Tourist Accommodation Sector Overview Salah K Al-Bukhayyet ﺍﻫﻢ

Tourist Accommodation Sector Overview Salah K. Al-Bukhayyet ﺍﻫﻢ ﺍﻟﻘﻀﺎﻳﺎ ﻭﺍﻟﻤﻌﻮﻗﺎﺕ ﻭﺍﻟﺤﻠﻮﻝ ﺍﻟﻤﻘﺘﺮﺣﺔ PH. D, CPA, CCSA , CIA, CGAP, CMA, CFM Vice President For Investment Saudi Commission For Tourism & Antiquities 12 December 2011 3/19/2018 1

Tourist Accommodation Sector Overview q This sector has emerged to be a main driver of the tourism industry. ﺍﻫﻢ ﺍﻟﻘﻀﺎﻳﺎ ﻭﺍﻟﻤﻌﻮﻗﺎﺕ ﻭﺍﻟﺤﻠﻮﻝ ﺍﻟﻤﻘﺘﺮﺣﺔ q SCTA has accordingly put major efforts in guiding and developing this industry. q As this industry did develop strongly in the Kingdom for the past 5 years, it is still not fully developed. q SCTA implemented the necessary regulative and administrative measures, until the sector itself matures and then will be ready for gradual self – regulation. 3/19/2018 2

Accommodation Sector Overview The following table shows the actual portfolio of the Kingdoms hotel sector : Province 1 2 3 4 5 6 7 8 9 10 11 12 13 Makkah Al Mukaramah Al Madinah Al munawarah Riyadh Eastern Province Al Qassim Province Tabuk Province Al Juof Province The North Borders Province Jazan province Najran Province Assir Province Hail Province Al bahah Province TOTAL 3/19/2018 Number of Hotel units 521 159 96 90 10 21 25 15 11 22 12 3 2 97884 36657 29600 8215 934 768 503 1359 987 696 127 261 984 178925 3

Accommodation Sector Overview The following table shows the actual portfolio of the Kingdoms furnished apartments sector : 1 2 3 4 5 6 7 8 9 10 11 12 13 Province Makkah Al Mukaramah Al Madinah Al munawarah Riyadh Eastern Province Al Qassim Province Tabuk Province Al Juof Province The North Borders Province Jazan province Najran Province Assir Province Hail Province Al bahah Province TOTAL 3/19/2018 Number of Operations 744 159 1235 1184 120 86 25 15 185 104 511 127 297 4792 Number of Units 18600 3975 30875 29600 3000 2150 775 375 4625 2600 12775 3175 6975 116650 4

Accommodation Sector Overview Classification System Ø All Hotels and Furnished apartments have undergone a re – classification with the newly established criteria's during the previous two years. Ø Hotels were graded with a 2 - 5 star system. Ø The furnished apartments were graded with a 1 st to 3 rd class scheme. Ø SCTA developed modified classification criteria's for Makkah Almukarmah and Madinah Almunawarah, taking in consideration the space limitation and nature of operation. 3/19/2018 5

Accommodation Sector Overview Classification System Ø SCTA is working now on development of a new version of these classification criteria’s, which will be focusing on the services delivered. Ø During the development of this updated version of criteria's several workshops with the private sector stakeholders will be held, as it was successfully done when initially establishing the criteria's. Ø SCTA also issued classifications for 5 new accommodation – types : * Hotel Villas * Hotel Apartments * Resorts * Motels * Chalets 3/19/2018 6

Accommodation Sector Overview Pricing Ø SCTA did implement a pricing policy in conjunction with the new classification - criteria's. Ø The pricing system is based on a point - system related to the inspection audits and the respective classification -criteria's evaluation. Ø The pricing system does have an upper ceiling per category. Ø Different Seasonality's corresponding with different prices have been considered. Ø A customized version of pricing has been developed for Makkah Al Mukaramah & Madinah Almunawarah. 3/19/2018 7

Accommodation Sector Overview Adhering to the classification standards Ø SCTA surveys indicate that consumer satisfaction and expectations are not always found to be at desirable levels, mainly due to a lack of baseline services and properties not being well maintained. Ø Some operators are in need of renovating and upgrading their properties and services. Ø The adherence to quality standards as per the classification criteria is therefore gaining even more importance when looking at the future scenario of the Saudi Tourism sector. 3/19/2018 8

