Kingdom Hotel taps extra revenue on property

DUBAI (Reuters) - Kingdom Hotel Investments KHI.DI (KHIq.L: Quote, Profile, Research, Stock Buzz) plans to beef up revenues by selling real estate developed as part of its hotel products, with projected revenues from ancillary property seen between $225 and 280 million over the next five years.

Kingdom Hotel CEO Sarmad Zok told the Reuters Middle East Investment Summit that the pre-sale of villas on its resort complexes would serve as an extra funding option for other projects.

"We are extremely focused on ancillary real estate, we are building in-house capabilities to further develop that," Zok said.

He said ample surplus liquidity in the Gulf region had left investors with cash to buy second homes and that owners could gain extra income by letting the properties via Kingdom Hotel.

"In certain cases we're able to fund an entire project from debt and ancillary listed sales with very little equity," he said.

"We're open to all funding structures that allows us to leverage the portfolio that we have and effectively reduce our cost of debt and our cost of capital," he added.

The company, controlled by Saudi Prince Alwaleed bin Talal, said in its full year results for 2006 that revenues were up 68 percent at $99 million, and future cash flows could fund between $200-300 million of additional purchases in the next 24 months.