Saudi Arabia's Tourism Development Fund and Deutsche Hospitality, the umbrella brand of the German hotel company Steigenberger Hotels, have signed a preliminary agreement to develop and operate Steigenberger Porsche Design Hotels projects in the kingdom.
The partnership includes the right to exclusively roll out the first Steigenberger Porsche Design Hotels project in the Middle East, which will provide individualised experiences for guests in the luxury hospitality segment, the fund said in a statement.
The agreement was signed by Qusai Al Fakhri, chief executive of the TDF, and Marcus Bernhardt, chief executive of Deutsche Hospitality, in the presence of Ahmed Al Khateeb, Saudi Arabia's Minister of Tourism and chairman of the TDF's board of directors.
“Through this collaboration – which will result in first-of-its-kind hospitality offerings – we continue to enhance the kingdom’s tourism offering under the National Tourism Strategy,” said Mr Al Fakhri.
Saudi Arabia – on a mission to diversify its economy from oil – pressed forward with its reform measures in 2021 as the kingdom looks to position itself as a dynamic destination for business, tourism and culture.
Tourism is one of the key pillars of the kingdom's Vision 2030 transformation programme, which seeks to diversify the economy and reduce its dependence on oil.
Saudi Arabia plans to invest more than $1 trillion in the tourism sector over the next 10 years, Mr Al Khateeb said in October.
The kingdom aims to increase the contribution of the tourism sector to the economy to more than 10 per cent of its gross domestic product by 2030 from about 3 per cent at present.
Revenue in Saudi Arabia's hotels segment is expected to reach $2.16 billion in 2022, 44 per cent higher than last year and almost double 2020s $1.09bn, data from Statista shows. It is projected to grow at a compound annual rate of 8.51 per cent and hit around $3bn by 2026.
Three big hotels are scheduled to open in the kingdom this year, including the Nobu Hotel Riyadh, Banyan Tree AlUla and The Jeddah Edition.
Last month, the kingdom created a new body to regulate tourism activity along the Red Sea coast and protect its environment, streamlining regulations to encourage investment and provide support to small and medium-sized enterprises involved in marine recreational and tourism activities along the coast.
Saudi Arabia is also ramping up flights to make the kingdom more accessible. Last November, Riyadh-based low-cost carrier flynas started direct flights from the UAE to the historical destination of AlUla, dubbed “the world’s largest living museum”.
The partnership between the TDF and Deutsche Hospitality plans to cater to the “sophisticated needs” of the Saudi market and create a unique experience within the kingdom's luxury lifestyle hotel segment, said Mr Bernhardt.
“A Porsche Design Hotel in Saudi Arabia reflects our commitment to the region and our support for the kingdom as a leading global tourist destination,” he added.
The TDF plays a critical role in advancing the development of Saudi Arabia's tourism sector by enabling private investors to participate, as well as providing support to SMEs and large institutions, ranging from planning to providing support from various tourism-related government agencies.
The fund offers a wide range of tailored solutions that suit the needs of investors, including direct financing, bank guarantees and co-financing with lenders.
Frankfurt-based Deutsche Hospitality, one of Europe's biggest hotel companies, has a portfolio of eight brands operating across more than 160 hotels globally. Its Steigenberger Porsche Design Hotels brand is its flagship in the luxury lifestyle segment.