Kingdom Hotels to invest $235m in Asia projects

By Shakir Husain - Gulf News

 
Dubai: Kingdom Hotel Investments (KHI) has signed preliminary agreements to invest $235 million in hotels in Asia, a new focus region for the company headed by Saudi Arabia's Prince Al Walid Bin Talal.

"We have signed five memorandums of understanding and we will be investing $235 million in those projects," KHI chief executive officer Sarmad Zok told Gulf News.

The final agreements will be concluded between six and 12 months from now, he said.

Management contracts for the new hotels will be given to Movenpick, Fairmont, Four Seasons or Raffles. Prince Walid owns stakes in the four hotel management groups.

Zok said there is a "very strong deal in the pipeline in Asia" but did not provide details.

KHI is targeting Asia, the Middle East, Central and Eastern Europe and Latin America for further hotel investments.

"All the emerging markets are focus areas for us. We are very busy in our own region (the Middle East) and in Asia," the KHI chief executive officer said.

"In many areas we don't have properties and we are very active getting properties in those areas.

Asia is pretty much empty for us other than two hotels in Thailand," he added.

KHI earlier this year acquired the Karon Beach Hotel in Phuket from LaSalle Investment Management for $98.5 million, marking its entry into East Asia. The hotel has been rebranded as Movenpick.

The company announced its second property in Phang Nga recently. To be developed at a cost of $115 million, the Raffles Phang Nga Resort and Residences will be operational in 2009.

The Middle East accounts for 52 per cent of KHI's investments and most of its operating assets are located in the region.

"The Middle East is subject to significant growth and we are well geared to capture that growth," Zok said.
  The company has more than $1.3 billion of investments in properties around the world. It has 30 hotels and 12 of those are under construction, Zok said.The company announced on Wednesday it had sold 0.5 per cent stake in Fairmont Raffles Holdings International for $12.6 million to a Canadian pension fund.

KHI will retain a 0.37 per cent stake in Fairmont Raffles Holdings and its representation on the board.

Prince Walid owns about 55 per cent of Fairmont.

Zok said the valuation at which the Ontario Municipal Employee Retirement System (OMERS) was willing to buy the stake in the company represented a gain of two and half times of KHI's original investment.