Interview: John Pagano
How is sustainability shaping investment attraction strategies for tourism-related giga-projects?
JOHN PAGANO: The Red Sea Development Company is the developer behind The Red Sea Project, a tourism destination on Saudi Arabia’s west coast that will be home to more than 50 resorts, residential properties and leisure facilities. Less than 1% of the 28,000-sqkm destination will be developed with 75% of the 90 islands left untouched. The project aims to be carbon neutral once fully operational, as well as achieve a net-positive conservation benefit of 30% by 2040. Both of these goals are in line with Saudi Arabia’s pledge to achieve net-zero greenhouse gas emissions by 2060 and the Saudi Green Initiative.
The Red Sea Development Company continues to invest in renewables, conservation and innovative technologies, and has partnered with leading architects, designers and scientists in these areas. In January 2022 we closed on a SR14.1bn ($375.9m) loan, the first riyal-denominated green finance offering, reflecting our commitment to sustainability.
The Red Sea Project will create new benchmarks for tourism in the Kingdom by offering immersive experiences, combining nature, culture, adventure and diving, at the luxury end of the market. At the same time, visitors will be able to explore the history of the region, and experience the hospitality and culture of the local people. Roughly 250m people are located within a three-hour flight and 80% of the world’s population within an eight-hour flight, making the project a convenient destination for travellers.
What is the expected impact of The Red Sea Project on local businesses in tourism and beyond?
PAGANO: The Red Sea Project will benefit players along the tourism value chain, from local service providers to adjacent communities and future guests. The Red Sea Project is working to align with the three pillars of Vision 2030: creating a vibrant society, a thriving economy and an ambitious nation. Working in tandem with a range of domestic and international partners is key for the construction and operation of hotels, residential properties, commercial assets and tourist attractions. More than 1000 contracts worth more than SR25bn ($6.7bn) had been signed for the project as of August 2022, and 70% of the value was awarded to Saudi companies. We aim to implement circular systems that will establish a local source for sustainable and high-quality agriculture products. For example, we are partnering with various agricultural companies both locally and internationally to explore innovative food-production solutions such as biosaline farming. We are also identifying opportunities to farm seafood sustainably and establish eco-friendly recirculating aquaculture systems.
In what ways can players in the sector complement government initiatives to diversify tourist offerings and source markets?
PAGANO: Many established tourist destinations are facing challenges related to climate change, biodiversity loss, land degradation and mass tourism. While these pose risks, they also represent opportunities for our industry to take the lead in finding solutions.
Making the Kingdom more accessible is a key goal of Vision 2030. Tourism is at the heart of this, with a focus on not only domestic and religious tourism, but also targeting a wider variety of inbound tourists. There have been structural and regulatory changes, as well as investment in giga-projects, to bolster the Kingdom’s position as one of the world’s fastest-growing tourism destinations in the world.
The project has also been aligned with global trends in luxury tourism – a segment seeing unprecedented growth – since the planning stages. By pioneering a new relationship between luxury and the environment, we are inviting the world to explore a new side of the country’s cultural, historical and natural heritage.