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‘The Red Sea Project’ to Contribute US$ 5.9 bn to Saudi’s GDP Upon Completion : Johan Pagano, CEO, TRSDC

Realising the fact that tourism can be a major driver of economic growth, Saudi Arabia is developing a world-class luxury, regenerative tourism destination to position the kingdom on the global tourism map. Being developed over 28,000 sq. km, the site will host 50 hotels offering up to 8,000 hotel rooms and approximately 1,000 residential properties across 22 islands and six inland sites upon the completion in 2030. Johan Pagano, CEO, The Red Sea Development Company, shares the development plan of the mega tourism project of Saudi Arabia.  Excerpts from the interview: 

You plan to develop 50 hotels by 2030 including 16 hotels already underway as part of Phase One. What is the total investment for hospitality projects? What is the total investment for the Red Sea Project? 

We’ve already signed up nine renowned international hotel brands to operate the first resorts in Phase One. These include EDITION Hotels, St Regis Hotels & Resorts, Fairmont Hotel & Resorts, Raffles Hotels & Resorts, SLS Hotels & Residences, Grand Hyatt, Intercontinental Hotels & Resorts, Six Senses, and Jumeirah Hotels & Resorts. 

The hotels are currently under development and collectively feature more than 1,700 hotel keys of the total 3,000 planned for Phase One. Construction is on track to welcome first guests by the end of 2022. 

Although we do not disclose the total investment, our funding is secure and includes the first riyal dominated green financing of its kind worth 14.12 billion. We’ve also awarded over 700 contracts to date, worth nearly SAR 19 bn ($5bn). Once complete The Red Sea Project is expected to create up to 70,000 new jobs and contribute as much as 22 billion Saudi riyals (USD 5.9 billion) to the nation’s GDP. This will be achieved by creating investment opportunities for the private sector and developing the Kingdom’s tourism industry while preserving the nation’s precious cultural and environmental heritage. 

Apart from the current hotel chains/brand, which more brands are expected for the project? 

We have already signed hotel management agreements with nine luxury hotel brands and are looking forward to announcing additional international hotel brand partnerships in the coming months. 

We were extremely proud to unveil our initial collection of unique and diverse hospitality brands that cater for Saudi Arabia’s growing tourism market. Reaching this milestone brings us one step closer to creating a world-leading barefoot luxury destination, which will soon serve as a gateway to one of the last undiscovered places on the planet. 

With thousands of hotel rooms and other tourism related facilities including a golf course, marina, entertainment, and leisure facilities etc., you are creating a destination with so much on offer. Do you think there is proportional demand from the market? What are the visitor arrival number estimated? 

We expect visitors from the region and beyond who want to explore untouched corners of the world and experience barefoot luxury, whilst ensuring sustainability is at the heart of their stay. While our destination could easily welcome more once complete, we have chosen to limit visitor numbers to one million per year, based on the environmental carrying capacity of the destination. 

We have recognized that travelers’ demands have changed. They are now looking for responsible and authentic travel destinations where sustainability is a key priority when choosing a destination. Travelers want to pursue quality experiences, immerse themselves in the beauty of the local environment and learn about new, intriguing cultures. They are increasingly more interested in pioneering, authentic and bespoke experiences that supplement and deepen the luxurious hospitality services expected, whilst ensuring sustainability is a key factor throughout. 

Our destination will offer an abundance of experiences for everyone, and visitors will have the exclusive opportunity to explore a distinctively diverse region of the world. Spanning 28,000km2, The Red Sea Project is an area of extraordinary natural beauty and biological diversity and is home to an impressive range of complex ecosystems and native wildlife. Across this incredible terrain exists vast mountain ranges, canyons, dunes, dormant volcanoes and breath-taking ancient heritage sites. There will be experiences for nature lovers, outdoor adventurers, cultural explorers and wellness seekers, and the opportunity to enjoy the fabled Saudi hospitality. 

