MBS expects Saudi Arabia’s Public Investment Fund to develop domestic projects that will reduce its reliance on oil.
Saudi Arabia’s flagship tourism project, The Red Sea Development Co (TRSDC), plans to have 16 hotels ready by the end of 2023, two more than initially planned in the first phase.
The project’s chief executive, John Pagano, told Reuters news agency on Thursday he expects a V-shape recovery in global tourism once the coronavirus pandemic abates.
During the first phase, the project aims to attract 300,000 visitors annually, said Pagano, adding: “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, in so far as tourism is concerned.”
Owned by a Saudi sovereign fund, and backed by Crown Prince Mohammed bin Salman, the multibillion-dollar project entails developing luxury resorts on 50 islands off the coral-fringed Red Sea coast, where tourists can dive, visit a nature reserve and see heritage sites.
TRSDC plans to finalise a 15-year loan from banks worth 14 billion riyals ($3.73bn) by the end of the year to partly fund its 30bn-riyal capital spending by 2023, as it expects to end 2020 with around 15 billion riyals worth of committed contracts, Pagano added.
The remaining funding needed for the first phase will come from the Public Investment Fund – the project’s owner.
“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,” Pagano said.
The kingdom wants tourism to contribute 10 percent of gross domestic product (GDP) by 2030, as part of a strategy to diversify the Arab world’s biggest economy away from oil.
Other major projects backed by PIF include the $500bn NEOM economic zone and the Qiddiya entertainment zone.
Pagano, a former managing director at London’s Canary Wharf Group, sought to allay fears that the Red Sea environment could suffer once the project is completed in 2030, saying it was not aimed at catering for a “mass market”.
“Even in the full build-up by 2030 – when we built the entire development – we will be 800,000 to 1 million visitors per year max,” he said.