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Saudi Arabia
hinges on the ability of Saudi to get up to speed with corporate travel advances, virtual accounting and cost containment methodologies since the kingdom’s accession to the World Trade Organisation (WTO) in 2005. More recently, a report by market research company Phocuswright ranked Saudi as ‘low’ in readiness for the adoption of globalised travel management. It said although technologically competent, the country was largely lacking in sophisticated management processes
“It’s a market requiring tailored management rather than a one- size-fits-all approach”
Mecca
at all levels against the backdrop of a depressed Europe. Such enticements, however, are tempered by two drawbacks, according to travel managers and TMCs. Allied to a myriad of visa, security, legal, banking and zonal complexities, the first drawback revolves around the changeable reforms and limitations imposed by a traditionally insular, devoutly Islamic and autocratic monarchy. The second
and generally ill-prepared for the implementation of centralised purchasing, use of company credit cards or uptake of self-booking tools (SBTs). The report pointed to a local travel market that, in common with the rest of the Gulf, requires highly personalised service built on long-established relationships with (locally-based) corporates. At the same time the region remains predominantly a transaction-fee market dominated by point-to-point travel and online travel agency (OTA) sales. These are set to double from £1 billion in 2011 to more than £2 billion in 2014, according to Phocuswright.
CULTURE CLASH The result is that local corporates and their TMCs have been questioning the return on investment for globalised convergence, says BCD sales vice- president Ivan de Lantivy. “They have their own culture, cheap labour and contracting methods to fulfil most of
SAUDI SNAPSHOTS…
• Saudia has increased frequency to daily flights from London Heathrow to Riyadh, in addition to daily to Jeddah in current winter schedules. Major Gulf carriers and British Airways also serve the Kingdom from the UK.
• The country ranks 22nd out of 185 countries for ease of doing business in this year’s World Bank economy rankings. In contrast, it ranks 78th for starting a business.
• Jaguar Land Rover has signed a new agreement to manufacture an aluminium-coated Range Rover at a plant in Saudi.
Jeddah CHANGE OF FACE
THE GLITZY SHOULDER-TO-SHOULDER skyrise properties that have almost overnight altered the ancient face of the Holy City of Mecca speak volumes about unprecedented new hotel development in Saudi. Despite average main city occupancies nationwide hovering around 60 per cent, few new projects are deemed too large for a mooted massive increase in international business traffic and (mostly domestic) tourism. Mecca alone is to get another 1,000-plus rooms
this year for an expected 6-8 per cent growth in (religious) visitors in the next few years, according to consultants TRI Hospitality. Hilton Worldwide is among the major international players investing here. Additional hotel construction close to the holy site of Madinah is expected to benefit from the re-development of Prince Mohammad Bin Abdulaziz International Airport. TRI says additional corporate hotel capacity
already in place in the Red Sea city of Jeddah points to increasing average rooms rates (ARRs) there, and that up to 5,300 new rooms will enter the market this year and next in the capital, Riyadh. Most new hotel construction in Riyadh and the
Gulf coast tri-city area of Dammam, Dhahran and Al Khobar carries an international management flag and is in the four- or five- (or sometimes labelled six- and seven-) star categories. However, adding to the mix are new budget Ibis and mid-category Mercure entries. These could prove beneficial to corporate cost-savings in future, according to Andy Taylor of HRG.
their corporate travel requirements,” he says. “So they question the need to employ additional processes or platforms. It’s a market requiring specifically tailored management rather than a one-size-fits-all approach.” FCM Travel Solutions Middle East managing director Andrew Boxall adds: “Although the travel industry in Saudi is well established, it has not embraced some of the progressive changes the industry has experienced in other global markets. A fear of changing conventional practices, combined with a lack of initiative from the
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