Two joint funds worth $550 million (Dh2 billion) have been set up by Rotana, Shuaa Capital and investors to build and run 20 hotels in Saudi Arabia and Egypt.
The first fund – worth $500m – will develop 15 hotels in Saudi Arabia, the first of which will open soon in Makkah, said Rotana Chairman Nasser Al Nowais.
He told Emirates Business Rotana and Shuaa had carried out detailed studies of the Saudi hotel market and found there was a huge demand in the Kingdom.
“The Saudi market is giant and untapped,” said Al Nowais, who was attending the Gulf Incentive Business Travel and Meetings Exhibition (GIBTM) in Abu Dhabi. “We plan to construct and run hotels in Makkah, Khobar and other Saudi cities.”
The second fund, which is worth $50m, will construct and run five three-star hotels in Cairo. He said the Egyptian market had a strong need for this type of property. Al Nowais said Rotana was currently building 10 hotels in Abu Dhabi and said demand for rooms and apartments was strong there.
“There is a shortage of rooms as there is strong demand from tourists, businessmen and foreigners. Abu Dhabi needs at least 40,000 new rooms over the next four years.”
He said the shortage would continue for at least three years. He expected about 1,800 rooms would become available in the capital this year including 1,000 operated by Rotana. In 2009, 3,500 more rooms will be available in the capital.
He said Abu Dhabi’s thriving exhibitions industry was pushing up demand.“Dubai started the exhibition industry and achieved great success. Then Abu Dhabi presented itself as an important centre for exhibitions and received an overwhelming response.”
He said the number of hotel visitors in Abu Dhabi rose by 20 per cent during the last three years and the occupancy rate in Rotana hotels had reached 95 per cent. The majority came from Europe, in particular Britain and Germany.
When asked about the high cost of hotel rooms in the capital, he said: “The prices are a result of the shortage of supply and unprecedented demand.
“The current increases are inevitable but prices might stabilise over the coming years with the opening of new hotels.”
Rotana and Shuaa set up Dh2bn hotel funds