Interview with Costas Verginis, Sr. Development Director – Marriott

“Saudi Arabia is a very important market for us,” Costas Verginis, Sr. Development Director – Marriott

Costas

Can you please brief us on your expansion plans in Saudi Arabia?

Saudi Arabia is a very important market for us. We see opportunities across all market segments from luxury to select service for both hotels and extended stay products. In terms of key cities we will continue to focus on Makkah, Medinah, Riyadh, Jeddah and Khobar/Dammam, but we will also look at secondary cities such as Jubail and Tabouk.

Would you say that the 5-star hotel market in Saudi Arabia is reaching the saturation point and that investors wishing to benefit from a higher return on investment are shifting to the less luxurious but still undersupplied 2- to 3-star hotel category?

It’s all about the demand generators and the competition. We still see significant opportunities for 5-star hotels (JW Marriott, Marriott Hotels, Renaissance Hotels) in Makkah, Medinah, Riyadh and Jeddah.  We also see significant opportunities for our select service and extended stay brands (Courtyard by Marriott, Marriott Executive Apartments and Residence Inn by Marriott) in all of the above cities as well as most of the secondary cities in the Kingdom.

We witnessed a luxury hotel outside Makkah without any rating attached to it, but also highly-rated hotels which were not correspondingly luxurious. How are hotel ratings regulated in the Kingdom?

Hotel classification is regulated by the Saudi Commission for Tourism and Antiquities.

 The Contractors’ Committee at the Riyadh Chamber of Commerce and Industry has announced that 40 per cent of construction projects are delayed owing to a lack of qualified workers. Current labor regulations are said to have had a negative impact on existing businesses in the Kingdom, making it more difficult to hire qualified people from abroad. Have you witnessed such an impact on your business?

Hotel projects are complex structures and delays are caused by various reasons, including shortage of qualified contractors, delays in obtaining the necessary permits, funding issues, etc. 

Saudi Arabia has announced its commitment to approaching the tourism sector in a “big way” and has projected industry growth of 90 per cent reaching SAR 190 billion by 2020. From your point of view, which Kingdom cities are most promising for the hospitality investor?

Makkah and Medinah are of course very promising due to the importance of religious tourism. Riyadh and Jeddah are the centres of government and commerce in the Kingdom and are therefore also important. Khobar and Dammam are the key cities of the Eastern province, the main oil producing region of the Kingdom. Last but not least, there are a number of smaller cities where economic activity is high, often owing to government initiatives: Jizan , Jubail, and Tabouk are good examples.

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