The kingdom holds it own

Another KSA-based company keen to make an impact on the country, no doubt in preparation for the increasing presence of international brands coming up, is Elaf Group of Companies, which comprises Elaf Hotels, Elaf Hajj & Umrah and Elaf Travel and Tourism.

“We have just completed our roadmap for the coming five years: we are planning to triple our capacity in terms of rooms under management; the number of pilgrims we are serving; the number of customers we are serving in the outbound business; and to expand our business outside of Makkah Madinah through developing in Jeddah,” reveals Elaf deputy chief executive  Tarik Nabulsi. The group’s first hotel outside Mecca, the Elaf Jeddah Red Sea Mall, is set to open its doors in July this year.

“So far we have specialised in Umrah and Hajj hotels, taking care of religious tourism in Makkah, but this year we are getting out of Makkah and looking to Jeddah with our first city hotel,” says Nabulsi.

“We have expanded into city hotels because we felt there was a big demand for this kind of product in Jeddah and not enough supply,” he adds.

For those based outside of KSA, the opportunities are just as strong.

Hilton Hotels vice president development Middle East Elie Younes believes the KSA market, where Hilton will launch the region’s first Garden Inn branded property in Riyadh this year, is resilient.

“Saudi Arabia is definitely a sufficient market — it is more recession-proof than others,” he says.

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Meanwhile, Accor Hospitality chief development officer Christian Karaoglanian sees “great opportunities” for both an Ibis country-wide network targeting corporate clientele and luxury Sofitel hotels in Riyadh and Jeddah, starting with the opening of Sofitel Al Khobar by the end of this year. And development for the country’s most luxurious hotel to date is already underway, with Raffles Hotels and Resorts set to manage an all-suite property — with three members of staff to a suite — in the Abraj Al Bait Complex being developed by Saudi Binladin Corporation.

Fairmont Raffles Hotels International (FRHI) chief operating officer Chris Cahill says: “Raffles Makkah Palace will be Raffles Hotels & Resorts’ second property in the Middle East.

“The growth of Raffles’ footprint to Makkah will also see FRHI operate as a group in the Holy city, as Raffles Makkah Palace will be located adjacent to The Makkah Clock Royal Tower, A Fairmont Hotel, at the Abraj Al Bait Complex — part of the King Abdal Aziz Endowment Project with a mandate to upgrade the precincts of the two Holy Mosques.”

The inside view

While the outside opinion is that business is booming in Saudi Arabia, do those actually working in the country’s hotels agree?

The general manager of Four Seasons Hotel Riyadh at Kingdom Centre, Rami Z. Sayess, says 2008 was a record year for the hotel with 30% growth and that despite the downturn, 2009 looks like another record year.

“We have not really been affected; on the contrary a lot of meeting planners have shifted their events to Saudi Arabia. A lot of financial institutions specifically are going on a weekly or monthly basis to Riyadh in particular because this is an area where they can find people interested in doing business still,” observes Sayess.

While the corporate market, which accounts for 80% of the business is still strong, Sayess business has also been boosted by the fact that women can now apply for visas to travel to Saudi Arabia unaccompanied.

“Another area we have been working on is honeymoon packages, as Saudi Arabia has limited options for this. It has been growing very successfully,” says Sayess, adding that the hotel has also developed a very profitable outside catering business.

Now, he says, the focus has turned to offering activities for children.

“The idea was to get the children to make the decisions; if they want to go to a place they are going to end up there,” he says.

Sayess explains that all of these initiatives are aimed at reinventing the hotel to ensure that it is constantly pleasing its repeat business, which stands at about 45% for rooms and 60% for F&B.

“The challenge in Riyadh is lack of  rooms; there is not enough supply in the deluxe category,” says Sayess.
“One of the things we are going to do is add 12% of our inventory in the next 18 months.”

The renovation will be performed in stages so the hotel will not close, he says, with room numbers increasing from 249 to 278, in-room technology being upgraded and a new-look meetings facilities.

“This is actually a great time to reinvest and be ready before new competition comes into the market so we will be ahead of the game,” says Sayess.

The other luxury hotel located in Riyadh, Al Faisaliah Hotel, A Rosewood Hotel, is also undergoing a multi-million dollar expansion scheduled to open in 2010. It will include a new wing of 106 luxury rooms and suites, a new Mediterranean dining restaurant and a ladies-only spa with 12 treatment rooms.