Conservative confidence

Hoteliers in Saudi Arabia and Yemen are seeing a slow but sure increase in business, with occupancies up year-on-year and new international brands entering both markets, as Sarah Campbell discovers.
Conservative confidence
By Sarah Campbell
Fri 01 Jun 2007 12:00 AM

While most markets in the Middle East witnessed a dip in occupancy last year, Jeddah and Riyadh continued to enjoy further occupancy growth, according to reports from HVS International.

Meanwhile, hoteliers in Yemen also saw a moderate increase in business, bringing an air of confidence to hoteliers throughout the conservative republic.

We are keen on the environment, social sustainability and want to introduce new products into Saudi.

While both Saudi Arabia and Yemen may not field the astronomical hotel figures of places such as Dubai or Qatar, recent years have brought steady growth for their tourism industries.

Renewed efforts

HRH Prince Sultan bin Salman Al Saud, secretary general of the Supreme Commission for Tourism (SCT) in Saudi Arabia, outlined initiatives intended to spur domestic travel at the recent Arabian Hotel Investment Conference (AHIC) held in Dubai in May.

"We are keen on the environment, social sustainability and want to introduce new hotel products to enable domestic tourists to explore opportunities in the countryside," Prince Sultan says.

Prince Sultan also set out plans for the first two of five new tourism destinations on the Red Sea. In addition, there will be a new grading system for hotels that will be implemented next year.

Meanwhile, the Saudi Arabian delegation at last month's Arabian Travel Market is believed to have signed commercial deals worth more than US $5.3 million, while the kingdom's hotels, and Hajj and Umrah agents, all intensified efforts to win regional business.

Religious tourism

With Saudi Arabia already hosting nearly three million Muslim pilgrims a year between Hajj and the Umrah season, the country's hospitality industry has a solid foundation to build on.

According to government statistics, domestic trips are expected to grow by 4.9% annually to reach 1.5 million non-Umrah tourists, while Haj and Umrah visits will collectively see 7-8 million visitors in the next few years.


Visitation to Saudi Arabia originates from Muslim countries, according to HVS International's report, Saudi Arabia Country Snapshot. Data for the first three quarters of 2006 showed a 10% increase in visitor arrivals and 43% growth in room nights. Religious and business tourism accounted for more than 70% of that visitation.

Yemen is looking more like Dubai, Abu Dhabi and Sharm El Sheikh and this is wrong.

Naturally, therefore, a large amount of investment is being focused on the Mecca, Madinah and Jeddah triangle.

New hotels

Planned hotel development focuses on the kingdom's west coast and the Holy Cities. For example, Accor's flagship property for the country, the Zam Zam Grand Suites, is located in Mecca and celebrated its soft opening in September. Once completed, the Zam Zam will total 1200 keys.

Elsewhere, Corniche, Rosewood Hotel, Jeddah is set to open this summer, completing Rosewood's hat trick of hotels in the kingdom and catering primarily to the business market.

June 2008 will see the soft opening of the 142-room Park Hyatt Jeddah, the first boutique hotel in Saudi Arabia. As part of the development, Hyatt International will also be managing a marina, a large convention and banqueting area, and an upmarket spa and health club.

Meanwhile, Mövenpick is preparing to open the Mövenpick Hotel & Residence Hajar Tower, Makkah in 2008.

"Our hotel in Makkah will adhere to the basics and fundamentals of Islam, but will also be economically, socially, culturally and environmentally feasible, and we believe, an attractive accommodation option for our guests," says Adel Bibars, regional manager, Anwar Al Madinah Mövenpick, Madinah and Mövenpick Hotel & Residence Hajar Tower, Makkah.

"Saudi Arabia is an important destination for us, not only because of the relaxing of visa laws and the massive investment in infrastructure, but more importantly the vision of the government to develop tourism. We expect to see a growth in year-round religious tourism and an increase in the corporate and government segment.

"We averaged 63% occupancy last year across KSA and we expect to do similar figures this year. The Mövenpick Hotel Jeddah did very well with an average occupancy of 70%. The Madinah Mövenpick Hotel also had a good year with an average occupancy of 68% while our second Madinah property the Anwar Al Madinah Mövenpick Hotel performed equally well with 62%," Bibars explains.


Occupancy increase

Indeed, most existing hotels in Mecca, Madinah and Jeddah have all seen a growth in business: occupancy for Jeddah hit 64% in 2006.

"There has been a large increase in arrivals compared to last year. We have succeeded in developing our existing markets and we were able to open new markets as well. Our main markets are from the GCC, Egypt, Turkey, South Africa and the Far East. We were able to open new markets from Pakistan, India and North Africa," says Ibrahim Atwa, director of business development at the Makkah Hilton Hotel & Towers.

"There are lots of efforts being exerted by the government to increase tourist attractions in Saudi

Arabia to increase the number of visitors. Lots of infrastructure developments are taking place to support this direction," he adds.

"We have seen fast growth from the Iranian and Turkish markets over the last five years, and recently had six Iranian groups back-to-back. My hotel has 400 rooms daily from Iran. Also, Dianatt from Turkey has started to organise regular trips for Umrah and we are seeing increases from this market year-on-year," confirms Yasser El Sherbiny, director of sales, Sheraton Makkah Hotel & Towers.

