top of page

Saudi Arabia’s Hotel Construction Surge Triggers Supply Chain Concerns

While the booming hotel development pipeline in Saudi Arabia is expected to cause disruptions, the hotel industry sees an opportunity to prioritize ESG goals. Will this construction frenzy lead to a green revolution?

The hotel development pipeline is expected to face disruptions in 2024 due to the significant construction volume in Saudi Arabia and a global logistics and supply industry that has yet to fully recover from the effects of Covid-19.

Saudi Arabia has the largest hotel construction activity in the Middle East and Africa region, followed by United Arab Emirates, according to hotel research firm STR. Saudi Arabia topped the regional list with 42,033 hotel rooms in March, followed by United Arab Emirates with 22,324 rooms.

Panelists at the International Hospitality Investment Forum in Berlin last month discussed how the demand for materials in the next 10 to 18 months is projected to create a supply problem. To mitigate delays caused by shortages, procurement companies like FEBC are negotiating advance guarantees with key global accounts, said Alessandro Tedesco, CEO of FEBC. The challenges also present an opportunity for the hotel industry to pursue ESG goals by shortening supply chains and focusing on local sourcing, said Philip Halanen, head of sourcing and sustainability Europe, Middle East and Africa, Wyndham Hotels & Resorts.

Engaging with local suppliers not only adds value to the supply chain but also contributes to the local economy and can attract local guests, Halanen added. The hotel industry is exploring ways to collaborate with local businesses and create partnerships that maximize resources and provide networking opportunities. While local sourcing can be challenging in some markets, it is becoming increasingly important for procurement contracts to include a percentage of locally sourced goods.

Wizz Air Plans Fastest Ramp-Up in Saudi Arabia Ultra low-cost carrier Wizz Air is rapidly expanding its operations in Saudi Arabia. The company’s president, Robert Carey, describes it as their “fastest ramp-up” ever achieved in a single market. With around 10 aircraft already operating in the kingdom, representing 7 percent of its total capacity, Wizz Air aims to reach full-scale operations by this summer, offering approximately 1 million seats to and from Saudi Arabia.

While Wizz Air, already serves four cities in Saudi Arabia — Dammam, Riyadh, Jeddah, and Madina, the airline plans to broaden its services by establishing operations in additional cities such as Taif and Tabuk, while also submitting a proposal to establish a base in Dammam. By linking Saudi Arabia with not just Europe, but also Africa and Central Asia, Wizz Air seeks to stimulate the kingdom’s aviation sector and contribute to the Vision 2030 objectives, aiming to attract 100 million visitors by 2030, Carey said to Arab News. He also said that the airline’s commitment to sustainability is demonstrated by its young and environmentally friendly fleet, including the A321neo, which significantly reduces carbon emissions.

Oman Airports Witness Over 3 Million Passengers by March End Oman has witnessed a significant increase in the number of passengers utilizing its airports, surpassing 3 million by the end of March 2023. Preliminary statistics from the National Centre of Statistics and Information reveal an 88 percent rise in passenger traffic through Oman’s airports compared to the same period in 2022.

The total number of passengers reached 3.3 million, compared to 1.7 million in the previous year. Muscat International Airport experienced a remarkable surge, with passenger numbers reaching nearly 3 million by the end of March 2023, indicating a staggering growth of 100.8 percent compared to the same period in 2022. Additionally, the airport witnessed a 93.9 percent increase in flights, with a total of 22,145 flights recorded compared to 11,419 in 2022. Salalah Airport also saw positive growth, with a 34.2 percent rise in passenger numbers, totaling 304,538 passengers on 2,184 flights. Sohar Airport reported 5,401 passengers on 76 flights, while Duqm Airport recorded 17,247 passengers on 152 flights during the same period.

