Riyadh approves $38bn Red Sea tourism plan

09 May 2008

The first 19 developments are aimed at domestic tourists

Riyadh has approved an ambitious $38bn tourism masterplan for the Red Sea coastline, that will see 19 locations being considered for development in addition to a $10bn Gulf coast development at Al-Auqair.

The plan received approval from the Supreme Economic Council on 4 May. The masterplan is now being reviewed by the kingdom’s Council of Ministers, which is expected to approve the plans within two weeks.

Speaking to MEED at the Arabian Hotel Investment Conference in Dubai on 5 May, Salah al-Bukhayyet, deputy secretary general of the Supreme Commission for Tourism (SCT), said the plan would focus on the kingdom’s west coast region.

“The plan has surveyed the Saudi Red Sea coast, all the way from Jordan down to Yemen,” he said. “It has made a thorough survey of natural attractiveness, environmental and historical aspects and has identified a number of spots on the Red Sea that shall be prioritised for tourism development.”

The masterplan has identified 19 potential sites that are deemed suitable for development. “The first one will be driven by commercial viability, and we expect it to be either in Medina or to the south of Jeddah,” he said.

For each destination, the commission is expecting an investment by the chosen developer of at least $2bn. This will cover infrastructure and project construction costs.

Following approval by the Council of Ministers, the first development, which will be a coastal resort, will be publicly announced and a master developer awarded the project.

The expectation is that by the end of 2008, the first project will be launched.

The final decision will also reveal the extent of government support and funding allocated to the various sites.

“It is a very nice area from a nature point of view and [has] historical significance,” said Al-Bukhayyet. “If you utilise the traffic that already comes to Medina from religious visits, and you can attract at least a portion of that to this place for two or three days, you will have a good market.”

SCT expects to appoint one developer for the overall project and sub-contract specific work for each site, rather than employing several master developers for the entire scheme.

“Normally when we [receive the] bid, we select the master developer, and they will bring the co-developers or third-party developer to handle specific aspects of the project such as infrastructure or electrical works,” said Al-Bukhayyet. “One company cannot do everything.”

Plans to develop the Gulf coast area of Al-Auqair, south of Dammam, are also at an advanced stage. One international developer has submitted proposals for the projects and a decision from the Council of Ministers is understood to be imminent.

According to Al-Bukhayyet, the 100-square-kilometre site, spanning 15km of coastline, will be developed over the next 20 years and will attract more than $10bn in investment.

The Civil Aviation Commission is also undertaking an initiative over the next three years to establish airport towns to capitalise on the growth in business tourism.

According to Prince Sultan bin Salman bin Abdulaziz al-Saud, president and chief executive officer of the SCT and a board member of the Civil Aviation Commission, accommodation and exhibition facilities will be developed around the existing airports of Riyadh, Jeddah and Dammam.

The kingdom’s tourism industry is undergoing a major trans-formation, following a recent statute that has created a new governing body.

The statute transforms the body from a co-ordinating agency to one that is responsible for restructuring the strategic plan for tourism development in the kingdom.

As a result, Prince Sultan will report directly to King Abdullah bin Abdulaziz al-Saud.

This year, SCT will absorb several sectors including antiquities, heritage and museums, and hospitality. The commission also plans to reclassify the hotel sector, beginning with Mecca and Medina (MEED 6:5:08).

Prince Sultan says the kingdom’s drive to build a stronger tourism sector is geared towards domestic rather than international tourism. An estimated 5 million Saudis travel out of the country on vacation each year, a market estimated to be worth $15bn, which the government would like to stay within the local economy.

“The Saudi Arabian market is really a local market, from which there is a huge demand,” says Prince Sultan.

“We do not want to import tourism for tourism’s sake. Saudi Arabia is wealthy.

“It is about added value, and we are not dependent on inbound tourism in a big way.”

Further investment in the kingdom, while welcomed by the private sector, will place further strain on a construction industry that is experiencing a torrid period.

Spiralling materials prices and a lack of skilled labour means firms are struggling to meet deadlines and complete projects within budget.

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