Alhokair Group outlines reform steps to return to profitability

Logo of Abdulmohsen Alhokair Group for Tourism and Development

Abdulmohsen Alhokair Group for Tourism and Development (Alhokair Group) outlined its development steps that aimed to amortize the accumulated losses, help company return to profitability, and continue the implementation of its strategy.

The group concurrently seeks to improve the pace of business in the hotels and entertainment sectors.

The group intends to implement these steps and complete the execution of its business plans in conformity with its approved strategy through a number of steps.

This first step aims to keep pace with the market developments and trends. This includes business development, innovative activities, entertainment ideas appropriate for different age groups, and, improving the main hotel portfolio.

Secondly, the group plans to restructure the company's sectors to improve efficiency. This can be implemented through potential acquisitions of hotel assets leased by the group, which will help reduce operating costs and, consequently, lead to a stronger financial position.

In addition, Alhokair Group plans investment initiatives in human capital by attracting competencies, training employees, automating processes, continuing to build strategic partnerships with international entities, establishing combined departments and rationalizing expenditures by improving and developing operational standards of the group’s daily management.

Thirdly, the group will continue to evaluate its projects and exit from non-viable projects that result in operating losses. The group periodically updates and assesses the performance of its projects across various segments in line with market requirements to maintain quality, competitiveness and profitability.

Moreover, the group is keen to study exit options for non-feasible branches to maintain the operating profits.

As stated in its most recent board of directors’ report, Alhokair Group manages 31 hotels and resorts, 78 entertainment centers, nine commercial centers and 46 restaurants in Saudi Arabia, UAE and Egypt, in addition to its joint investments in hospitality and entertainment sector in six local companies.

Alhokair Group was founded in 1978 and listed on Tadawul in 2014.

With the beginning of 2020 and the outbreak of COVID-19, the group's business was greatly affected, as occupancy rates decreased and operations were suspended in all its entertainment centers in the Kingdom, starting from March 15, to June 20, 2020.

The group’s accumulated losses by the end of 2020 amounted to about SAR 302 million which is 55% of its capital. This was due to the negative impact of the pandemic consequences and the precautionary measures that included suspension of all flights and Umrahs, ban on holding events and obligation of social distancing in public activities and facilities. All these factors have badly affected the hospitality and entertainment sector.

In 2021, hotel and tourism sectors partially operated while the other sectors returned to total operation with the end of the precautionary measures, quarantine requirements and the restrictions imposed for entering the Kingdom. This allowed the group to resume international travel and carry out tourism and entertainment activities. However, and despite all the aforementioned developments, the hotel and entertainment sector companies were still suffering of financial setbacks that resulted from the pandemic repercussions, the tourism developed stated.

The Kingdom’s hospitality and entertainment market continued to recover, supported by the recent positive developments, including launch of tourist visas and Gulf residential visas. Moreover, the developments included unprecedented season of entertainment events, backed by hosting international conferences and exhibitions across various sectors and activities, as well as the return of the Umrah and Hajj seasons during the year.

Alhokair Group announced, on Nov. 17, amortization of its accumulated losses in full, following a capital reduction by SAR 335 million to SAR 315 million.

The group recorded revenues of SAR 176.5 million and a net profit of more than SAR 12 million in Q3 2022, with a profit growth rate of 96% year-on-year.

Alhokair Group announced by mid-September, signing two contracts for establishing and operating international brands “PlayOCity by Hasbro” and “Cocomelon” of SAR 49.2 million and SAR 44.7 million respectively; indicating that the group owns exclusive rights for both brands.