Corporate Presentation December 2017
Contents Overview: A leading travel & tourism company 3 Hospitality 8 Travel 14 Investments 25 Supporting Businesses 29 Financial Performance 32 2
A leading travel & tourism company with a balanced portfolio of trusted brands that consistently exceed customer expectations
Adjusting to a shifting landscape Despite being the largest travel & tourism company in Saudi Arabia, ATG is Introduction constantly monitoring emerging market trends and opportunities Hospitality Travel Investments Supporting Businesses TRENDS OPPORTUNITIES Financial Performance Travelers increasingly Capitalize on the competitive ▪ discerning advantages inherent in its size and history Leadership role in travel ▪ Industry facing pressure management services on mark-ups Admired Saudi company – aligned ▪ with Vision 2030 Online increasingly Delivering growth and strong cash ▪ important sales channel flow Government spending decline 4
Travel & Tourism Value Chain We will be selective about where in the sector we will deliver value Introduction Hospitality Travel LOGISTICS INTERMEDIARY SERVICE DELIVERY Investments & INFRASTRUCTURE Supporting Businesses Financial Performance Documentation Traditional travel agent Infrastructure Providers • • • Logistics • Local Travel Online travel agent • • DMC Accommodation • • Transportation • Entertainment • Excursions • KEY : ATG Focus Area Al Tayyar has a well balanced commercial portfolio to succeed in the travel & tourism industry, specifically along intermediary and service delivery activities 5
Operational Consolidation To best capitalize on market opportunities, we are organizing operations around Introduction four core commercial focus areas Hospitality Travel Investments FROM A GROUP OF NUMEROUS SUBSIDIARIES… …TO Supporting Businesses 5 SBU’S 4 FOCUS AREAS Financial Performance Traditional Travel Agent (KSA) DMC International TRAVEL DMC Mecca Travel Services Conference - operate Freight Forwarding Online Travel Agency Online Travel Agency Hotels – own Hospitality HOSPITALITY Hotels – operator Car rental Car rental SUPPORTING BUSINESSES Traditional Travel Agent (Int'l) Corporate ventures INVESTMENTS Other investments 6
Positioning for the Future We know where we want to be by 2020 and are implementing the strategic Introduction initiatives required to get us there transform, diversify and balance Hospitality Travel TODAY STRATEGIC INITIATIVES TOMORROW: 2020 Investments Supporting Businesses General General General Financial - Business-to-government (B2G) - Reorganize of main business areas - B2G and B2C Performance - Concentrated revenue source - Upgrade of technological capabilities - Diversification of revenue source - Traditional travel agency - Balanced portfolio - Hospitality owner - Technology-focused Travel Services Travel Services Travel Services - Leading ticket agent in Middle East - Reconfigure the traveler experience - Leading omni-travel service - Targeting offline sales, corporate w/ focus on leisure customers - Holiday “advisor” accounts - Invest in tech platforms - Hajj & Umrah (inbound travel) - Increase focus on Hajj & Umrah Online Online Online - New market player - Scale up technology capability - Leading service provider in MENA - No profitability - Enter new markets with potential - Profitable in core markets and to build market share growing in new markets - New products and expand market share Hospitality Hospitality Hospitality - 5 operational hotels including 2 direct - List REIT 2018 - Optimizing the balance sheet assets - Maximize cash flow from direct - Own and operate 6,000 keys in - Entering mid-market segment assets mid-market - Launch Development Fund - Leverage the Choice Hotel brands to - Diversified net income from grow mid-market segment different assets – include 7 Development Fund
Hospitality Supporting Financial Investments Performance Introduction Hospitality Travel Businesses
Al Tayyar is leveraging its legacy business to successfully Travel Group reposition the Company through a balanced asset portfolio offering stable cash-flows and risk- adjusted returns 2
