Saudi tourism operator says will focus on expanding its online businesses
Al Tayyar Travel Group Holding will focus on expanding its online businesses as the Saudi Arabian tourism operator seeks to diversify revenue sources.
The company has been focusing on finding new revenue and profit streams since the end of a major government contract to provide travel services for Saudi students last year, which alone was responsible for nearly a third of total bookings.
The travel group’s stock extended gains on Monday after Bloomberg News reported that Uber Technologies is in advanced discussions to buy Dubai-based ride-hailing service Careem Networks, a company in which Al Tayyar invested in back in 2014. Analysts at Arqaam Capital estimate the Saudi company owns almost 15 percent in Careem.
“What we’ve announced as part of our transformation is that our stake in Careem” and other businesses are part of the investment portfolio, CEO Abdullah Al Dawood said in an interview in Riyadh last week. “So it’s strategic, but non-core to our main travel operating businesses.”
As part of the reorganisation, Al Tayyar proposed this week a 43 percent capital increase to 3 billion riyals through the issuance of bonus shares.
“Companies are always in discussion to raise funding, but our key focus is on our business and how to grow further and how to deliver better value,” he said, without mentioning any current talks.
Al Tayyar posted a loss for the full year of 2018 mainly on the back of a non-operational asset sold at a discount to its book value. The company bought 30 percent of a mega development project in Makkah back in 2016 called Thakher, which was sold last year for about 377 million riyals ($101 million). It will use part of the money to fund further expansion this year and for bonus shares payment, Al Dawood said.
“We’ll turn a corner in 2019,” Al Dawood said. “2018 was tough, we lost the Ministry of Education contract, but at the same time we made significant progress in our transformation plan. That resulted in the tremendous growth from key focus areas for us, such as the online travel.”