Accommodation Sector Overview Administrative Initiatives Ø SCTA established LQA ( Licensing & Quality Assurance Department ) in 2003, to be the core business department for the leading of the sector. Ø SCTA responsibilities to supervise the sector was assumed in 2008. Ø SCTA has certainly been setting a track record in generating greater confidence and trust for investors in the marketplace. Ø SCTA did establish 13 investment - Business – Centres in all provinces, in order to be the first contact point with any investor. The centres are providing various services, including the facilitation of the licensing process. 3/19/2018 9

Accommodation Sector Overview SCTA Licensing and Inspections Ø SCTA Inspectors are working to facilitate the licensing and related tourism investment process, as well as to conduct classifications and quality – audits. Ø SCTA is making tremendous efforts in training it’s inspectors, keeping them updated with the latest in international practices and regulations, currently they are undergoing the certification as Lead Auditors as per ISO 9011 : 2008 Periodic inspection visits are used to monitor quality of hotels. Ø The main focus will be given on the services delivered of hotels, particularly the 5 -star and 4 star properties, the sole appropriate measure of quality monitoring of these services to be delivered are Mystery Guest Shopper Audits. Ø Such audits are executed through an independent and contracted third party, mainly a consultant firm with the appropriate expertise in this field. 3/19/2018 10

Accommodation Sector Overview Automation of Licensing System SCTA has continuously developed the automated system for the licensing process and other important processes as : § § § § Licensing Process through WEB publications effective as of January 2012. The applicant does not have to go to the licensing office – but can apply online, as well effective as of January 2012. The applicant is provided with the possibility of the tracking the status of his Application until the final classification / license is issued. The automated licensing system is to be seen as 2 way communications tool, facilitating the licensing process and at the same time providing SCTA with needed information and statistics. 3/19/2018 11

Accommodation Sector Overview SCTA Tourism Investment Support Initiatives Ø Provision of funds for tourist project through the agreement of corporations ( MOU’s ) with governmental funds and financial institutions. Ø A study has been conducted for the establishing of a Tourism Development Company Ø The creation of a Tourism Development Fund has been proposed to the government. Ø SCTA Requested the establishment of a Hotel Association. 3/19/2018 12

Accommodation Sector Overview Human Resource Supply to the Industry and Training MAIN PROGRAMS Ø Nationalization Targets the following sectors : Travel & Tourism, Accommodation, Attractions & Theme Parks, Museum & Antiquities and Haj and Umrah. Ø Awareness Is pursued for two Types, 1 st Occupational, for employers and young Saudis. 2 nd Customer Service, Public Sector – Front Liners and Private Sector, Tourist Guides, Tour Operators, Event Management and Organization and Taxi Drivers. Ø Investment in HR Development Promotion of Educational and Training facilities, such as Universities, Colleges and Institutes, SME’s Training, Scholarships and MOU’s , mainly governmental and private sector and universities. Ø Development of related training / education materials. 3/19/2018 13

Accommodation Sector Overview Future Outlook Ø KSA hotel industry today is looking more prosperous than before. Ø Enhanced competition through more and more international and local companies are investing in the sector. Ø The Kingdom’s hotel industry is overall growing. HOTELS YEAR 2011 Rooms (Required ) 178925 3/19/2018 2015 198785 2020 204748 14

Accommodation Sector Overview Future Outlook New Accommodation Project in the Kingdom, will open end of 2012 / beginning 2013 Province Number of Hotel units 1 2 3 4 6 Makkah Al Mukaramah Al Madinah Al munawarah Riyadh Eastern Province Al Qassim Province 14 8 42 27 3 2305 3300 6446 3510 648 7 8 9 10 11 12 13 14 Tabuk Province Al Juof Province The North Borders Province Jazan province Najran Province Assir Province Hail Province Al bahah Province 6 2 4 6 4 4 3 2 716 480 41 602 240 635 465 184 125 19572 Total 3/19/2018 15

Thank you for your kind Attention ! 3/19/2018 16