22 Apr A deep insight into Saudi Arabia’s dynamic hospitality sector
According to Prince Bandar bin Saud bin Khalid Al Saud, secretary general of the King Faisal Foundation and chairman of the board of Al Khozama Investment Company, a top-three player in Saudi Arabia’s hospitality industry: “Saudi Arabia is perhaps the most dynamic place today in the world of hospitality.” Al Saud made this assertion during his speech at the official opening of the 2023 edition of the Future Hospitality Summit (FHS) Saudi Arabia, the country’s foremost annual hospitality investment event, which took place at the iconic Al Faisaliah Hotel in Riyadh over three days in May.
Organized by the preeminent deliverer of high-impact worldwide investment forums and conferences, The Bench, FHS Saudi Arabia brings together leading public sector figures, developers, investors, operators and other current and potential stakeholders in the country’s hospitality industry to foster collaborations and discuss the sector’s future. Those enlightening discussions center around the industry’s development and growth, investment opportunities, entrepreneurship, sustainability in all its forms, market trends, innovation, technology and human capital needs.
2023’s edition was the biggest edition yet. Under the umbrella theme ‘Invest in Change’, the summit attracted over 150 speakers and a record-breaking 1,100-plus delegates from more than 35 countries across the world, who enjoyed an agenda-full three days that included presentations, interviews, round-table debates, networking events and many other activities.
Excitement about the sector’s exponential growth potential was palpable throughout FHS 2023. At one of the introductory sessions, the head of hospitality, tourism and leisure for Knight Frank MENA, Turab Saleem, noted that hospitality real estate and infrastructure projects worth over $1 trillion were underway or upcoming, which would create an additional 315,000 hotel rooms in the country, at least 50 percent of which should be open by 2028.
73 percent of those new rooms will be based at the transformational gigaprojects that are being developed around the country, such as NEOM, Diriyah and Rua Al Madinah. The investments already committed to represented less than a third of the government’s total ambitions for the sector, as it seeks to draw 100 million tourists a year to Saudi Arabia by 2030, he added.
Due to the rapid realization of its ambitions, the Kingdom is all set to become a global tourism and hospitality hub this decade, said Prince Mansour bin Saad Al Saud, the King Faisal Foundation’s assistant secretary general and a member of Al Khozama’s board, at a panel discussion entitled Connecting Saudi to the World and Enabling Vision 2030. At the same event, Qusai Al-Fakhri, CEO of the Saudi Tourism Development Fund revealed that the authorities were keen to assist local and international companies in unlocking opportunities in the industry. As part of this, they were developing new funds to encourage investors to enter or expand in the market.
Following up on this at a later session, Deputy Minister of Investment Attraction in the Ministry of Tourism Mahmoud Abdulhadi said that the efforts the government was putting into developing a sustainable and business-focused environment for tourism investments meant that international inflows into the sector were now expected to more than double in the next few years. As an example, he highlighted the fact that the country had established mechanisms to support investments in innovative forms of hospitality, with tools like the Public Investment Fund now seeding riskier segments to help them to flourish.
Major expansion plans from global operators
One fascinating panel discussion involved leading developers providing insights into the sector and how their organizations were investing in changing the country’s tourism offering. A participant in this was the highly respected Jerry Inzerillo, group CEO of Diriyah Company that is responsible for the $63.2
billion Diriyah gigaproject, which covers 14 square kilometers just outside Riyadh.
“Opportunities [in the sector] are abundant,” he said. “I encourage everyone to invest. There are substantial incentives to invest, but if you come, you’ve got to commit and you’ve got to move fast, because the country is moving fast.” 36 of a planned 38 luxury hotel and resort brands had signed up to the Diriyah project to date, Inzerillo stated.
Ahmed Al Juhani, CEO of Rua Al Madinah Holding, also reported strong interest from global groups wanting a presence in that gigaproject, which spreads over 1.5 million square meters by the Prophet’s Mosque. 47,000 hotel rooms will be added to the site within seven years and deals valued at $1.17 billion have been signed with operators such as Marriot that will develop eight brands there and Hyatt, which is introducing three.
During FHS 2023, senior executives from many other leading players announced expansions in their businesses. For example, Tetra Hospitality Investment and Millennium Hotels & Resorts has 30 hotel projects under construction or discussion, while Marriott International has 35 hotels in its pipeline, as does IHG Hotels & Resorts.
Numerous new deals were also signed on the sidelines of the conference, including an agreement between Rua Al Madinah Holding and Accor for three luxury hotels, and one between the Tourism Development Fund and Golden Frond Hotel Services Company to develop a groundbreaking ecolodge in the UNESCO World Heritage Al-Ahsa region.
Beyond the main summit, a wide variety of events were taking place. Not the least of these was the Global Restaurant Investment Forum that provided deep insights into that sector’s huge growth in Saudi Arabia, as well as heavily oversubscribed culinary tours of the Kingdom’s top restaurants, which included a fabulous trip to Diriyah’s recently opened first-class dining district. Other standout events included a Battle of the Brands, where hotel entrepreneurs presented new brand concepts to a panel of expert judges, and a Start Up Den that gave innovators the opportunity to pitch to investors.
The 2024 edition of FHS Saudi Arabia is forecast to be even larger and just as unmissable. It will take place between 29 April and 1 May at the same hotel and further details can be found on the FHS Saudi Arabia website.
UPDATE: Demonstrating the dynamism of the Saudi hospitality sector, in January 2024 the landmark location of FHS Saudi Arabia was rebranded from the Al Faisaliah Hotel to the Mandarin Oriental Al Faisaliah, Riyadh, a move that marks the Mandarin Oriental Hotel Group’s entry into the country.