Saudi Travel Tycoon becomes Billionaire with Pilgrimage Packages
Mohammed Al Madani, chancellor at Saudi Arabia’s ministry of foreign affairs, is a frequent flier, logging at least 10 international trips a year on diplomatic missions to London, Lisbon, Manila and elsewhere. Before packing his bags, he usually checks in with the Al Tayyar travel agency in Riyadh.
Al Madani is one of 3 million Saudi and non-Saudi government workers and their families who move in and out of the country every year, according to the Saudi Central Department of Statistics & Information. Publicly traded Al Tayyar Travel Group Holding Co. has captured almost half of the domestic market for the VIP travelers, and is Saudi Arabia’s largest air travel business.
“They’re always my first choice when coming to London,” Al Madani’s 21-year-old son, Fahad, an information technology student at Middlesex University, said in an e-mail.
Such loyalty has helped Al Tayyar’s founder, Nasser bin Aqeel Al Tayyar, amass a fortune valued at more than $2.4 billion, according to the Bloomberg Billionaires Index. Al Tayyar, 58, is also the founder and president of Dubai-based Arab Publishers House, the publisher of Forbes Middle East and four other publications. He’s never appeared on an international wealth ranking.
A spokeswoman for Al Tayyar who asked not to be identified because she’s not authorized to comment publicly about the business, confirmed the billionaire’s stake and said he would not comment on his wealth.
Pilgrimage Packages
Al Tayyar provides airline reservations, mobile ticketing, hotel booking and ground transportation services through 370 branches in Saudi Arabia and at 18 companies outside the kingdom. It also organizes travel for foreign medical care and education, as well as Hajj and Umrah pilgrimage packages, according to its website.
Other businesses include cargo shipping, magazine publishing and a real estate development company that was founded in 2008 to build and manage hotels, apartments, resorts and clubs. The business plans to transform what the billionaire said in 2012 was a neglected element of the country’s infrastructure.
Revenue has increased an average of 19 percent annually in the past three years to more than 7.7 billion riyals ($2 billion) in 2014. The stock has risen almost 340 percent since it began trading on the Tadawul Stock Exchange in June 2012, after adjusting for a stock split. The Tadawul All Share Index has risen about 38 percent in that period.
Local Sponsor
Saudi Arabia accounts for about 90 percent of Al Tayyar’s sales, according to Abdulaziz Ahmad Jawdat, a research analyst at Riyadh-based Saudi Fransi Capital. The 82-year-old kingdom is one of the most difficult places to visit in the world due to its lack of freedoms, according to Washington D.C.-based Freedom House, giving Al Tayyar a further hold on the tourists who want to visit and the residents who want to leave.
Al Tayyar was the first company to receive official permission from the Saudi government to organize and promote domestic pilgrimage travel packages in the kingdom in 2000, according to its website. Its packages cover visa services and other authorizations, and include special prices during Ramadan, accommodations, reserved seats on flights and buses, medical services and even special trips to the holy sites upon request.
Religious tourism makes up 37 percent of all inbound trips to the kingdom and half of all travel spending there, according to Jawdat. The Hajj pilgrimage to Saudi Arabia’s holy city of Mecca is a mandatory religious duty that Muslims must carry at least once in their lifetime. More than 1.3 million non-Saudi pilgrims came from 163 countries to perform the Hajj last October, according to figures released by the Minister of Interior, up from 1.1 million the year before.
Cultural Sites
The government plans to increase the capacity of the Holy Mosque to accommodate more than 2 million worshipers, including adding new security infrastructure and air-conditioning systems, as well as hotels and a rail and bus station in Medina.
“Once the Holy mosque expansion is complete, which is expected by 2018, the number of religious visitors might even triple,” Jawdat said.
Al Tayyar has also been expanding outside Saudi Arabia, acquiring Chester, England-based luxury tour operator Elegant Resorts Ltd. from Thomas Cook Group Plc for 88 million riyals in February 2014 and Manchester-based United Co-Operative Travel Management Ltd. for 85 million riyals a month later.
Last month, the company announced the formation of the Saudi Heritage Hospitality Co. with the Saudi Commission for Tourism & Antiquities to promote tourism at cultural sites across the country. Al Tayyar has a 20 percent stake in the new business.
Government Travelers
The billionaire has been in the travel business most of his life. Before founding the company in 1980, he worked at a local bank and at the reservations department of Saudi Arabian Airlines. He left the airline and opened up his own reservation business in Riyadh with four employees and about $300,000.
“My dream was to establish a private airline company, but Saudi laws prevented me from doing that,” Al Tayyar said in a 2012 interview with Jeddah, Saudi Arabia-based Arab News. Instead, he decided to sell tickets on behalf of the airlines.
Al Tayyar has a 45 percent market share among Saudi corporate and government travelers whose business represented two thirds of its sales in 2014, according to the company’s annual report.
Kingly Gesture
Its domestic travel business got a boost with the accession of King Salman bin Abdulaziz to the throne on Jan. 23, 2015 after the death of his 90-year-old half-brother King Abdullah bin Abdulaziz. One of the new king’s first acts was to hand out $32 billion in cash to Saudi citizens, John Sfakianakis, the Riyadh-based director of the Middle East region at London-based investment manager Ashmore Group Plc., said in an e-mail.
The extra disposable income from the new King could encourage more Saudis to travel because 80 percent of the money would go toward consumption, Sfakianakis said.
“Saudis tend to react positively to such measures,” he said. “They are very consumer driven.”
Source: Bloomberg
