Kingdom Hotel Investments (KHI), partly owned by Kingdom Holding, the investment firm of Saudi Prince Alwaleed bin Talal, saw an increase in net profit in 2009 by 27 per cent to $21.8 million (Dh80m) compared to $17.3m in 2008 despite the rise in debt.

Kingdom Holding said it wants to buy $375m worth of shares in KHI, its hotel division listed in Dubai. Group revenues decreased 12 per cent to $246.4m in a continued tough trading environment from $278.7m in the previous year. It said sale of four assets generated $87m in value and $37m gains. The company said its net debt increased 19 per cent to $177.1m from $149.1m in the previous year.

KHI's development pipeline is on track with three projects in the Seychelles, Marrakesh and Accra expected to reach post construction/pre-completion stage this year.

It expects to register mid-single digit growth in RevPAR during 2010, underpinned by good growth in Asia. The group will selectively consider strategic acquisitions within its targets markets. In 2010, KHI will continue to manage the business tightly in the expectation that the current recovery in market conditions will remain slow and fragile.

Sarmad Zok, CEO, KHI, said: "The trading environment in 2009 remained challenging. RevPAR declines slowed in the second half of the year as the overall portfolio proved resilient and the company benefited from the diversity of our properties by both geography and market segment. During the year we were able to realise substantial value from the sale of four assets and through the monetisation from our associate investments.

"Our focus on prudent asset management and cost control has enabled KHI to actively manage the business during the downturn. We are well-positioned to execute our plans for the strategic development of the portfolio during the current year and into the medium term," he added.

KHI's shares have not traded since January 11, 2009, and are down 57 per cent since listing on the Nasdaq Dubai in March 2006. KHI's hotel business was performing well but low liquidity and trading volumes were likely to continue to affect the company's share price, said a KHI statement, explaining the reason for the stake purchase.

KHI's independent committee had recommended accepting the bid, it said. The offer will have a maximum value of $375m. (With inputs from agencies)