World's Largest Hotel With 10,000 Rooms And 70 Restaurants Could Cost $3.5bn, But When Will It Open?
Abraj Kudai—the $3.5-billion project expected to become the world’s biggest hotel (by room count) in Mecca, Saudi Arabia—may have trouble completing as scheduled by 2017.
This is as result of the low oil prices last year, which according to a recent Gulf Business article, could be causing quite a ripple effect to the Saudi economy.
As the owner of the Abraj Kudai project, the Kingdom of Saudi Arabia’s Ministry of Finance is also a prime customer of The Saudi Binladin Group (SBL)—one of the country’s largest construction companies. Naturally, the actions of the government directly affect SBL. So when the low oil prices began propelling the government “to cancel or suspend projects and delay payments,” SBL suffers too. Further exacerbating the situation, as reported by Gulf Business, was when one of SBL’s cranes fell into the Grand Mosque in Mecca, resulting in 107 deaths and the company banning “from receiving new state contracts altogether.” In response to its potential financial collapse, the conglomerate let go of thousands of employees and stopped work on several important projects that includes, of course—Abraj Kudai.
Since last year, Abraj Kudai has attracted much attention for a number of reasons. First, it overtook (most notably) the likes of First World Hotel (7,351 rooms) in Malaysia and MGM Grand (5,044 rooms) in Las Vegas to become the world’s biggest hotel in terms of room-count. Then, many such as Time.com and Architectural Digest reported on the multi-functional project, revealing how it would contain 70 restaurants, food courts, a bus station, a shopping mall, a conference center and ballroom. With twelve towers housing four- and five-star rooms, five floors reserved entirely for Saudi royalties, and four rooftop helipads, Abraj Kudai was touted for “offering an unprecedented level of luxury” by CNN.
(Photo credit: Dar)
So while the folks at Dar Al Handasah—the international design firm in charge of the project—believes this development will become a striking landmark for its “huge unparalleled size, height, distinguished location and exposure,” the $3.5-billion project and the likes of other luxury hotels near the Sacred Mosque also attracted much criticism—especially from pilgrims who attend Haj.
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For instance, Irfan Al-Alawi, Director of the Islamic Heritage Research Foundation in the UK, spoke to The Guardian about how “Everything has been swept away to make way for the incessant march of luxury hotels, which are destroying the sanctity of the place and pricing normal pilgrims out.” And while the starting price of Abraj Kudai’s four or five-star hotel towers are unknown as of press time, it appears that these luxury hotels are turning the “simple rite of passage”… “into an experience closer to Las Vegas, which most pilgrims simply can’t afford,” he noted.
At this point, given the potential effect SBL’s actions could have on the Saudi Arabia economy, it seems questionable as to when (or if) the development could be built. This progression of events is hardly surprising to Tarik Dogru, Assistant Professor of Hospitality Finance and Accounting at Boston University School of Hospitality Administration. Prior to the reporting by Gulf Business, he noted how the country’s fiscal deficit has risen to approximately $100 billion in 2015, which effectively makes budget management of a major project like Abraj Kudai especially challenging.
So as it seems, what we see now— according to Dogru—is the Saudi government restructuring the economy in response to the deficit. With plans to reduce spending, opening their economy for foreign investment in a larger scale, and changing immigration policies, the Saudi Arabia—as Dogru sees it—is a strong country and major oil producer that could well have the effective strategies to weather this storm.
And as for the Abraj Kudai, the financial expert believes the potentially prestigious country icon would continue and be finished in the near future—although he predicts that it would most likely be after 2018.
Completing this development through this difficult time would mean applying different strategies—from finding other construction companies to finish the job or entering into a joint venture with a foreign investor, “but in theory, the solutions are endless,” Dogru said.
Ultimately, “The decision about when and how to complete the Abraj Kudai would depend on the government, and it will probably be an important indication of how a restructured Saudi Arabia economy will look like,” noted Dogru.
No comments were made by the Kingdom of Saudi Arabia’s Ministry of Finance and Dar Al Handasah as of press time.
(Photo Credit: dar)
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