CHANELLING ENERGY

CHANNELING Five years after it was announced, the Red Sea Project – which is built on the premise of regenerative tourism – is being readied to host its first guests in 2023

ENERGY

WORDS VARUN GODINHO

In July 2017, Saudi Arabia’s Crown Prince Mohammed bin Salman bin Abdulaziz Al Saud announced The Red Sea Project. As details emerged over the following months, it became evident that it was being drawn up on a scale that would eclipse traditional tourism developments around the world. Five years on, that belief is only reinforced when you consider what the destination has now achieved.

Spearheading the project is John Pagano, group

CEO of The Red Sea Development Company (TRSDC) and Amaala. “Everybody talks about sustainability – we believe sustainability is not enough. Sustainability is not making a mess of the place, but it doesn’t undo the damage that we have caused to our planet. Regeneration seeks to go further and make the place better than the way you found it – and that’s the essence of what TRSDC stands for and the approach that we’re taking both at the Red Sea [Project] and Amaala. Our commitment to 100 per cent renewable energy [for example] costs us more money, but it’s for the benefit of the planet. Between those two projects [Red Sea and Amaala] in the first phase, we will save one million tonnes of carbon dioxide that would otherwise be emitted into the atmosphere,” Pagano told Business Traveller Middle East recently.

John Pagano, group CEO of The Red Sea Development Company and Amaala

The Red Sea’s idea of regenerative tourism is being backed up by billions of dollars in funding. In January, TRSDC said that it had closed a SAR14.1 billion (US$3.76 billion) term loan and credit revolving facility with Banque Saudi Fransi, Riyad Bank, Saudi British Bank and Saudi National Bank, touted at the time as the first riyal-dominated green financing credit facility.

When the Red Sea Project is completed in 2030, it will comprise of 50 resorts, collectively offering up to 8,000 hotel rooms, as well as over 1,000 residential properties across 22 islands and six inland sites. The first phase of the project has already seen big names come aboard including the likes of Edition hotels, St. Regis Hotels and Resorts, Grand Hyatt, SLS Hotels and Residences and Intercontinental Hotels and Resorts, among others. “There are 16 hotels that will be a part of the Red Sea [Project] in our first phase. We will open the first three hotels at the beginning of next year, and the remainder at the end of 2023. Amaala is eight hotels in the first phase, comprising of around 1,200 hotel rooms, and we’re on track to complete that by the end of 2024. We’re fully capitalised for both projects, fully financed and building at speed,” notes Pagano.

One of the hotels coming up in the destination – the Jumeirah The Red Sea – marks a significant moment for TRSDC. It is the first joint venture that the company announced and it was entered into with Almutlaq Real Estate Investment Company (AREIC), a subsidiary of the Al Mutlaq Group (AMG). The SAR1.5 billion (US$400 million) venture will see a 159-key luxury resort built on Shura Island. It is already under construction and scheduled to open in early 2024.

Although the Red Sea Project covers an area that has over 90 islands, only 22 of them will be developed and nine will be designated as special conservation zones. The islands are being developed in coordination with global design powerhouses such as Foster and Partners, Oppenheim Architecture, Killa Design, and Kengo Kuma. The infrastructure to support the mega project – roads, bridges, utilities, and accommodation for those working at the site – is being constructed parallelly too. One eagerly anticipated piece of infrastructure is the Foster and Partners-designed Red Sea International (RSI) airport which will be the first airport in the region to serve amphibious seaplanes with a dedicated water runway for them.

A special second runway will support hydrogenpowered seaplane variants including eVTOL (electric vertical takeoff and landing) and eSTOL (electric short takeoff and landing) aircraft. Hydrogen-electric aircraft developer Zeroavia recently signed a memorandum of understanding with TRSDC. “Mobility is hugely important. We’ve committed ourselves to being net zero from day one. We’re investing in a full green mobility fleet across land, air and sea via a variety of electric and hydrogen-powered vehicles, as well as hydrogen-powered boats. Technology is going to play a significant part in the logistics of moving thousands of people from the airport to resorts, and between the resorts,” says Pagano.

Technology was also sought for TRSDC’s Marine Spatial Planning operations that dictated which islands could be developed without tipping the ecological scales of the destination – only one per cent of the total area will

THE RED SEA PROJECT WILL FEATURE:

50

Resorts

8,000

Hotel rooms

1,000

Residential properties

22

Islands developed

be developed, with plans to achieve a 30 per cent net conservation bene t to the area by 2040. Says Pagano, “We’re going to actively monitor the environment using an array of sensors, the Internet of ings, big data and arti cial intelligence to give us early warning signs if something’s not going to plan so that we can x it before there’s any lasting damage.”

Part of Saudi’s Vision 2030, the giga project is backed by the country’s Public Investment Fund, and is feeding back its fruits to the local economy. To date, TRSDC and Amaala have awarded over 1,000 contracts worth more than SAR25 billion (US$6.6 billion), with 70 per cent of the total value awarded to Saudi companies.

By 2030, once fully operational, the Red Sea Project is expected to support over 70,000 direct and indirect jobs. “ e Crown Prince’s support has been invaluable. He supports everything we do, which allows us to succeed. He’s committed to this journey of diversifying the economy and Vision 2030 is hugely important to him.” Pagano isn’t oblivious to headwinds, although he stresses that they are being actively mitigated. “In ation is a big challenge that we’re facing right now. A lot of the supply chain disruptions were manifest as a result of coming out of Covid and global economies responding much quicker than anybody anticipated. e recent trouble in Ukraine is not helping. Energy prices and transport costs have gone up. at’s creating some challenges for us. We just have to be a little bit more clever and [for example] think about di erent source markets when we consider where we purchase from. ere used to be a default solution – if you’re going to buy manufactured goods, go to China. I think with the disruption in the transport side and the higher costs of transport, it has now negated some of their We’re on the advantages and so we have to look at di erent locations. drawing board In ation is here and we are going to have to incur slightly today, planning higher costs, but that’s an inevitable consequence of in ation. e main thing is that it hasn’t blown us o the second phase course and we’re still driving towards that nish line of the Red Sea without any cause for a pause.” at nish line is looking increasingly radically imaginative as more details of the project continue to unfold. For now, while phase one is being fully activated and the destination opens to its rst guests next year, Pagano is working on the ne print of phase two. “Beyond 2023, we’re already thinking ahead about subsequent phases. We’re on the drawing board today, planning the second phase of the Red Sea. Amaala is moving in earnest. I have another dozen projects up and down the Red Sea coast, all driven by the grand vision of His Royal Highness to put Saudi Arabia on the global tourism map.”