Sarmad Zok, chief executive of Kingdom Hotel Investments

11 May 2006
Sarmad Zok, chief executive of Kingdom Hotel Investments

Sarmad Zok is chief executive of Kingdom Hotel Investments and one of the key players in the Middle East's hotel development scene. He took time out of the Arabian Hotel Investment Conference to talk to Emily Manson about the company's plans.

Is the Dubai hotel market overcooked? Not overcooked but definitely well-baked. Traditionally, it was just upscale properties being built here, but now the market is opening up to other segments - which is not a bad thing.

Do you think the hotel market in Dubai is sustainable? Yes, because they are not just building a supply of rooms, but the infrastructure to create more demand, such as attractions, etc. Regions need to have a hub and Dubai is trying to become that. However, there are quality issues, as markets like this grow at such a rapid pace there is bound to be some compromise on quality.

How do you guard against political instability? People are obsessed with only one kind of industry risk - political risk - but there are many other types. However, people still need to stay in hotels in these regions. Providing you are not just catering for a leisure market, non-discretionary travellers will still come. We do measure threats, but you have to take risks and just insure against them.

How are you reducing your energy consumption? We use intelligent design and technology to keep energy consumption to a minimum and keep us energy friendly and eco-chic.

How seriously do you take environmental issues? We are obsessed with the environment and the impact our hotels have, especially as we've developed some hotels in very sensitive areas, such as Kenya. People do take the environment lightly but, as a company, Kingdom is very serious about it - without the earth, we lose the soil from which we feed.

How important will mixed-use developments be to the future of Kingdom? Mixed-use developments are very important as they allow us to leverage more value by tapping into other forms of real estate.

What are your development plans? Having just gone through our initial public offering, we want to bring depth to our management team and continue to expand in emerging markets. Our new acquisition in Phuket, Thailand, gives us a foothold in the Asian market, and we will continue to develop there, as well as in eastern Europe and Africa.

If you could have only one hotel, where would it be? Cairo - based on wanting the most return on capital. For the past 10 years, they've sustained occupancy at 75%. There is a high barrier to entry in the city but strong demand and high profit margins. Demand growth is expected to outstrip supply growth in Egypt too, which is key.

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