Business & Finance Club - Riyadh: Hilton Worldwide has signed up to manage two new hotels in Riyadh, a city ranked high on the global hospitality performance scale.

"Hotel performance in KSA and Riyadh in particular fared very well during the first six months of 2010 relative to regional and global lodging markets. Deloitte's Global RevPAR rankings cite that Riyadh holds a third position just below Dubai and Geneva," Sven Gade, director and head of consulting at PKF, The Consulting House said.

Furthermore Riyadh's position as the country's political and business capital means it should be able to sustain its position in the global hotel performance ranking.

He added that new supply was expected to be absorbed sufficiently."

Saudi Arabia is one of the leading development markets in the Middle East for Hilton, said Andrew Clough, the group's senior vice-president development for Middle East & Asia-Pacific.

"Riyadh is drawing both domestic and international visitors from strong business and corporate markets," he commented on the two management agreements signed with Saudi Arabia's King Saud University Endowment.

Economy brand

The group already manages six hotels in the country in Makkah, Madinah, Jeddah and Riyadh and plans to open the Hilton Riyadh King Saud University (241 rooms) and the Hilton Riyadh King Saud University Residence (155 rooms) by 2012.

The signing of the Management Agreement with Saudi Arabia's King Saud University Endowment for the two hotels was announced yesterday.

The signing was conducted by Abdullah A. Al Othman, Director, King Saud University, Essam Abouda, Vice-President, Pperations, Hilton Worldwide, Arabian Peninsula and Indian Ocean and Carlos Khneisser, Senior Director of Development, Hilton Worldwide, Middle East.

The two hotels are unlikely to compete with their counterparts in Riyadh itself. King Saud University City, although a significant mixed-use development in terms of build-up area and in close proximity to Riyadh is anticipated to complement rather than compete with the lodging market of the capital, said Gade.

"The area is expected to cater primarily to students, teachers and their visiting family and friends as opposed to the business segment which is traditionally catered to by Riyadh," he added.

Four more hotels including the Hilton, Hilton Garden Inn and Doubletree brands are expected to come on line between the end of next year and 2014. The group's development strategy focuses on rolling out Hilton's economy brand Garden Inn across the country. The development pipeline envisages an additional 2,500 rooms.

The strategy is supported by Saudia Arabia's economic facts. GDP is forecast to grow by 2.5 to 4 per cent during the next four years and it has earned global investor confidence. It ranked the eighth largest recipient of foreign direct investment (FDI) in the world, according to a report by UNCTAD (United Nations Conference on Trade and Development.)