment, especially in emerging cities such as Tabuk, Jubail and Yanbu where we have already started developing three- to four-star hotels to tend to the need of the middle income sector that is significantly growing.Q: Is the Saudi hospitality sector attracting foreign investment?
A: While we don't have enough data on foreign investment in the hospitality sector, we can say generally that the Kingdom attracts the third largest foreign direct investment (FDI) flows in Asia after Turkey and the UAE. We can also confirm from our experience at Dur with international hotel operators and other hospitality brands that foreign investors are looking to enter the Saudi market. This is especially so considering the positive outlook of the economy and the huge infrastructure projects under development across the Kingdom. They have been looking for the perfect local partner with extensive hotel operation and development experience. Accordingly, we have completed this year the signing of the Master Development Agreement with the Intercontinental Hotels Group (IHG), in addition to our long strategic partnership with Marriott International.Q: Will the falling oil prices impact hospitality sector projects in Saudi Arabia?
A: While it is prudent to note that the falling price of oil may result in marginal decreases in domestic hotel demand in the Kingdom, we anticipate that any negative effect will be offset by many positive factors, including the expected tourism growth due to increasing international demand. Expectations are high as international air carriers are willing to lower their airfares considering the drop in oil prices. Also, internal tourism is expected to develop greatly with the completion of the huge infrastructure and transportation projects in the Kingdom, which will facilitate the transportation between major cities and touristic resorts. And of course the increasing number of religious visitors is expected to reach 30 million in the coming five years, which will surely have a positive impact on tourism in the Kingdom.Q: Does the hospitality sector create jobs for Saudis?
A: The tourism sector in all its subsectors generates numerous jobs for jobseekers in Saudi Arabia. The GCTA estimates that the number of direct jobs in key tourism sectors in the Kingdom rose by 5.9 percent to 794.9 K in 2014, compared to the preceding year's direct jobs of 750.9 K. Accommodation alone is responsible for almost 14 percent of this number. GCTA also estimates that the tourism sector is expected to create around 1.4 million direct and indirect jobs in 2017, 1.8 million in 2020 and 2 million in 2025. However Saudi nationals constitute only 27.4 percent of the tourism industry professionals, according to the GCTA 2014 report. And despite the huge efforts by the industry leaders to attract more Saudis to this vital sector, we still encounter challenges and obstacles that we hope to overcome in the future. As for our strategy in 2016, we are hoping to reach 35 percent Saudization across our company properties.Q: What projects Dur Hospitality has in the holy cities of Makkah and Madinah and what percentage of the hospitality investment is in these cities?
A: We operate Makarem, our own spiritual brand, specialized in serving the visitor of the two holy cities of Makkah and Madinah. Makarem Ajyad Makkah is already established, while the Madinah city project is in the pipeline. Our hospitality investment in the holy cities is about 25 percent of total properties. Q: With Dur Hospitality investing in creating Makarem brand, could you tell us whether this is a successful brand?
A: Makarem, Dur Hospitality's hotel brand, delivers specialized hospitality services dedicated to the holy cities of Makkah and Madinah. Makarem has proved throughout the years that no one can compete with their local expertise and this is our benchmark.Q: Dur Hospitality believes in solid and prosperous partnerships. How do your partnerships work?
A: Partnerships lie at the heart of our business; we aspire for key partnerships in everything we do and we commit to adopting the highest standards of service and quality. This has ensured the success of these partnerships. We have some partnerships in potential projects in the pipeline such as our new development in Madinah city in addition to other projects throughout the Kingdom in which they are all solid and successful.Q.What is the total investment of Dur Hospitality in various projects across the Kingdom?
A: SR1.8 billion.Q. In what way does Dur Hospitality support the future of the hospitality industry?
A: We are constantly seeking to participate in developing the hospitality industry and improving its services by providing excellent quality hospitality services that are elevated to the status of our families and guests in the Kingdom. Thus, we will be investing SR1.5 billion in developing 14 new hotels, in major cities and upcoming cities such as Jubail and Tabuk to achieve a planned portfolio of 20 hotels and six residential properties by 2023.Q. Will the creation of economic cities boost the Kingdom's hospitality sector?
A: The objective of economic cities (ECs) is to grow the national economy and raise the standard of living for Saudis by enhancing the competitiveness of the economy, creating new jobs, improving Saudis' skill levels, developing regions and diversifying the economy. The private sector is developing each city around at least one globally competitive cluster or industry, which will serve as an anchor and a growth engine for the city, around which other businesses will be located. These businesses and industrial sectors will be the demand generators for the hospitality sector developments to be located in these cities. Dur currently has a project with Knowledge Economic City in a joint venture project to develop 200 key hospitality development projects in Madinah city for a total investment of SR150 million.
© Arab News 2016