Saudi Arabia to resume building mammoth Makkah hotel: sources

DUBAI: Saudi Arabia is set to restart work on one of the world’s largest hotel projects, the $3.5 billion Abraj Kudai in Makkah, where a financial squeeze halted construction in 2015.

When completed, the Abraj Kudai is meant to have about 10,000 rooms, 70 restaurants, several helipads and a section reserved for the Saudi royal family.

Renewed plans for the government-funded project signal Riyadh is again willing to spend on strategic economic development projects such as tourism and are a boost for Saudi Binladin Group, the company leading the construction.

Saudi Binladin, one of the country’s biggest construction conglomerates, has been hit hard by a slump in the building sector after low oil prices slashed Saudi Arabia’s export revenues and forced the government into austerity policies.

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Sub-contractors have been asked to submit pricing proposals to Saudi Binladin by mid-September, sources familiar with the matter, who declined to be named, told Reuters.

“With a clearer grasp on its finances, the government has allocated a portion of its budget towards completing key projects,” an executive in the Binladin group told Reuters.

A spokesman for the group could not be reached for comment, and the Ministry of Finance declined to comment.

Saudi Binladin Group is estimated by bankers to have debt of around $30 billion and earlier this year its creditors agreed to extend a 4 billion riyal ($1.1 billion) Islamic credit facility to pay for building work at Makkah’s Grand Mosque.

“The Ministry of Finance is taking a lead role in the hotel project … This is positive for the banking sector,” one Saudi banker told Reuters.

Saudi state finances have strengthened somewhat this year because of moderately higher oil prices and cost-cutting. The state budget deficit shrank to 46.5 billion riyals ($12.4 billion) in the April-June period from about 58.4 billion riyals a year ago, Ministry of Finance data showed on Sunday.

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The government is keen to create jobs and reduce its dependence on the oil sector by developing industries such as tourism, particularly Islamic tourism.

The annual haj pilgrimage attracts about 2 million pilgrims to Makkah

and the government’s economic reform plan envisages boosting that number to 2.5 million by 2020.

A planned opening date for the Abraj Kudai has not yet been confirmed, but one source said it would take at least 2-1/2 years to complete.