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Red Sea Development Co.'s John Pagano on Saudi Arabia tourism

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The Kingdom of Saudi Arabia is moving aggressively to diversify its economy with a strong play in luxury tourism. A cornerstone of that effort is the Red Sea Project, which aims to develop one of the world's last untouched marine environments into a massive, ecofriendly resort destination. Senior editor Jeri Clausing spoke via email with John Pagano, CEO of the Red Sea Development Co., about the changes underway.

Q: Has construction started on the project?

John Pagano
John Pagano

A: Yes, operations at our Base Camp commenced in February. The camp represents a key milestone reached in the Phase [Zero] stage of the project, in which we intend to complete a range of essential enabling infrastructure, including temporary roads, a bridge, jetties, utilities, workforce accommodations and a management village.

Q: When is the first phase set to open, and what will that entail?

A: The first phase of the project is scheduled for completion in 2022 and will include 14 hotels providing 3,100 rooms across five islands and two inland resorts. Phase One will also include a yacht marina, leisure and lifestyle amenities and an airport as well as the necessary supporting logistics and utilities infrastructure.

Q: Who besides the kingdom is investing in this project, and have any major international brands signed on for any of the hotels?

A: We are talking to major hotel brands at the luxury end of the market, and we have received very positive feedback on the quality of the destination and the growth opportunity presented by the development of the Saudi tourism industry. One of our primary goals is to become the world leader in environmental sustainability across all phases of development: planning, construction and operation. To achieve this will require that best practices in sustainability and governance are implemented and maintained long term.

Q: Who is the target demographic for this development?

A: In line with current industry trends, our core target audience is the luxury traveler segment. The majority of luxury travelers are still coming from Western Europe and North America, but Asia is an emerging force, as well. In particular, the Middle Eastern tourism and leisure market is forecast to grow faster than average, led by visitors from Asia and Europe.

Q: What steps are being taken to change the perception of the kingdom as unfriendly to Westerners?

A: Saudi Arabia has always been welcoming of the outside world. Each year, the kingdom hosts close to 18 million international visitors for the Hajj and Umrah pilgrimages, and around 120,000 Western expats call the country home. Western companies have long played a role in the Saudi economy, and many companies here have relationships that extend back decades. Many former Western expatriates have very fond memories of their time in Saudi Arabia and of the hospitality of the Saudi people.

Western Europe is one of the largest outbound tourism markets in the world, and we have already encountered a growing number of Western travelers who are excited to visit one of the last unexplored frontiers in tourism. They are attracted by the idea of being among the first to experience the destination and by the opportunity to experience a unique, intriguing cultural heritage and an even more fascinating people.  

Our primary aim is to bring people and cultures together to enjoy the natural beauty and experiences that the area has to offer. We will therefore welcome nationalities from across the globe, and we are already looking forward to extending the warm hand of Saudi hospitality to them. And with the government launching an e-visa platform for tourism visas earlier this year, our vision is well aligned with that of the country and its leadership.

Q: How many visitors will you be able to accommodate?

A: Phase One will give us annual capacity of around 300,000 visitors. Once complete, the destination is planned to offer 48 hotels with 8,000 rooms across 22 islands and six inland sites, for an annual capacity of around 1 million visitors per year.
We will be managing visitation very carefully to minimize overtourism and the associated environmental costs, while offering a uniquely memorable experience to everyone who comes to enjoy the destination.

Q: How open do you think Western tourists will be to this project?

A: The project is closely aligned with current and developing trends in the luxury tourism market. Travelers are increasingly seeking standout experiences over conspicuous acquisition. Our year-round ability to offer an island getaway, a resort holiday, a mountain retreat and a desert experience, all within comparatively close proximity, will be very appealing. And the opportunity to experience a rich and very hospitable culture will also be a factor in encouraging people to visit. There is always appeal in the path less well-trodden, so initial interest is likely to be based on curiosity. However, the extraordinary beauty of the environment and the diversity, both natural and built, of the destination is what will keep people coming back again and again.

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