Performance Review

Hospitality Sector

SEDCO Holding has invested in world-class Saudi hospitality companies such as Elaf, which operates a network of hotels, offers Hajj and Umrah services, and operates tour and travel agencies. SEDCO’s Tarfeeh casual dining subsidiary also has a vital role in catering for locals and visitors alike.

Elaf Group

Elaf is a leader in Saudi Arabia’s hospitality, travel and tourism sectors. It is wholly owned by SEDCO Holding, having been established in 1981. The company operates a network of three, four and five-star hotels, offers Hajj and Umrah services, and operates tour and travel agencies.

Ziyad Bin Mahfouz
Chief Executive Officer

“INTENSIVE MARKETING CONTINUED THROUGHOUT THE YEAR, INCLUDING THE ROLL-OUT OF THE GROUP’S NEW BRAND STRATEGY AND VISUAL IDENTITY.”

Providing an enhanced customer experience through better use of technology was an important part of Elaf’s 2019 strategy. The company actively participated in the digital development that will link to the Ministry of Hajj booking platform and was chosen to be one of the first operators to pilot the new platform.

Keeping revenues stable despite severe pressure on room rates was achieved by focusing on profitable segments, opening new markets such as Kazakhstan and South Africa, and increasing penetration in existing markets. This was supported by disciplined expense monitoring and controls.

Ensuring compliance with the regulations and standards of the Ministry of Labor, Ministry of Hajj, and the Saudi Commission for Tourism and Antiquities remains a constant priority. The combined efforts contributed to 11% annual growth in Hajj and Umrah revenue.

Hotel Galleria retained its status as one the highest ranked hotels in the Kingdom, scoring 9.1 in the booking.com customer rating. All restaurants in Hotel Galleria became fully functional during the year, as well as the spa.

A new guest satisfaction survey and feedback system was launched, with three Elaf hotels taking part as a pilot phase.

Saudization levels were further enhanced and expatriate hotel staff were video-trained in their native languages.

Intensive marketing continued throughout the year, including the roll-out of the Group’s new brand strategy and visual identity and participating in more than 10 international exhibitions and roadshows. Expanding the role of social media in marketing, several accounts were opened for hotel properties and other businesses.

Industry recognition received during the year included an IFT award (Elaf Group), Award for Excellence by Islamic Travel Mart (Elaf Hajj & Umrah), Mousam Jeddah Award (Hotel Galleria), Shavira Award (Elaf Al Mashaer), Shafira Best Partnership Award (Elaf Al Majeedi), and Travco Award (Elaf Kinda)

Looking ahead, maintaining high levels of Saudization will remain a constant priority, tapping into local capabilities and enriching skills. All Elaf businesses will continue to benefit from the new tourist visa program offered to 49 nationalities, launching new brands and opening new markets in line with the Vision 2030 concepts for the travel and hospitality sector.

Tarfeeh

Tarfeeh, a leader in Saudi Arabia’s hospitality sector, was established in 1996 to operate international and domestic food and beverage brands such as Applebee’s, Ocean Basket and China Gate. The company is wholly owned by SEDCO.

Ahmed Saleem Marashde
Chief Executive Officer

“INNOVATION CONTINUES ON MULTIPLE FRONTS, MAINLY FOR APPLEBEE’S WITH THE LAUNCH OF A 100% HOMEGROWN BREAKFAST MENU.”

Tarfeeh has been through a complete restructuring to align with the changing and highly competitive F&B market, positioning for future growth and anticipating the trend to higher consumer expectations. Restructuring continues in the drive to maintain leadership in casual dining and to grow in other segments such as fast casual and quick service restaurants.

Efficiencies and cost optimization have also been priorities as Tarfeeh adapts to the new market norms. Alignment with strategic business partners on long-term goals has strengthened the benefits of adaptation strategies.

Innovation continues on multiple fronts, mainly for Applebee’s with the launch of a 100% homegrown breakfast menu. This has proved successful, giving guests all-day dining options. The new menu offers American dishes, as well as regional Arabic favorites.

In-store entertainment was introduced during 2019 including live music, karaoke and stand-up comedy. A centralized streaming service ensures high-quality music and also enables transmission of promotional material.

Ocean Basket increased sales by more than 7% in 2019, with delivery orders rising by more than 40%. China Gate sales rose by 5%, and Applebee’s continues to outperform the market.

A new POS system is being tested in several stores, providing more flexibility and data collection to better serve guests, mainly through integration with loyalty programs and the ability to personalize offerings.

The company is proud to have maintained its Platinum status for Saudization and will continue to train and nurture capable Saudi youth. One-third of Tarfeeh’s 25 locations earned a 100% food safety rating, with all scoring at least 85%.

Tarfeeh continues to review ideal growth channels. A complete relaunch of the Applebee’s menu is expected to be a great sales generator. A refreshed lunch offering will make a higher contribution, as will the expansion of entertainment attractions

AutoWorld

AutoWorld is a leader in automotive leasing for corporate, government and semi-governmental clients, having been established in 1981 and now operating across Saudi Arabia.

Tariq Khshhal
Acting Chief Executive Officer

“THE MAIN ELEMENTS OF SHIFT 2025 ARE TO OPTIMIZE AND GROW THE CORE LEASING BUSINESS AND GRADUALLY INTRODUCE SYNERGISTIC NEW SERVICES.”

In mid-2019, AutoWorld relocated its head office in Al-Khobar, exited the short-term rentals business, and adopted a new strategic plan — Shift 2025 — defining a clear roadmap for the company. The plan involves expanding its core leasing business while introducing new value-added services for corporate and retail clients.

The strategy was developed in cooperation with the Roland Berger consultancy, the company’s management team, and key stakeholders. The strategy includes a dedicated operational excellence program that focuses on increasing the scale of the company’s core leasing operations through enhancing key business processes to deliver better customer experience.

The main elements of Shift 2025 are to optimize and grow the core leasing business and gradually introduce synergistic new services. The leasing business will also diversify by targeting SMEs and individual consumers with tailor-made solutions based on specific needs.

A digital transformation project — Switch — is included in Shift 2025, targeting the digital optimization of AutoWorld’s procedures across all business lines, while setting the stage for disruption in the region’s auto-leasing sector.

At the same time, corporate governance was strengthened by activating the Board Nomination and Remuneration Committee and the Audit and Risk Committee, and strengthening the executive management team.

Operational highlights of 2019 included new contracts that were signed with leading corporates and government entities, delivering more than 2,000 vehicles, with a further 2,500 due in the first half of 2020.

AutoWorld’s financial performance in 2019 reflected the early impact of Shift 2025. The leasing fleet grew by 7.9% year-on-year and improvements in the sale of used cars also contributed significantly to the bottom line. Overall, EBIT rose by more than 240%.