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World’s largest hotel franchiser eyes Saudi mid-market sector

Ramada by Wyndham Riyadh Supplied
Wyndham recently opened the 189-room Ramada by Wyndham Riyadh King Fahd Road, its 13th hotel in Saudi Arabia
  • Wyndham president Dimitris Manikis sees gap in tourism market
  • Kingdom aims to attract 100m tourists in 2030 
  • Hotelier says 90% of travellers seek budget or mid-scale hotels

The mid-market hotel segment offers great opportunities in Saudi Arabia’s fast-growing tourism industry, the president of the world’s largest hotel franchising company told AGBI. 

New Jersey-headquartered Wyndham Hotels and Resorts last month opened its 13th hotel in the kingdom, the 189-room Ramada by Wyndham Riyadh King Fahd Road. 

It is one of several Wyndham hotels in Riyadh, while the company also has hotels in several other Saudi cities, including Dammam, Al Khobar and Jeddah. 

“Wyndham is the leader in economy, budget and mid-scale around the world. Out of the billions of people who travelled in 2019, five to seven 5-7 percent travelled in the luxury segment,” said Dimitris Manikis, president of Europe, Middle East, Eurasia and Africa at Wyndham Hotels and Resorts.

“The rest are travellers like me, who go to a nice accommodation – comfortable, bed, great shower, and great Wi-Fi. I pay a moderate price so I can enjoy everything else the destination has to offer. 

“Saudi Arabia did a phenomenal job in positioning itself with luxury brands, but you cannot ignore that 90 percent of the world is the economy, budget and mid-scale. 

“Saudi has an enormous opportunity to tap into that market, because it’s not just about luxury, and you don’t want to create an exclusive destination.”

Tourism spending in Saudi Arabia totalled SAR95.6 billion riyals ($25.5 billion) in 2021, of which 24.1 percent went on accommodation, 23.4 percent on food and drink, 21.2 percent on local transport, 20.2 percent on shopping and 7.3 percent on entertainment, official data shows.

The average hotel daily room rate in 2021 was SAR423 riyals ($113) and occupancy was 53.3 percent, excluding Mecca and Medina. 

Dimitris Manikis, president, Europe, Middle East, Eurasia and Africa at Wyndham Hotels and Resorts

Secular tourism

Religious pilgrims from abroad have visited Saudi Arabia for centuries and it has long been possible to arrange visas for business travel, but it was only in September 2019 that the kingdom began issuing secular tourist visas as part of its Vision 2030 economic diversification plan. 

The kingdom has since promoted itself globally as a unique destination unblemished by mass tourism, including highlighting the ancient city of AlUla, a Unesco World Heritage Site. 

The government aims to raise tourism’s share of GDP from an estimated 5.3 percent in 2022 to more than 10 percent in 2030.

To achieve this, Saudi expects to attract 100 million tourists in 2030, of which 55 million will come abroad. 

“We have the right brands, methodology and philosophy for the next phase of Vision 2030. We’ve done the exclusive, now we have to do the inclusive,” said Manikis.

Travellers and tourists are not easily categorised into particular income or spending groups, the hotel boss believes. For example, someone may splash out for an all-inclusive stay at a luxury resort and then fly soon after by low-cost airline for a cheap weekend getaway at a budget hotel. 

Corner, Interior Design, Indoors
‘I pay a moderate price for a good bed, shower and wifi and enjoy the destination,’ says hotelier

“After Covid the hotel industry realised you cannot put people in brackets anymore. The same people who behaved in a certain way this week will behave completely different travel-wise three months later,” said Manikis.

“That’s the beauty of our business – the variety and the diversity of clienteles and the travel patterns and behaviours they have.”

In 2021 Saudi hosted 67.3 million tourists, up 3 percent from 2019, according to government data. Combined, these visitors stayed for 415.8 million nights, down 9.2 percent versus 2019 – the last full year unaffected by the Covid 19 pandemic.  

Yet, of the 2021 visitors, 94.8 percent were domestic, with only 5.2 percent – or 3.5 million – arriving from abroad.

This relatively small proportion of foreign visitors reflects severe restrictions on Hajj pilgrims; in 2021 just 25,711 non-Saudi pilgrims performed the Hajj. That compares with 1.86 million foreign pilgrims in 2019.

Last year 47.2 percent of visitors to Saudi were for leisure, while 33.8 percent were to visit friends and relatives living in the kingdom, 11.3 percent were religious tourists and 5.1 percent came on business, official data shows.

Saudi can compete with rival Middle East locations such as Dubai for European and South and East Asian leisure tourists, despite the lack of alcohol, Manikis believes. 

“People talk about all the great things in the Saudi tourism plan and then say, ‘oh what are they going to do about alcohol?’ It’s not about alcohol. It’s about the services, amazing amenities that the country can offer, and the welcoming people,” he said.

Wyndham is in the midst of recruiting for a new position of Saudi Arabia country director to develop its business in the kingdom, having recently reacquired exclusive franchise and management rights for Wyndham’s Ramada hotel brand in Saudi Arabia from another company that previously held the master licence agreement. 

“It was a strategic decision bearing in mind what’s happening in Saudi Arabia. We needed to control our own destiny,” said Manikis. “The sky’s the limit for us.”

Ramada by Wyndham Riyadh King Fahd Road

Of Wyndham’s 13 Saudi hotels, the company directly manages four. Third-party companies manage the remaining nine under franchise agreements. As is typical for international hotel brands, the hotels themselves are owned by local investors. 

“Franchising is becoming the trend now in the hospitality industry,” said Manikis, noting Wyndham is the world’s largest hotel franchiser, with around 98 percent of its approximate 9,000 hotels operating under franchise agreements. 

“You let the owner do what he has to do to manage the hotels and you provide all the support in the package to make that hotel successful including the brand.”

Wyndham will open at least three new hotels in Saudi next year and might double this number to six, said Manikis. 

“Saudi Arabia tourism at the moment is like a lab because they’re testing so many new things that hospitality has never seen anywhere else. That’s why Wyndham wants to be part of it,” he said. 

His hotels cater to various types of guests depending on the location of the hotel such as business, leisure and religious tourism. 

“What’s phenomenal about Saudi Arabia – and you discover this as you talk to people – is it has so much to offer. It has the history, it has the futuristic,” added Manikis. “It also has the basic stuff for hospitality – sun, sea, relaxation, good food and nice, welcoming people.”