Cost-conscious Saudi travelers boost demand for budget hotels: Rotana COO

Budget-conscious travelers are driving demand for branded mid-market hotels in Saudi Arabia, as the outlook for the hospitality industry remains robust over the next three years, Rotana’s chief operation officer Guy Hutchinson told Argaam in an exclusive interview.

The UAE-based hospitality company will open five hotels in the Kingdom in coming years, adding 1,153 new rooms. This will take Rotana’s total number of keys in Saudi Arabia to 2,411.

“The new hotels will expand our footprint to other major cities such as Al Khobar, Dammam, and Medina,” Hutchinson said, adding Rotana plans to double its employee strength over the next three years.

Below are the excerpts from the interview.

Q: Where and when will Rotana open its five hotels in Saudi Arabia?

A: Saudi Arabia has been a key focus market for Rotana. We have a portfolio of 1,258 hotel keys currently under operation across our four properties in Riyadh, Jeddah, and Makkah.

With the opening of Dana Rayhaan by Rotana, Centro Olaya, Centro Corniche, Centro Salama in 2018 and the Centro Medina by 2020, we will add an additional 1,153 rooms and expand our footprint to other major cities in the country such as Al Khobar, Dammam, and Medina.

Q: Do you believe the Saudi market will grow more inclined to 3- and 4-star hotels than 5-star hotels?

A: We are seeing demand across various segments of lodging. Luxury and upscale properties continue to grow steadily; however, there is an increasing demand for branded mid-market hotels driven by growing numbers of budget-conscious guests. Not only leisure visitors but also corporate travelers, both domestic and international, are increasingly favoring budget accommodation, but there is not sufficient supply in the market.

To bridge the shortfall, Rotana has turned our focus on an affordable segment of the market with our “Centro by Rotana” brand. The brand has become a huge success among large corporate entities, small and medium business owners, and individual travelers.

Q: What is the biggest challenge for the hospitality industry in Saudi Arabia?

A: On the back of rapid economic growth and a strong government push for tourism development, the country has been witnessing a rise in tourist and corporate visitor footfall, and the demand for branded accommodation has increased multi-fold. While these offer an excellent opportunity, the market has become highly competitive with the entry of new brands and the expansion of existing players.

Nonetheless, as a homegrown brand, we better understand the needs of our customers in the region and this will give us a competitive edge in the Saudi hotel market.

Q: Which factors do you feel will drive growth in the hospitality sector in Saudi Arabia?

A: As part of its efforts to diversify the country’s economy, the Saudi government has identified tourism sector as a key enabler of economic growth. The Kingdom’s ambitious roadmaps for its future, such as the Saudi Vision 2030 and the National Transformation Program 2020, have accelerated the transformation of the sector. Furthermore, new initiatives such as $500 billion Red Sea coastline project and plans to issue tourist visas will trigger growth.

Q: What is your outlook for the Saudi hospitality industry for the next three years?

A: With the rising number of travelers from developing and emerging market countries and their yearning to travel to new destinations, the outlook for the Kingdom’s hospitality industry over the next three years remains robust. With ongoing social and economic reforms, the country will only strengthen its standing as an attractive destination for both business and leisure travelers.

Q: How many jobs is Rotana likely to create in the next three years in the Saudi hospitality industry?

A: We have currently more than 1,000 employees in Saudi Arabia alone. As we continue our expansion with a target of operating 100 hotels by 2020 and 5 properties currently under development in the Kingdom, we believe that our employee strength will grow double over the next three years.