What is the overall destination development plan timeline? 

The Red Sea Project has already passed significant milestones and work is on track to welcome the first guests by the end of 2022, when the first hotels will open. Phase One, which will complete by 2023, includes 16 hotels in total, as well as an international airport, luxury marinas, 18-hole championship golf course, entertainment, and leisure facilities. 

Upon completion in 2030, the destination will comprise 50 resorts, offering up to 8,000 hotel rooms and more than 1,000 residential properties across 22 islands and six inland sites. 

How is The Red Sea Project going to contribute to Saudi Arabia’s Vision 2030 program? 

The Kingdom is going through a rapid period of change and tourism is a strategic growth industry. Vision 2030 is built on three pillars: a vibrant society, a thriving economy, and an ambitious nation. Achieving the ambitious goals of these pillars will enable Saudi Arabia to secure a prosperous future that all its citizens can be part of. 

Tourism has been a central tenet of Saudi Arabia’s Vision 2030 program since it was first laid out. As the nation’s flagship tourism developer, The Red Sea Development Company (TRSDC) is proud to be a key enabler of the Kingdom’s diversification. 

We have bold ambitions to support the growth of tourism revenue from the current three per cent of GDP, to 10 per cent by 2030 and attract a new type of traveler to the country. International and domestic visits to Saudi Arabia are already on track to increase to 100 million a year by 2030, attracting significant foreign and domestic investment and creating a million jobs. 

Combined, both The Red Sea Project and another of our developments, AMAALA, will contribute circa SR35 billion ($9.33 billion) to the Kingdom’s GDP once fully operational. We will be a significant creator of jobs too, employing around 60,000 people directly and creating a further 60,000 induced and indirect jobs. With the Kingdom’s Vision aiming to increase women’s participation in the workforce from 22% to 30% by 2030, tourism will play a crucial role in offering new and rewarding career opportunities 

Can you also throw some light on the design element of this project? 

Design plays an essential role in making our ambition to create a truly regenerative destination a reality. Our designs are intended to seamlessly embed within the natural landscape so that guests feel at one with the beautiful, pristine environment that the Red Sea has to offer. 

Our sustainability principles guide our partnerships with all stakeholders, including our architecture and design teams, and we ensure that everyone we work with shares our values and high standards. We ask our partners to challenge conventional conceptions of design and construction to deliver sustainable approaches throughout the entire lifecycle of the project. Thinking about the design of a building itself is just one consideration, we also carefully consider how it will be used sustainably once operating.  

One key example of the work we are doing in this space is with our Coral Bloom resort, which we unveiled earlier this year and was designed by international firm Foster + Partners. Our vision for the resort was to create a truly immersive barefoot luxury feel. Inspired by the island's natural state and the thriving coral reef that surrounds it, the hotels are designed to give the impression that they have washed up on the beaches and nestled among the dunes almost like driftwood. 

Another resort where sustainability has been instrumental in shaping the design is Desert Rock, created by the architectural design firm Oppenheim Architecture. The resort will be built into the mountain face, with the architecture fully integrated into the rock to preserve its striking silhouette and carefully considered landscaping efforts will enhance the environment by creating new terrestrial habitats. As a result of this design, guests will enjoy uninterrupted panoramic views of the stunning landscape. 

Will this destination offer global level services like night life etc or will there be some restrictions? 

World-class facilities that will be found at the destination include luxury marinas, golf courses, entertainment, leisure facilities and an international airport. International travellers to The Red Sea Project will benefit from the destination being allocated in a Special Economic Zone (SEZ) that will enable relaxed social norms within its boundaries compared to the wider Kingdom. We will announce more on this in due course.  

Which countries are you looking at as your source market? 

We will be opening our doors to visitors from around the world with different backgrounds, cultures, and expectations who are interested in learning more about Saudi Arabia’s rich cultural heritage. Saudi Arabia is also relatively unexplored. It is a new and exciting destination, with a variety of offers from incredible biodiversity to unique landscapes – there is a lot for tourists from around the world to uncover and explore. 

