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The Red Sea Development Company is on a mission to welcome the world to an unspoilt stretch of the Kingdom's unique coastline - sooner than you might think.

Inside Saudi Arabia's plans to transform its tourism industry

John Pagano, CEO of The Red Sea Development company (TRSDC)

Imagine sitting at a luxury hotel, on a stretch of pristine, seemingly untouched virgin coastline. With little to do but relax, you’re faced with the enviable options of spending the afternoon scuba diving, visiting a local village in the hunt for some traditional cuisine and culture, or exploring nearby undeveloped islands to observe the more than 1,200 Red Sea species of fish – an astonishing 10 percent of which cannot be found in any other body of water.

This vision of paradise, however, is not what one might expect. It’s not Mexico’s Riviera Maya, nor Zanzibar, the Seychelles or Bali – it’s Saudi Arabia, newly opened to the world.

Announced in July 2017, Saudi Arabia’s The Red Sea Project is the only one of the Kingdom’s landmark “giga”-projects to focus solely on its nascent tourism sector.

The plan is nothing if not ambitious, though: by the time it’s complete in 2030, it will deliver up to 8,000 hotel room keys across 22 islands and six inland sites in a project of approximately 28,000 square kilometres – an area roughly equivalent to the size of Belgium.

At the helm of it all is John Pagano, the CEO of The Red Sea Development Company (TRSDC), which is wholly owned by the Public Investment Fund. Pagano is no stranger to what he describes as “transformational” projects: A veteran of the industry, he’s the former managing director of London’s Canary Wharf business district, as well as the Baha Mar Development company, which developed a 1,000-acre resort complex on the island of New Providence in the Bahamas.

A project of this scale in Saudi Arabia – a kingdom that not long ago was unthinkable as a tourist destination for non-religious visitors – represented a completely different and, in many ways, unprecedented challenge.

In an interview with Arabian Business, Pagano says that a project of this scale in a largely untouched tourist market was something that he simply couldn’t turn down.

One of the proposed luxury residences on the Ummahat Al Shaykh islands

“I met a lot of the people that were working on the project. A lot of young Saudis. I was so taken by their optimism, their enthusiasm and their looking forward to what the country was going to do,” Pagano explains with a smile. “I didn’t need to do another large-scale project, but because of the combination of all those things, it was just one of those opportunities I felt I had to participate in.”

Full steam ahead

At the moment, however, much of Saudi Arabia’s attention has been on battling the ongoing Covid-19 pandemic and its impact. Over the past several months, the pandemic has not been kind on Saudi Arabia, bringing international flights to a stop and forcing authorities to massively scale down this year’s Hajj and Umrah pilgrimages.

The global pandemic, however, has not had a significant impact on The Red Sea Project’s progress. “It had a limited effect, with some delays, most related to restrictions on travel and the free movement of materials,” Pagano explains. “I’m pleased that as we come out of the other end of [the pandemic] we were able to mitigate a large part of that… we got concessions [from the government] that allowed us to keep this site operating.”

In fact, tourists may be hitting the beaches of the Kingdom’s Red Sea coast as soon as two years from now. The first phase of the project will eventually grow to include 16 hotels, totalling 3,000 hotel keys across five islands and two inland locations.

“The next real milestone is welcoming our first guests at the end of 2022. That’s what’s on the horizon. We’re working towards opening the resort, although not the full 16 hotels,” Pagano tells us. “We’re probably going to open five by the end of 2022, and then the balance will open in 2023. But we’re committed to opening and welcoming our first guests.”

To honour this commitment, the first phase of The Red Sea Project has been busy preparing all the necessary infrastructure, which will eventually grow to include an airport, entertainment facilities and a “town” capable of housing and providing for 15,000 workers.  “We’ve already committed SAR 5.3 billion ($1.41 billion) of signed contracts that we are executing on site,” Pagano adds.

The scale of the project, Pagano explains, presents golden opportunities for firms of various kinds – particularly in the construction and hospitality sectors – as well as for investors. As Pagano tells it, the scope of the project, taken alongside Saudi Arabia’s other “giga-projects” may present a once-in-a-lifetime chance.

The Red Sea Project will eventually include its own international airport

“Saudi Arabia is going to be one of the biggest spenders in capital programmes in the world. This is a perfect opportunity for a first mover to get in and establish a presence in order to avail themselves not only to our project, but ultimately to projects [across Saudi Arabia] that are going to continue for many years to come,” he explains. “We’re engaging all kinds of brands.”

A protected environment

As he discusses the project over a Zoom call from Saudi Arabia, Pagano takes pains to remind us – repeatedly – that he believes what differentiates The Red Sea Project from other regional developments is a commitment to sustainability and to the enhancement of the environment.

