The Red Sea Development, Saudi Arabia’s flagship tourism project, aims to have 16 hotels ready by the end of 2023, two more than originally planned in the first phase, as it expects global tourism to recover in a V-shape once the pandemic ends, Chief Executive John Pagano said.
The multi-billion dollar project, owned by a sovereign Saudi fund and sponsored by Crown Prince Mohammed bin Salman, involves the development of luxury resorts on 50 islands off the Red Sea coast, where visitors can go diving and visit a nature reserve and heritage sites.
The mega project is expected to increase the Saudi GDP (Gross Domestic Product) by $5.86 billion per year upon completion, when it will cover 28,000 km2 of islands, beaches, desert, mountains and volcanic areas.
The project aims to attract 300,000 visitors annually during the first phase, Mr. Pagano said, expecting demand to soar in the wake of the COVID-19 pandemic.
“There will be a lot of pent up demand to go and travel as soon as the restrictions are lifted, so I see a V-shape recovery certainly, as far as tourism is concerned,” he said.
The project plans to finalise a 15-year loan from banks worth $3.73 billion by the end of the year to partly fund its $7.9 billion capital spending by 2023, as it expects to end 2020 with around $4 billion worth of committed contracts, Mr. Pagano added.
The remaining required funding for the first phase would come from the Public Investment Fund who is the owner of the project.
“Nothing has changed, our commitments are in place, our capital is secured and fully committed, we are extremely excited about how we’re going to transform the role of tourism in Saudi Arabia as it exists today,” he said.
As part of a strategy to diversify the Arab world’s largest economy away from oil, the kingdom wants tourism to contribute 10 percent of the GDP by 2030.
Other big PIF-supported ventures include the $500 billion NEOM economic zone and the entertainment zone in Qiddiya.
Pagano, a former managing director of the Canary Wharf Group in London, tried to ease concerns that once the project is completed in 2030, the Red Sea environment will suffer, claiming it was not aimed at catering for a” mass market.”
“Even in the full build-up by 2030 – when we build the entire development – we will have 800,000 to 1 million visitors per year maximum,” he said.