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Kingdom ramps up global investments

Having made significant investments in the Middle East, including a successful IPO in Dubai, Kingdom Hotels Investments (KHI) is now looking beyond the region for growth.

The investment firm is now listed on the London stock exchange and has already highlighted Asia and Africa as key markets for growth, saying that two thirds of its expansion this year will occur in these regions.

KHI is planning to invest between $400 and $600 million in hotels in the next 24 to 36 months. Breaking Travel News caught up with chief executive, Sarmad Zok to discuss the firm’s focused expansion drive:

BTN: Are the best investment opportunities in the Middle East or further a field?

Zok: KHI is focusing investment in high growth emerging markets, with a particular emphasis on Asia. We have opened offices in Singapore and in South Africa and recently announced our first deal in Kunshan, China.


BTN: Why are Asia and Africa priority investment regions for you?

Zok: We see considerable scope for these areas where there are a number of un-penetrated markets which are growing in popularity with both tourist and business travellers. In many of these areas we have the potential to capitalise on a ‘first mover advantage.’

BTN: Can you elaborate on the ‘Oasis effect’ that you are creating? What are the potential benefits for hotels?

Zok: The Oasis effect is providing guests with a one-stop environment for all their needs, so they do not feel the need to leave the development during their stay. This might include adding retail, offices and extended stay facilities to a hotel development, so that all the key visitor activities that comprise a typical stay can be done within the property. 

This provides an area within the city that can be considered safe, clean, modern and providing the traveller with all his needs, an ‘Oasis.’ It is, of course, more efficient to operate but more importantly, each component generates and supports demand for and from the other components.  It is a win-win situation. 

BTN: How will the industry evolve over the next few years?

Zok: There is significant growth in the demand cycle at present in nearly all markets around the world, more often than not occurring as a result of globalisation. Inevitably, new supply is being developed, and there is bound to be a shift in the balance with over-supply occurring as a result of overbuilding or an adverse swing in the economic cycle. 

This business has traditionally been cyclical and we would expect to see this trend continue. Against this background there is always opportunity for M&A activity, and we would certainly expect to see additional consolidation amongst the brands.  With more of the world’s brands being controlled by fewer groups, this may result in the balance of power shifting towards the brand owners and against the developers when new management agreements are being negotiated.