Hyatt Aims to Increase Presence in the Middle East Hyatt’s first quarter 2023 financial results showcased the company’s robust global portfolio, particularly in the Europe, Middle East, and Africa (EMEA) region. In EMEA, Hyatt experienced remarkable 256 percent revenue growth across managed and franchised hotels compared to the same period in 2022.

This success was primarily driven by strong international inbound demand, with the Middle East and Western Europe delivering favorable outcomes. Over the past decade, Hyatt has significantly expanded its presence in the Middle East, tripling its portfolio throughout the region.

Saudi Arabia is a key growth market for Hyatt, with plans to triple its number of hotels across the country in the next five years. The highly anticipated debut of Miraval The Red Sea and Hyatt properties in Madinah further strengthen the brand’s foothold. The Middle East’s business and leisure travel demand remains robust, and Hyatt aims to enhance its presence in Qatar by introducing two lifestyle brands — Andaz Doha and Dream Doha. Additionally, Hyatt recently completed the acquisition of Mr & Mrs Smith, a London-based global travel platform featuring a curated collection of over 1,500 boutique and luxury properties.

Tourism: A Powerful Catalyst for Economic Development of Middle East The Middle East is the first global region to exceed pre-pandemic numbers for international tourist arrivals so far in 2023, according to UNWTO data. Speaking at the 49th meeting of the UNWTO Regional Commission for the Middle East in Jordan, Secretary-General, Zurab Pololikashvili, said:

“Tourism has shown its resilience in the face of crisis. And now, recovery is well underway — with all the challenges and opportunities this brings. For the Middle East, tourism represents an unrivaled driver of employment and opportunity, as well as economic diversification and resilience.” Pololikashvili also met Crown Prince Al Hussein to congratulate him on the “rapid and remarkable” recovery of Jordanian tourism. Jordan welcomed 4.6 million tourists in 2022, close to the 4.8 million recorded in 2019, with receipts from tourism totaling US$5.8 billion for the year.

How UAE’s Tourism Fuels Region’s Leisure and Entertainment Sector Global live-entertainment discovery platform, Fever, cites that the United Arab Emirate’s target of attracting 40 million tourist visits by 2030, and its subsequent economic contribution of $123 billion to the country’s national gross domestic product will further boost the leisure and entertainment sectors of both the nation and the region. The leisure and entertainment sector in the Middle East and North Africa (MENA) currently generates approximately $8.2 billion in revenue.

Countries like the UAE and Saudi Arabia have invested heavily in tourism infrastructure and marketing campaigns to attract tourists from all over the world and this has elevated the region’s stature to become a globally renowned touristic destination, noted Fever. According to Fever, the influx of visitors has fueled the demand for leisure and entertainment offerings in the region.

“The money spent by tourists on accommodation, dining, transportation, shopping, and entertainment activities directly stimulates the local economy. This financial infusion creates opportunities for businesses to invest in the development and expansion of leisure and entertainment offerings,” said Rachid Laurent Elameri, general manager of Fever Middle East.

AlUla Begins Work on Sharaan Resort and International Summit Centre The Royal Commission for AlUla (RCU) has begun construction of its Sharaan Resort and International Summit Centre designed by French architect Jean Nouvel. The project will be built directly into the mountains of Sharaan Nature Reserve and aims to meet ambitious sustainability goals for the construction phase and resort operations. Built into a mountain dating back 500 million years, the Sharaan resort would feature 38 suites, a spa and wellness center.

Inside an adjacent mountain, the Sharaan International Summit Centre will also have 13 total hospitality pavilions and two private villas will be constructed nearby, completing the project with 53 total hospitality keys. “Sharaan resort is our most ambitious project currently under construction,” said Mohammed Altheeb, chief development and construction officer of Royal Commission for AlUla.

