Hilton bullish on Saudi growth, Red Sea project

Hilton plans to increase its Saudi properties from 10 to over 40 in the next five years, as the Kingdom shores up tourism and entertainment spending through major developments like NEOM and the Red Sea project, a senior executive told Argaam.

The hotel chain is eyeing openings in Riyadh, Jeddah and Makkah, as well as secondary cities like Jubail and Khobar among others, said Carlos Khneisser, Hilton’s VP of Development in MENA.

Hilton is optimistic on demand for hotels in secondary cities, mainly from families traveling across the country and business travelers, he said in an interview. “We believe that there are enough demand generators to keep these hotels busy all year-round.”

Moreover, secondary cities are underserved in terms of international branded hotels, also presenting an opportunity for expansion, he added.

Hilton is targeting four new properties in Saudi Arabia, set to open doors by 2021. Two of the properties will be in Jubail, while the other two will be in Khobar and King Abdullah Economic City.

The hotel operator is also eyeing expanding its footprint in cities like Jeddah and Makkah, Khneisser said.

“I believe we still have potential to grow in Jeddah, not only in the midscale but also in upper-scale and luxury segment. Makkah is our focus city when it comes to midscale segment.”

Meanwhile, a new Hilton hotel in the Saudi capital of Riyadh is at a “quite advanced” stage, and will open doors by the third quarter of this year, Khneisser said.

Tourism plans

Saudi Arabia has been working to boost its tourism and entertainment industries under the Vision 2030 economic reform plan, which seeks to double household spending on cultural and entertainment activities in the country from 2.9 to 6 percent.

Saudis currently spend over $20 billion on foreign tourism and recreation each year, Ahmad al-Khatib, head of the country’s General Entertainment Authority, recently said.

Major new developments set to boost tourism revenue include NEOM, a $500 billion megacity announced by Crown Prince Mohammed bin Salman last October. Another is the Red Sea project launched in August, a 30,000 square kilometer coastline tourism project that will develop 50 islands between the cities of Umluj and Al Wajh.

“They are planning to build around 20 resorts on those islands. It's still an unexplored area, and we would look forward to have a few resorts there,” Khneisser said.

When asked for further details on Hilton’s plans for the Red Sea project, he said that it was “still early to identify where we're going to put our hotels.”

“As soon as those locations develop more, masterplans are finished, investors know where they want to invest their money, then our role comes into play,” he added.

Middle East expansion

Around the region, Hilton is planning to triple its hotels in the Middle East from 41 to 120 in coming years.

In the United Arab Emirates, Hilton has 22 hotels operating and 23 more in the pipeline.

Elsewhere in the GCC, the brand is in “good shape” in Qatar, despite the ongoing rift with fellow Gulf nations.

“From a development perspective, we're still seeing business as usual and our hotels are still running as normal,” Khneisser said.

Meanwhile, Egypt is a key focus market in the MENA region, with Hilton signing three new hotels in the country this year. One of them is the Waldorf Astoria, set to open doors by end of this year.

Hilton also has a hotel in Maadi, Cairo, under construction, and another property on the Nile, taken over from an existing brand and currently under renovation.

While resorts on the Red Sea have been affected by declining tourism, particularly in the aftermath of an EgyptAir plane crash in 2016, business is better now, Khneisser noted.

“I believe now the resorts are recovering and business is getting back to nearly normal,” he said. 

Write to Jerusha Sequeira at jerusha.s@argaamnews.com