Divesting non-profitable assets boosts profitability: BAAN Holding

Fahad Al Obailan, CEO of BAAN Holding Group

BAAN Holding Group Co. divested from several hotels and entertainment centers with ongoing losses as part of its strategy to eliminate non-profitable income sources, CEO Fahad Al-Obailan told Argaam.

While this move may temporarily affect revenues in the short term, it is expected to positively impact future profitability.

In his interview, Al-Obailan mentioned that the launch of the catering and provisioning business as a new arm of the group bolstered revenue growth in 2024, and it is one of the promising segments within the group.

The group is focusing on expanding this business as part of its plan to diversify income sources and reduce the impact of seasonality. Despite its recent launch, the demand for the services has been steadily increasing.

Al-Obailan also indicated that revenue increased by 5% quarter-on-quarter (QoQ) in the fourth quarter, driven by growth in the catering segment due to higher occupancy rates in its projects, as well as improvements in hotel occupancy rates in Riyadh.

However, the entertainment segment was negatively affected by a decline in visitor numbers and average spending due to the seasonality of the activity and increased competition in Riyadh and Jeddah.

The net profit of SAR 5.2 million for 2024 was attributed to the implementation of the strategic transformation plan, which aims to enhance operational efficiency, maximize returns, and diversify income sources.

He pointed out that direct costs and general expenses decreased as a result of improved operational efficiency, as well as the activation of the organizational structure.

Additionally, the group reopened entertainment centers in Riyadh and Jeddah after redevelopment and launched a global-themed facility named "PlayoCity" in partnership with Hasbro Co., as well as another center in the UAE in collaboration with Mattel Co.

The group also received a letter of award for a second project in the catering segment during Q1 of 2025, marking a strong growth boost for this field.

Al-Obailan emphasized that the hotel segment is a key pillar for the group. The company has extensive experience in the segment and is one of the largest hotel operators in the Kingdom and the region, with strategic partnerships with major global companies.

The CEO stated that this segment directly contributes to achieving the objectives of Saudi Vision 2030 by supporting tourism, increasing visitor and Umrah numbers, and boosting activities and events in the major cities.

He highlighted that the group’s operations are affected by the seasonality of the entertainment and hotel segments and reiterated that the group is continuing to implement its transformation plan to improve operational efficiency and expand income sources to mitigate the impact of seasonality on its core activities.

According to data available with Argaam, BAAN Holding (formerly Abdulmohsen Al-Hokair Group for Tourism and Development Co.) achieved profits of SAR 5.2 million by the end of 2024, compared to a loss of SAR 89.8 million in 2023.