Tailored Travel Experiences for Banking Industry Singapore-headquartered artificial intelligence and big data company Crayon Data announced its partnership with travel distribution platform Crayon Data and would work to empower financial providers to create personalized travel experiences for their customers. Commenting on the partnership, Suresh Shankar, CEO and founder of Crayon Data, said, “The global travel and tourism market is expected to reach $854.8 billion by 2023, with online channels projected to account for 74 percent of the revenue by 2027. With, we hope to create a world where banking customers discover highly personalized travel experiences based on data insights from their behaviour and preferences.”

IHG to Come Up With Voco Hotel in Egypt’s North Coast IHG Hotels & Resorts has announced the signing of a management agreement for Voco hotel with developers Akam Al Rajhi. With this signing, IHG continues to expand its footprint across the Middle East and Africa region and diversify its portfolio, as part of the company’s ambitious growth strategy. With the Voco hotel brand already well established in the region, including locations in United Arab Emirates and Saudi Arabia, the new signing marks the first Voco resort in the region, and will cater to the growing leisure demand on Egypt’s North Coast. Set to open in December 2026, the 300-key Voco North Coast will include low-rise buildings, chalets and townhouses in a prime location, directly on the beachfront. IHG currently operates 7 hotels in Egypt across brands including, InterContinental, Crowne Plaza, Holiday Inn, and Staybridge Suites. The hotel company has 10 hotels in the development pipeline.

Gulf Hotels Group Buys Novotel Bahrain Al Dana Resort Al Jazeera Tourism Company has completed the sale of Novotel Bahrain Al Dana Resort to hospitality management company Gulf Hotels Group. Following the initial announcement in February, the property transfer agreement has now been executed with the operational transfer of the property to Gulf Hotels Group going into effect from June 8. “This is a strategic milestone for our company that comes as part of our broader business strategy. We are confident that the operations of this key resort will continue to thrive under its new ownership,” said Hazem Al Mubarak, Chairman of Al Jazeera Tourism Company. Like many industries, the hospitality industry has also experienced an increase in mergers and acquisitions, seeking enhanced competitiveness, synergies, and expanding geographic presence. This trend has led to a diversification of offerings beyond traditional hotel properties, with companies venturing into new segments such as serviced apartments, resorts, conference centres, food and beverages, spas, and other related services.

IGY Marinas Partners With Sindalah to Develop Yachting Destination IGY Marinas has announced that it is partnering with Neom to develop and operate the marina at Sindalah, the giga-project’s luxury island destination. Positioned as a gateway to the Red Sea, Sindalah calls itself the closest ultra-prime super-yacht marina to Europe and the Mediterranean. The maritime facility is expected to offer 86 berths for yachts up to 50 meters and additional serviced offshore buoys for super-yachts up to 180 meters. “This partnership with IGY is one of many steps we are taking to achieve our vision of reshaping the global yachting calendar,” said Antoni Vives, head of urban development at Neom. Once established, the marina will join IGY’s international super-yacht marina network of 23 marinas across 12 countries as well as their exclusive super-yacht membership program IGY Trident. Due to open in the first quarter of 2024, Sindalah will be the first region in Neom to welcome guests.

Ajman’s Tourism and Transport Authority Join Forces The Ajman Department of Tourism Development and the Transport Authority in Ajman have signed a memorandum of understanding to foster sustainable and advanced development, positioning Ajman as a leading destination for tourism and transportation. Among the key objectives outlined in the memorandum is the cooperation in providing digital systems and empowering their utilization, as well as coordinating permits for tourism activities and civil aviation between the two parties. Additionally, the agreement encompasses joint marketing efforts for the services offered by the transportation authority, including taxi and limousine bookings for guests in hotel establishments.

“By aligning our strategies and resources, we are confident that we can enhance the overall experience for tourists and residents in Ajman, while contributing to the emirate’s economic growth,” said Mahmood Khalil Alhashmi, director general of The Ajman Department of Tourism Development. This collaboration between the two entities sets the stage for a more integrated and cohesive approach to the development of the tourism and transportation sectors in Ajman.

7 views0 comments
bottom of page