Importantly, our destination is at the crossroads of Europe, Africa, Asia and the Middle East, with 250 million people within three hours’ flying time and 80% of the world’s population within an eight-hour flight.  

We are already seeing keen interest in Saudi Arabia as a tourist destination from around the world. Following the exciting launch of the e-visa in September 2019, Saudi Arabia’s Ministry of Tourism issued more than 350,000 tourist visas in the first three months of that year alone and provided nearly 50 countries with new access to the Kingdom. 

Where does India stand in your overall scheme of things? What sort of Indian visitor numbers that you are aiming for in short-mid to long term? 

We look forward to welcoming visitors from India and beyond as we open our doors to the world. It was great news to see the partnership announced in September this year between Thrillophilia, India's largest platform to book travel experiences, and the Saudi Arabia Tourism Board to showcase the Kingdom as an exciting holiday destination for the Indian market. Through this partnership, Thrillophilia has announced it will engage with its audience of 50M+ travellers to bring awareness about Saudi Arabia's diverse travel experiences.

 One of the interesting elements of this project is regenerative and sustainable tourism. How are you incorporating these elements in the project now and what is in the future? 

Since the very beginning of The Red Sea Project, we have embedded sustainability at the heart of our operations, with a commitment to become the most ambitious regenerative tourism destination in the world. We aligned with all 17 of the UN Sustainable Development Goals (SDGs) from the outset to set immediate high standards and good governance to ensure the project has a regenerative impact on the local environment, society, and economy.  

These high standards for regenerative development drove us to push the boundaries of what is possible for a tourist destination to achieve. For example, the Marine Spatial Planning (MSP) simulation we delivered with King Abdullah University of Science and Technology (KAUST) to assess the developmental impact of the project was the largest ever undertaken. The results of this simulation led us to decide that only 22 of the 90 islands in the area would be developed, with nine protected as special conservation zones. 

Additionally, as a result of the MSP, we created a Concept Master Plan to safeguard marine and coastal habitats with an aim to deliver a net positive conservation benefit of up to 30 percent within the next two decades, a target almost unheard of in tourism and equivalent to designating the entire area as a Marine Protected Area.  

TRSDC is also creating the world’s largest battery storage facility at 1000MWh to enable the entire site to be powered by renewable energy 24 hours a day – the first tourism project of its size to do so. New infrastructure at the destination will generate up to 650,000 MWh of 100% renewable solar energy to supply resorts, attractions, and other utility systems, whilst emitting zero CO2. The resulting saving in CO2 emissions to the atmosphere is equivalent to nearly half a million tons each year. . 

What sort of benefits will you be extending to local communities? 

At TRSDC, we are committed to ensuring the local community benefits as a result of our destination. We want the region to play an integral part in the development and delivery phases and enjoy the rewards once the project opens its doors to guests. 

We’ve also seen that young people are keen to support the growth of the tourism sector and create new futures for themselves. Our research, Future Faces of Tourism 2020, found that nine in 10 young Saudis are looking towards tourism and hospitality careers as the country’s economy diversifies and two-thirds of young Saudis believe that the sector will be a key provider of employment for Saudi nationals. 

There are more than 10,000 workers currently on-site, and we expect there to be around 14,000 people who will eventually work at The Red Sea Project, living in the Coastal Village. Half of our employees at TRSDC are Saudi nationals, which is more than double the national average. We also recently signed an agreement with the Human Resources Development Fund for the vocational training of 500 applicants in hospitality, engineering, airport operations and more. In just a few days, we received more than 35,000 applications. 

We have also completed two rounds of our Elite Graduate Program, which offers young Saudis the opportunity to experience a wide range of roles within the business. Our third iteration of this has just been announced and we are excited to uncover more exceptional local talent.

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