“How hotel operators are contributing to Vision 2030” brought hotel operators together to address the goals of Vision 2030, as well as their development pipelines and investment opportunities in the sector. The engaging and informative talk was held during Saudi HORECA Riyadh in November 2022.
Organized by Semark Group, Hospitality News Middle East and Hodema consulting services Middle East and Africa, the panel included Eddy Tannous, VP of operations at Accor, KSA; Fahad Al Fawaz, CEO of Al Hokair Group; and Maher Abou Nasr, VP of operations, KSA at IHG Hotels and Resorts. Nada Alameddine, managing partner of Hodema consulting services Middle East and Africa, moderated the session. She opened the discussion by stating: “Over the past three years, KSA has evolved from a non-touristic destination to the host nation of the 2022 World Travel & Tourism Council Global Summit. Gigantic hospitality projects have been announced recently, creating thousands of new jobs and shaping the sector to become a key economic driver.”
State of the market
Al Fawaz spoke about operators experiencing a “golden age” in the kingdom. “The pandemic was challenging, but Saudi Arabia has taken great strides to become more than a business destination, evidenced by the opening of resorts, leisure properties and mega projects.” He mentioned that the easing of entry requirements has led to greater demand.
Abou Nasr agreed that it is a golden era. He mentioned that post-pandemic recovery was rapid and that confidence in the market is unprecedented. “There’s definitely strong demand for hotels, as more and more visitors choose Saudi Arabia as a holiday destination, not just for the religious sites. Everything the government has tried has worked, and we are now reaping the benefits,” he said.
Tannous said that the announcement of Vision 2030 and Covid-19 were two massive milestones for the kindgom. “The pandemic was very well managed, and the country was able to bounce back very quickly.” He added that the opportunities are numerous and that local demand is sufficient to sustain high occupancy for 4-5 months of the year. “These days, visiting Saudi Arabia could not be easier. There is huge potential for operators; it is the largest country in the GCC with a young population,” he said.
Beyond religious tourism and business travel
Abou Nasr stated that IHG is expanding its vision, in line with that of the government. With a growing number of large-scale events taking place in the kingdom, including G20 in Riyadh and WTTC, he highlighted the rising demand for hotel rooms by a wider audience. “The relaxation of visa regulations has made it much simpler to enter KSA and quicker to exit the airport. For a long time, we had three IHG brands in operation in the kingdom. But we recently added more to offer greater variety and cater to the new markets,” he said.
According to Al Fawaz, the kingdom’s cultural wealth needs to be leveraged so that tourists can experience a different side to Saudi Arabia.
Going beyond the mainstream by introducing new brands to meet the needs of the market is something Accor has been focusing on. Tannous stated that KSA now requires all kinds of hotels: experiential, lifestyle, traditional and so forth. “We just opened Banyan Tree in Al Ula, and we have Fairmont, Raffles and Sofitel properties slated to open soon. I can envisage all of our 37 brands opening in KSA within the next 5-7 years,” he said
Investing in KSA
With foreign investments in KSA at an all-time high, Al Fawaz said that it’s definitely the right time to invest. “Vision 2030 is clear and ambitious. You will not find other places as rewarding. There is a global recession, yet we witnessed growth of 7 percent in 2022, so there’s huge momentum.” He added the government has offered economic incentives, favorable tax rates and lending initiative to entice investors.
Tannous spoke about KSA being a “safe and secure market” and encouraged smart investors to move quickly, otherwise it will be too late.
Bringing something new to the scene
The panelists agreed that as the market matures, newer concepts are emerging. Al Fawaz discussed the resorts and lifestyle properties, as well as agricultural tourism. “We are shifting away from traditional hotels and seeing greater variety. Secondary cities are becoming more popular, and there is a definite need for mid-market properties that are not very expensive and can respond to seasonal fluctuations.”
Being part of the community is important to Accor, and Tannous explained how the company is creating hotels that stand at the heart of the neighborhoods they are in, providing communal areas and co-working spaces to attract local residents.
What’s missing?
Abou Nasr noted said that the market has all the right ingredients, so there is not much missing. “All we need is just a greater number of big events, including exhibitions and sports tournaments, in addition to stronger partnerships between the private and public sector.”
Al Fawaz noted that owners are more sophisticated and have higher expectations. “All the players in the market are wanting more, so it is crucial to live up to the hype.” He offered some advice to operators, stating that more effort needs to be made in terms of marketing, as well as providing hotel guests with innovative F&B concepts, adopting new forms of technology and addressing the needs of the younger generation.
Sustainability was also discussed. Abou Nasr said that IHG is working with local partners on its hotel of the future, one with net-zero carbon emissions.
Attracting talent
The discussion switched to human capital. Abou Nasr was very positive in his assessment, stating that exceptional hospitality talent exists in KSA, but operators just need to focus on retaining skilled employees.
Al Fawaz said that women are contributing significantly to the service industry. “Approximately 35 percent of the service sector is made up of women, which is enormous when you consider how things were a few years ago.”
While there are a handful of women in managerial roles, the panelists said that it would take a little time to see more women in senior management positions in the hospitality arena. “Women only recently joined the workforce in Saudi Arabia, so we need to be a little patient. The talent is there; it’s simply a matter of time and creating paths for career development,” said Tannous.
