Saudi Arabia has earmarked tourism sector as a key driver for growth under its Vision 2030 plan. The Kingdom aims to attract 1.5 million tourists by 2020 and increase revenue from tourism to 18 percent in the next 14 years.
As the hospitality sector continues to grow, driven by rising demand from religious, business and leisure tourists, Swiss-Belhotel International, a global hospitality management chain, has set an objective to have 15 percent of its total portfolio of hotels in the GCC in Saudi Arabia.
In an interview with Argaam, Laurent A. Voivenel, Senior Vice President, Operations and Development for the Middle East, Africa and India, Swiss-Belhotel International, said the company is exploring opportunities in mega projects such as NEOM, AlUla and Red Sea.
Excerpts from the interview
Q: How many hotels do you currently operate in Saudi Arabia?
A: Saudi Arabia is a key development market for Swiss-Belhotel International, and we will debut this year in the Holy city of Makkah with the expected opening of a 525-room 4-star Swiss-Belhotel Al Aziziya Makkah in Q4 of 2019. Some of the other projects in progress are Swiss-Belboutique Tahlia Riyadh, a deluxe 4-star hotel featuring 60 rooms; Swiss-Belhotel Riyadh, a 4-star hotel featuring 112 rooms; Swiss-Belhotel and Suites Jazan, a 4-star boasting 210 keys and Swiss-Belhotel Al Khobar, a 4-star featuring 99 keys. Our expansion in Saudi Arabia, like the rest of the region, demonstrates the confidence of owners in the strength of our brands.
Q: What are you expansion plans from now until 2020?
A: The Kingdom is offering remarkable opportunities for the hospitality industry at the moment and we are very eager to capitalise on those with an ambitious expansion strategy. Our goal is to have 15 percent of our total portfolio of hotels in the GCC in Saudi Arabia and we hope to achieve it with a number of exciting projects under negotiation in various parts of the Kingdom.
Q: Are you in talks with investors to operate hotels in mega-projects such as NEOM, AlUla and Red Sea?
A: We are definitely exploring opportunities to expand our presence in the Kingdom and areas such as NEOM, AlUla and Red Sea are no doubt on our radar. Swiss-Belhotel International is a globally successful company and well equipped to meet the needs of the Saudi hotel sector in accordance with the highest standards. With 14 well-established brands, we are able to cover every segment of the market. This diversity of brands allows owners the flexibility to pick the right fit for their property.
Q: Do you expect mid-scale hotels to be more popular than 5-star hotels?
A: As tourism becomes a major driver of the economy with its huge employment-generating potential, Saudi Arabia has launched major initiatives to stimulate the travel and tourism industry. However, like the rest of the region, it is a market that is currently under supplied in terms of quality mid-scale hotels. The 3- and 4-star segment is, therefore, projected to show strong growth in the near future and we are keen to take advantage of this massive opportunity.
For the first time we have introduced brands such as Swiss-Belsuites, Swiss-Belboutique and Swiss-Belinn in the Arabian Peninsula that we believe are ideal fits for the Saudi market.
Q: Are you witnessing decline in room rates?
A: Room rates are no doubt under pressure in the Kingdom currently due to the growing supply in the market. However, it is going to be a temporary phase considering the long-term investments being made in tourism and hospitality as part of the Vision 2030. The market will stabilise once the projects come on line.
Q: Which factors will drive growth in Saudi hospitality sector?
A: Investment in major infrastructure projects such as expansion of existing airports, Haramain High Speed Rail line, new airport in Jeddah, increased capacity of Holy Mosques, development of a number of new hotels and resorts, significant investment in family entertainment and other recreational parks, new leisure and cultural activities, preservation of heritage sites, introduction of “Umrah Plus” Visa, tourism skills training for over 30,000 Saudi citizens, large and fast growing young population as well as a competitive and open business environment will certainly tremendously boost tourism.
The Saudi 2030 Vision recognises the role religious tourism can play in diversifying the economy with religious pilgrims currently contributing 2-3 percent of Saudi’s GDP. Therefore, there are plans to roughly double the capacity to accommodate both Umrah and Hajj visitors to around 15 million and five million, respectively, by 2020. In addition to massive development of hotels, the Saudi government is investing in major transport infrastructure to grow tourism. It is also doing significant investment in large-scale leisure, culture, experiential and entertainment projects.
Q: What is your outlook for the Saudi hospitality industry?
A: The outlook for tourism in Saudi Arabia is very positive with strong growth forecast. In addition to a solid domestic market, international tourism receipts are forecast to grow by 5.8 percent per year until 2022. The goals that have been set are no doubt challenging but achievable given the strategy outlined to reach those.
Write to Parag Deulgaonkar at parag.d@argaamplus.com
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