UAE hotel company Rotana sees huge potential in Saudi market: CEO

UAE's hotel management company Rotana remains optimistic about positive prospects for the hospitality sector in Saudi Arabia, as the Kingdom emerges as a leading hub of business and leisure travel. The demand for branded accommodation in Saudi Arabia is expected to increase multi-fold as it continues to open its doors to international investors, tourists, and religious pilgrims.

While the Kingdom is currently home to six Rotana hotels, four new hotels are set to open soon. In an exclusive interview with Argaam, Guy Hutchinson, Acting CEO, Rotana, discusses new opportunities and the latest trends in Saudi Arabia’s hospitality market.

Q: What is your outlook for Saudi Arabia’s, as well as the wider region’s hospitality sector in 2019?

A: Most of our markets in the region— including Abu Dhabi, Beirut, Manama, and Sharm El Sheikh—posted firm growth in occupancy, ADR, and RevPAR in the first two months of 2019. Reflecting the growing demand for branded accommodation in Saudi Arabia, Rotana hotels in Riyadh reported a 15 percent increase in occupancy and a 48 percent increase in RevPAR during this period. In addition, room nights coming from the Kingdom— which is one of our key feeder markets— have increased by 15 percent. 

Even though some markets reported slow growth in January and February, we remain optimistic about positive prospects for the hospitality sector given the upward trend in the performance of global markets as well as on the back of the promising transformation underway in the region.

Also read: Rotana to open ‘Centro Salama’ hotel in Jeddah next month

Q: With oil prices hovering near $60 a barrel, do you believe it is sufficient to trigger demand from tourists to visit the Kingdom?

A: As part of Saudi Arabia’s efforts to diversify its economy with the aim of reducing its dependence on hydrocarbon revenues, the country has identified the tourism sector as a key enabler of economic growth.

In line with the goals outlined in its ambitious roadmap for the future— the Saudi Vision 2030— the Kingdom has introduced a number of social and economic reforms, such as new tourist visas and the opening up of the entertainment sector. As a result, it has been witnessing a significant rise in tourist and corporate visitor footfalls.

In addition, the government has announced several tourism initiatives, including the $500 billion Red Sea coastline project, NEOM mega-city project, Al Qiddiya Entertainment City, Farasan Islands, and the 3,000-square-kilometre Amaala luxury destination project. With these projects becoming a reality, the Kingdom will emerge as a leading hub of business and leisure travel, and the demand for branded accommodation will increase multi-fold. Against the backdrop of these developments, the country’s hospitality market is poised to achieve a 13.5 percent compound annual growth rate (CAGR) by 2022.

Must see: UAE’s Rotana to operate 20 hotels in Saudi by 2030

Q: Which class of visitors is likely to pull the growth of the Saudi hospitality sector? Leisure, religious pilgrims, or business travelers?

A: Pilgrimage tourism has remained a key driver of overnight international visitation to the Kingdom and it is expected to see between 25 and 30 million religious’ tourists by 2025. With the ongoing tourism, infrastructure, and economic developments, the country will strengthen its standing as an attractive destination for both business and leisure travelers as well, thereby driving unprecedented growth in the hospitality sector.

Q: What does Rotana have planned for Saudi Arabia going forward?

A: With its vibrant society, thriving economy and booming tourism sector, Saudi Arabia has been and continues to be a leading growth market for Rotana. The Kingdom is home to six trading Rotana hotels under operation across three major cities.

Al Marwa Rayhaan by Rotana, Makkah, Rosh Rayhaan by Rotana, Centro Olaya and Centro Waha in capital Riyadh, and Centro Shaheen and Centro Salama in Jeddah have a combined inventory of 1,603 keys. Keen to capitalize on the emerging opportunity in the Kingdom’s hospitality sector, Rotana has planned a new line-up of four hotels in line with our long-term growth strategy.

Centro Corniche, Al Khobar, and Dana Rayhaan by Rotana, Dammam, are scheduled for opening in the first and second quarters of 2019 respectively, while Salama Arjaan by Rotana, Jeddah, and Centro Medina, Medina, will open their doors to guests in the second quarter of 2020. The upcoming properties will add a total of 1,018 keys to the company’s strong portfolio in the country.

Write to Sunil Kumar Singh at sunil.kumar@argaamplus.com