While the emphasis for the religious visitor is on Mecca and Madinah, other parts of the country do benefit, either through extended stay tourists exploring beyond the Holy Cities, or with repeat visitors.

Riyadh

and east coast

Riyadh is the main destination for business travellers, and hotels there saw occupancies top 70% for 2006, according to HVS International. Average room rates jumped by $32 to make $142 and revPAR achieved $100.

Novotel Al Anoud is located in the heart of Riyadh and is scheduled to open by October 2007. The project belongs to the country's royal family and will donate its profits to the Princess Al Anoud Foundation charity.

Meanwhile, Holiday Inn Al Qasr will also open later this year, while 2008 will see openings for Park Inn, Tulip Inn and Mövenpick Hotel Riyadh.


On the east coast, further hotel openings are lined up, with Al Khobar set to see at least six more properties enter the market. These will include an InterContinental, Crowne Plaza, Park Inn, Mövenpick, and Sofitel Al Khobar.

"The eastern region - and [the rest of] Saudi Arabia - is enjoying growth and six more hotels will bring dynamism in this market, increasing competition," says Prashant Sharma, assistant director of sales and marketing, Le Gulf Meridien Al Khobar.

Le Gulf Meridien Al Khobar celebrated its twenty-fifth anniversary in 2006 with a bumper year in terms of both occupancy and yield. For 2007, occupancy has increased 9% while rates have shown a further growth of $17.

"So far, heavy demand from the commercial sectors has boosted the rate with increased requests for executive floor rooms and suites. Also this year, we have managed to sell our Le Meridien Villas on a long-term basis to companies. We have also noticed leisure groups visiting from the US and staying for three or four nights, which is a good sign for the region," Sharma says.

"Our main market is domestic, which contributes over 60% of room business, while the rest of the GCC market contributes more than 12%."

Yemen

Yemen received 544,000 tourists in 2006, of which the UAE contributed more than 50,000, a substantial growth compared to 2005 figures, according to statistics from Tourism Yemen.

"For the year 2007, we foresee a further growth of over 10%. Last year and the first quarter of 2007 saw a large number of arrivals, especially from EU countries and the US. This shows the tourist confidence that Yemen is no longer an unsafe place to travel," says Abdulla Kassim Mohammed, area manager-Dubai & Northern Emirates for national airline Yemenia.

According to Mohammed, Yemen has a lot to offer, especially to European tourists, as its capital Sana'a is on the UNESCO World Heritage list. Other attractions include Shibam Hadramawt, referred to as the Manhattan of the desert, with its tall mud-brick buildings. Meanwhile, the island of Socotra, in the Gulf of Aden, has been officially declared an UN nature reserve.

New developments

Last year saw the opening of Mövenpick Hotels & Resorts' five-star Mövenpick Hotel Sana'a, which has been instrumental in setting new standards for the hotel industry in the country's capital, according to Joe Abdel-Massih, director of sales & marketing, Mövenpick Hotel Sana'a.


"The size of the convention centre, which is the largest in the country, has encouraged the government to call for local and international meetings and conventions that they previously never thought they could hold," he says.

"There is now growing international interest in Yemen, too. In terms of both revenue and occupancy, our figures have doubled," he adds.

"There has been significant investment undertaken by the government and as a result many investors are starting to look at Sana'a as a serious opportunity. We are starting to see proposed projects such as tourism villages, hotel construction and even the lease of islands in the Red Sea for the creation of mega resorts," Abdel-Massih says.

"All those developments can only contribute to enhance the tourism image of Yemen and further its aims to become a tourist destination."

Elsewhere in the city, the Sheraton Sana'a Hotel has recently refurbished two floors of guest rooms and the lobby lounge. The property now offers Classic, Presidential and Executive rooms, as well as Junior Suites.

Last year also saw the entry of UAE real estate developer Tameer into Yemen. Tameer opened a new subsidiary in the country in July 2006 to oversee the firm's construction plans in Yemen.

"In the coastal city of Aden we intend to build several ‘mega sized' tourism developments. We envisage that within three years, our work in Yemen will be one of the biggest single projects that the country has ever experienced," says Omar Ayesh, president of Tameer Holdings.

Cultural appeal

Universal Touring Company in Yemen recently opened up a satellite office in Dubai, called Arabia Felix, in order to better promote holidays to the country.

The company has seen business to Yemen grow by 10% year-on-year, mainly from Italy, France, Germany, Belgium and Spain.

However, for the company's managing director, Marco Livadiotti, the mega developments of companies like Tameer are not a welcome addition to Yemen's tourism profile.

"Yemen is a cultural destination, a living museum and a special place, and the country has to invest in this, protecting the heritage, conserving the architecture and the monuments, and keeping the traditions alive. Until now, however, this has not been implemented and Yemen is looking more like Dubai, Abu Dhabi and Sharm El Sheikh, and this is wrong," he says. "Yemen is not, and never will be, a beach destination."

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