Owner Update: Saudi Hotels & Resorts Company

Aug 6, 2013

Al Bader says Sharaco has an edge in KSA?s religious tourism market.

Badr Al Bader, chief executive officer of Saudi Hotels & Resorts Company, believes the company’s owner and operator model works in the competitive Saudi Arabian market because of its unique understanding of traditional Arabian hospitality

When Badr Al Bader joined Saudi Hotels & Resorts Company (Sharaco) as CEO in 2012, he brought with him a fresh perspective to “reignite growth”, particularly of its in-house managed hotel brand Makarim Hospitality Group, launched in 2000.

In addition, Sharaco has owned and operated hotels in Saudi Arabia since 1982. The company currently has 11 hotels in the country, with two more in the pipeline — one each in Medina and Riyadh.

“It’s a company that is highly profitable; financially it is doing really well. It has an able team, it has a good number of hotels, yet the shareholders think the company can do much better given the potential in the market and the financial strength of the company,” he tells Hotelier.

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The company aims to capitalise on its position as a Saudi Arabian operator, which has proved vital to its success thus far, especially in the religious tourism market. “We have an edge in the Hajj market, the religious tourism market,” explains Al Bader.

“We have been there since 1982, through the Makarim Ajyad, the first five-star hotel in Makkah, and now we have grown from one to five hotels in Makkah,” he adds.

Al Bader points to a distinctive fact about the country’s religious tourism market when explaining Sharaco’s success. The ‘demand generators’, as he explains, are not the pilgrims themselves, but travel agents.

“The markets in Mecca and Medina are dominated by travel agents who arrange travels rather than individuals themselves, and we have very good access and a very good reputation with them. So that results in very good financial performance for our hotels and for our owners,” he says.

Similarly, Al Bader insists the Makarim brand is strong with the local market in other Saudi Arabian cities as well. “We can say that we are on par with the other players when it comes to local travellers. The local market there knows us very well and trusts us. Makarim stands for Arabian hospitality and resonates very well with our clientele,” he says.

However, he admits the hotels don’t fare the same with international tourists who visit KSA.
“I wouldn’t say we are as strong right now with the international markets or other hotels that cater to people coming from western countries who have not heard our name before. That’s one area that we need to work on. But with the local market, we do really well,” says Al Bader.

Strategy for Growth
Following the company’s success within its home market, Al Bader has no plans of expanding Sharaco’s activities to other countries just yet.

With at least two more hotels under development at the moment and several more in the planning stage, Al Bader intends to focus on the Saudi Arabian market and build on Sharaco’s strength in the country.

“We are one of the few companies in Saudi Arabia with almost all of the management who are Saudi locals. Many of them have grown with the company. Many of our shareholders have been with our company for so long, even though we are publicly listed. So from a stability point of view, we are on very stable, very solid ground,” states Al Bader.

“We have a clear-cut strategy that requires us to focus on Saudi Arabia for the next few years and we will not diverge from this strategy. We will build our base, build our strength, and at the right time we will look opportunistically at some of the other GCC markets,” he adds.

However, the company is actively exploring new areas of growth in the country in the form of mid-market hotels, a segment that is underdeveloped in Saudi Arabia, and particularly the religious tourism market in the country.

Bader explains: “Most of our hotels in Makkah are five-star, we have a few that are four-star, but still they are close.

“As part of the next phase of our growth, we are exploring three-star and four-star properties in secondary cities. We don’t have anything definite yet. But it’s an attractive segment, it’s underserved and it’s high growth,” he asserts.

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