Hospitality: Overview ATG will deliver stable cash flows by capitalizing on the growth of Saudi Arabia’s tourism sector via the development and operation of mid-market hotels in the GCC Introduction Hospitality Travel Investments AT A GLANCE Supporting ACHIEVEMENTS Businesses 2 5 1,880 SAR 4 bn Financial Performance Inaugurated flagship - Sheraton Makkah Cities Hotels Rooms Book value Delivered two pilgrim - OBJECTIVE accommodations in Makkah Provide stable cashflow to fund working capex ▪ Invest in under-served mid-market hotels ▪ Decision to spin-off - Optimize balance sheet, push for higher returns on equity ▪ hospitality assets in Makkah into a REIT APPROACH Mid-market hospitality Locate hotels in high density areas and/or major cities - ▪ Identify clear entry points for mid-market hotels Development Fund to be ▪ Support long-term indirect and minority stakes ▪ launched in H1 2018 10
Hospitality: Direct investments These assets are associated with globally recognized brands, strategically located Introduction in Makkah and Jeddah - delivering stable, low volatility cashflow Hospitality Travel Investments Benefits Supporting Businesses Global brand recognition - better Financial Performance RevPAR premium #1 location in Jeddah and Makkah Lower income volatility and greater transparency Disciplined strategy of investing in key cities and heritage sites Key growth markets – Hajj & Umrah, and domestic tourists 11
Hospitality: Indirect Investment Our two ‘indirect assets’ will further increase steady cashflow, via off -balance sheet Introduction financing, and will also enhance our liquidity profile Hospitality Travel Investments ASSET 1: MID MARKET DEVELOPMENT FUND ASSET 2: REIT Supporting Businesses ▪ Develop and operate mid-market hotels across GCC utilizing Financial Create REIT to extract cash for ▪ Performance equity and debt off the balance sheet investment and provide stable net income to the group ▪ Contribute 7 plots of land and cash equity into the fund , to be managed by a independent fund manager and operated by 100% of assets in Makkah ▪ the Choice Hotel brand Specialist hospitality portfolio ▪ ▪ Develop 10 hotels under the Choice Hotel brand Consists of 3 fully leased hotels and ▪ 110 serviced apartments Fully focused on Hajj & Umrah ▪ Al Tayyar Group Listing Q1 2018; retain majority stake ▪ Invest land and cash - 7 plots > Jeddah, Riyadh and - Makkah Landowners/Contractor Unitholders Invest cash - Invest land - 10 Masafi Hotel Sheab Quraish Beer Baleela Private Real Estate Fund Fund Manager 3rd Party Custodian (CMA - 12 authorized)
Hospitality: Minority Stakes Thakher will be one of the largest development projects in Makkah Introduction Hospitality Travel Investments Largest Direct 30% Phase 1 development 95 hotels and 8 residential investment acquisition – 323 sq/m size completed by Supporting project in apartments buildings commitment Businesses SAR 804 m FY 2018 Makkah SAR 100m Financial Performance 13
Travel Supporting Financial Investments Performance Introduction Hospitality Travel Businesses
Al Tayyar delivers travel and holiday solutions to its customers Travel Group across the MENA region and broader Muslim world through its travel service outlets and proprietary online travel platforms 2
Travel Services: Overview ATG’s Travel Services, a traditionally flagship business, will be refreshed, rebalanced Introduction and redefined Hospitality Travel REALIGN REFRESH REBALANCE Investments Supporting Businesses Financial Performance Hajj & Umrah Leisure Tourism Government & Corporate Business OBJECTIVE ▪ Defend leading position in government ▪ Identify new growth ▪ Seize untapped opportunity leisure business opportunities for Hajj & business Umrah tourism ▪ Consolidate growth of corporate business ▪ Target SAR 2.7 bn gross sales by 2022 APPROACH ▪ Provide seamless customer experience ▪ Introduce new travel management ▪ Define growth and go-to- through omni-channel strategy portal market strategy for Hajj & Umrah tourism ▪ Shift from selling low margin tickets to ▪ Optimize processes and focus on cost packages optimization ▪ Propose new government platform to allow Umrah ▪ Enhance sales experience by pivoting ▪ Customer segmentation strategy operators to target global from ticketing agents to travel pilgrims advisors ▪ Align with Vision 2030 ▪ Create inspirational holiday advisory programs and initiatives experience in redesigned branches 16
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