The British hotel operator InterContinental Hotels Group (IHG) is expanding in Saudi Arabia in a big way.
Dur Hospitality, formerly Saudi Hotels and Resorts, has signed a franchise agreement with IHG to bring more Holiday Inn and Suites to the kingdom.
IHG plans to open nine hotels over the next three to five years, including InterContinental Riyadh and Hotel Indigo Riyadh, which will be the Middle East’s first Indigo property. Both hotels will be situated in the King Abdullah Financial District.
The country has the largest pipeline for Nasdaq-listed IHG in the Middle East, said Pascal Gauvin, the chief operating officer at IHG for India, the Middle East and Africa. The operator has 24 hotels in its portfolio in Saudi Arabia.
After the UAE, Saudi Arabia has the largest number of rooms in the pipeline at 37,362, according to STR Global, which benchmarks hotel data worldwide.
“Taking the country as a whole, sentiment is generally positive and will continue to be so, as long as the government continues to invest in infrastructure and other projects designed to bolster the economy and to create jobs,” said John Podaras, a partner at the Dubai-based consultancy Hotel Development Resources.
The development projects affect not only the main urban centres of Riyadh, Jeddah and Al Khobar but also the industrial cities such as Jubail and Yanbu that are attracting private-public investment in infrastructure and industrial development fuelling demand for hotel rooms, he said.
IHG is building a 1,238-room Holiday Inn in Mecca – its biggest, which is expected to be ready in 2016.
Revenue per available room in the quarter ended September was up 4.4 per cent in Asia, the Middle East and Africa. “The Middle East benefited from strong occupancy in Saudi Arabia and Qatar,” said Paul Edgecliffe, IHG’s chief financial officer, in October.
Starwood Hotels and Resorts Worldwide will open three new hotels in Mecca by 2016, adding 1,496 rooms. The Sheraton Makkah with 532 rooms, Westin Makkah with 513 rooms and Four Points by Sheraton Makkah with 451 rooms.
It has five more hotels planned in Jeddah, Riyadh and Dhahran.
Starwood currently operates 10 properties in the country, its second-largest market in the Middle East after the UAE.
The French chain Accor has 14 properties in Saudi Arabia, its second largest national portfolio in the Gulf after the UAE, where it manages 24 hotels.
Hilton, which has five hotels in Saudi Arabia, has no hotel in the pipeline there.
This year, Saudi Arabia was expected to issued fewer visas than it did in 2012 as construction work continues around the Grand Mosque.
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