As an example, Pagano points to a partnership with the nearby King Abdullah University of Science and Technology (KAUST). Together, KAUST and TRSDC are working to track a number of endangered – and increasingly rare – green and hawksbill turtles that are known to inhabit the area. Additionally, the project has pledged to pursue a policy of 100 percent renewable energy, as well as zero waste to landfill and a total ban on single-use plastics. TRSDC is also mulling over the idea of bringing in park rangers to patrol and protect the site’s more than 90 islands, 75 percent of which will remain undeveloped.

This approach, Pagano says, is what guides the project and all its partnerships going forward. “We welcome like-minded partners who share our values and our beliefs, but we will control it,” he says. “So, the joint venture is with us. We don’t tell them there is an island that they can do what they want with. That’s not our business model.

“The whole of this lagoon has been classed as a critical habitat, and what happens in one part of the lagoon affects the entirety of it,” he adds. “All it takes is one rogue developer, and you spoil the whole thing. Once you’ve done that, you’ve ruined the most precious commodity that we have.”

In what is perhaps unique among other large-scale developments in the Middle East, TRSDC has also turned to prefabrication to diminish its impact on the environment – putting the finished pieces into place like Lego blocks on-site.

“In other words, we want to build completed units and bring them to site, and put them into position,” Pagano adds. “The reasons for doing that are two-fold. For one, when you build in a factory environment, you’re going to get a much better quality of finish because it’s in a controlled environment.

A Red Sea Maldives? The project will create luxury, low-impact island experiences

“But more importantly, we want to minimise our environmental footprint. This is especially true on the islands we want to protect. We’re going to use off-site manufacturing as a solution.”

Why Saudi Arabia?

When it comes to resorts and luxury destinations in the region, post-Covid travellers won’t be short of options. On the Red Sea alone, one could head to Egypt’s famous coastal towns such as Hurghada or Sharm El Sheikh, or to Jordan’s Aqaba. Alternatively, one could head across the Arabian Peninsula to the UAE, or south to Oman.

Rather than be challenged by the stiff competition in the region, Pagano says that The Red Sea Project will “complement” the region’s other offerings, rather than compete with them. Looking to the future, he says he believes that the project will attract a 50-50 split between international customers and Saudi and GCC visitors, particularly in the hot summer months when the UAE’s tourism sector traditionally sees decline.

“When it comes to our international visitors, I think clearly Western Europe and Asia will probably top the list. Not everybody travels longer distances. But from a European perspective, I think we’re going to resonate extremely well,” he adds. “But we’ve also got our local market, and the GCC.”

Aside from the combination of luxury and environmental possibilities – which he says are unique, even on the Red Sea – Pagano says he believes the climate will be one of the selling points that ultimately makes a difference when customers make a choice.

TRSDC is also working with KAUST to research Red Sea corals

“I’ve been to Dubai in the summer months. It’s quite warm and humid. The Red Sea is a totally different climate,” he remarks. “We don’t have the saturation, and we don’t have the excessive heat. I think our source markets will change throughout the year. Clearly, the winter months will be more attractive to Western Europeans and Asians, versus the summer months when I think it’ll be an attractive destination for GCC residents who want to escape the heat but not go too far.”

The bigger picture

There is still a long way to go to 2030. Looking ahead, however, Pagano is sure of one thing: that The Red Sea Project will be seen as an historic milestone as Saudi Arabia welcomes the world – an event that itself would have been unthinkable for foreign visitors just a few years ago.

“It’s hugely important. The Kingdom is committed to growing tourism, and we’ll be a flagship destination for the industry,” he says. “But we’re going to contribute a relatively small number of visitors. We’re not mass market.

“I think we’ve become a very important enabler and proof of concept,” he adds. “Saudi Arabia is going to be worth experiencing. The Red Sea Project will play a very important part in achieving that ambition.”

Job creation

The project expects to create 35,000 direct jobs – many of which will be slated for Saudi nationals. Another 35,000 jobs are expected to be created and maintained in supporting industries.

TRSDC has also partnered with a number of NGOs and the Kingdom’s Ministry of Human Resources and Social Development and Ministry of Education to help prepare nearby communities to take part in the project. As part of this outreach programme, 12,000 applicants were narrowed down to 120 young people who received scholarships to study hospitality management at the University of Prince Mugrin in Madinah.

Red Sea coral

TRSDC is also working with KAUST to research Red Sea corals, which have not been subject to the same bleaching, overfishing and pollution as coral in the Indian Ocean or the Great Barrier Reef off the eastern coast of Australia.

“We’re actually experimenting with them, with innovative coral growing techniques,” John Pagano explains. “We’re going to work to enhance our coral habitat. Not because we need more coral, as we have an abundance of it, but to help our understanding of it. We can look at what elements of their DNA make them more tolerant and resistant to temperature and global warming and the like. It will also create habitats to enhance our biodiversity.”

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