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25 June 2024

KHI eyes acquisitions in Eastern and Central Europe

By Ben Flanagan


Kingdom Hotel Investments (KHI), the Dubai- and London-listed firm controlled by Saudi billionaire Prince Alwaleed bin Talal, is eyeing acquisitions in the “traditionally overpriced” Eastern and Central European markets.

The firm also considers Talal’s native Saudi Arabia a “promising market”, according to KHI CEO Sarmad Zok.

“We find the current environment may create some opportunities in the traditionally overpriced markets [such as] Eastern and Central Europe,” Zok told Emirates Business. “We are watching this trend and positioning ourselves accordingly.”

“I think Saudi Arabia is a very promising market, especially for the middle class. It bears similar fundamentals to countries such as Egypt and China,” he said.

KHI positions itself as the “leading hotel holding company in the emerging markets”, and owns properties managed by chains such as Four Seasons, Fairmont Hotels and Moevenpick in regions such as Asia, Africa, Europe and the Middle East.

Further hotel acquisitions could be indirectly enabled by KHI’s intention to raise $400 million to $500m (Dh1.46bn-Dh1.83bn) in debt, which was disclosed in a results statement issued by the company yesterday.

“We’re in discussion with a number of banks in the emerging world,” said Zok. “The bank financing that we’re raising is primarily to finance previous acquisitions and development commitments [but] indirectly it’s also to chase new acquisitions.”

KHI invested $634.4m on eight acquisitions in 2007, which comprised five operating hotels, two new developments in Asia and one in the Seychelles. Further acquisitions would build on a portfolio of 35 properties – 22 of which are operational – in 21 countries. KHI plans to renovate or open hotels in six locations, including Dubai, Mauritania, Zambia, Beirut and Kenya, in 2008.

The company is behind the Dubai Fairmont Palm project, which is expected to open in 2009, and also has an affiliated investment in the Fairmont Nile City in Cairo, which is expected to open in 2008.

Yesterday, the company announced its profits fell 20 per cent in 2007 compared to the year before, although the 2006 figures were swelled by a one-off credit gain. These were sales of properties in Beirut. 

But the company said its net profit excluding this non-recurring item was up 40 per cent to $32.8m in 2007, and that revenue grew 80 per cent to $179m through its expansion in Asia.

The Dubai-based company said full-year EBITDA increased to $35.6m from $10.3m as the group saw strong performances from existing hotels and new acquisitions. Revenue per available room for 2007 was up 23 per cent, or 18 per cent excluding currency impact.

Growth in Dubai and Damascus helped offset declines in Beirut and renovation impacts in Kenya and Tanzania.