Saudi Arabia's Hotel Construction Surge Triggers Supply Chain Concerns
25.08.2023 - 13:26
/ skift.com
/ Wizz Air
/ Peden Doma Bhutia
The hotel development pipeline is expected to face disruptions in 2024 due to the significant construction volume in Saudi Arabia and a global logistics and supply industry that has yet to fully recover from the effects of Covid-19.
Saudi Arabia has the largest hotel construction activity in the Middle East and Africa region, followed by United Arab Emirates, according to hotel research firm STR. Saudi Arabia topped the regional list with 42,033 hotel rooms in March, followed by United Arab Emirates with 22,324 rooms.
Panelists at the International Hospitality Investment Forum in Berlin last month discussed how the demand for materials in the next 10 to 18 months is projected to create a supply problem. To mitigate delays caused by shortages, procurement companies like FEBC are negotiating advance guarantees with key global accounts, said Alessandro Tedesco, CEO of FEBC. The challenges also present an opportunity for the hotel industry to pursue ESG goals by shortening supply chains and focusing on local sourcing, said Philip Halanen, head of sourcing and sustainability Europe, Middle East and Africa, Wyndham Hotels & Resorts.
Engaging with local suppliers not only adds value to the supply chain but also contributes to the local economy and can attract local guests, Halanen added. The hotel industry is exploring ways to collaborate with local businesses and create partnerships that maximize resources and provide networking opportunities. While local sourcing can be challenging in some markets, it is becoming increasingly important for procurement contracts to include a percentage of locally sourced goods.
Ultra low-cost carrier Wizz Air is rapidly expanding its operations in Saudi Arabia. The company’s president, Robert Carey, describes it as their “fastest ramp-up” ever achieved in a single market. With around 10 aircraft already operating in the kingdom, representing 7 percent of its total capacity, Wizz Air aims to reach full-scale operations by this summer, offering approximately 1 million seats to and from Saudi Arabia.
While Wizz Air, already serves four cities in Saudi Arabia — Dammam, Riyadh, Jeddah, and Madina, the airline plans to broaden its services by establishing operations in additional cities such as Taif and Tabuk, while also submitting a proposal to establish a base in Dammam. By linking Saudi Arabia with not just Europe, but also Africa and Central Asia, Wizz Air seeks to stimulate the kingdom’s aviation sector and contribute to the Vision 2030 objectives, aiming to attract 100 million visitors by 2030, Carey said to Arab News. He also said that the airline’s commitment to sustainability is demonstrated by its young and environmentally friendly fleet, including the A321neo,