Located at the crossroads of the East and West, the Middle East region is increasingly turning to travel and tourism to help it reach its economic diversification targets.
While government entities and large corporations will continue to drive much of the development in the future, a growing number of start-ups are emerging that are helping the region’s tourism offering diversify with new concepts.
One such start-up is Envi Lodges, which was founded in the GCC in 2021 as the region’s first experiential ecolodge brand.
“The idea first started with me as a traveller,” says Envi Lodges co-founder Chris Nader. “With my co-founder, we were thinking about where to go on holiday. Where do we want to take our kids? And what do we want to tell them about travel?
“We got inspired by some amazing lodges around the world, and we then realised why we have to go to the jungles of Costa Rica or places in Africa and the Far East to find these amazing projects. We wanted to bring these projects and concepts to the Middle East,” he says.
Within the first 12 months, Envi Lodges had secured its first project in Saudi Arabia, to the north of Jeddah on the Red Sea coast. The resort is scheduled to open its doors to guests by the end of this year.
The low-impact nature of ecolodges makes the project’s short delivery period possible.
“It typically takes three to four years to complete the hotels. Sometimes it can take even longer. With our lodges, it can be up and running in 12 to 14 months. From an investment standpoint, this is attractive because it gives a payback period of six to eight years as opposed to the 12 to 14 years you may get for other asset classes,” says Nader.
Low-impact construction is part of Envi Lodges’ commitment to sustainability, which is an increasingly important issue for the tourism industry. A survey by Booking.com in 2022 found that 71 per cent of travellers want to make more effort in the next year to travel more sustainably, up 10 per cent from 2021.
“The low impact can definitely be found on the construction side. But it is also protecting and regenerating the local environment, as well as supporting the local communities by preserving the local culture and heritage. These are the three pillars of our sustainability approach,” says Nader.
Envi Lodges’ focus on sustainability has opened up opportunities in areas of land that are not normally appropriate for hotel development.
“Some landowners either do not want to or are not allowed to fully construct on their land. We come with a low-impact solution that gives them the opportunity to generate returns,” says Nader.
“Governments also find it extremely interesting because they are able to utilise protected areas and natural reserves by developing and attracting tourism in a responsible manner.”
A sustainable approach appeals to a broad range of potential financiers for Envi Lodges’ projects.
“Publicly listed companies now need to show a commitment to ESG (environment, social and governance) and they are investing in green energy,” says Nader.
“We are in talks with some private equity groups that have developed green funds with the objective to solely invest in ecotourism and ecolodges in underdeveloped destinations that have a clear programme of supporting local communities.
“A brand like Envi is exactly what they need, so we are helping each other find opportunities.”
As an operator, Envi does not fund the development of its projects.
“The projects are funded by their individual owners. Some are pure equity, and others have a mix of debt,” says Nader.
“In Saudi Arabia, for instance, the role of the Tourism Development Fund has been important. It does not necessarily give the cheapest interest rate, but it takes the risk by funding projects that banks would not because they may not understand the risk,” he adds.
Compared to larger traditional hotels, the investment required to complete an ecolodge is much smaller.
“For lodges between 20 to 60 keys, you are talking about anything between $8m-$20m. Our total portfolio is just under $100m, which is the cost of one hotel somewhere else,” says Nader.
The formation of Envi Lodges coincided with Saudi Arabia’s drive to establish itself as one of the world’s leading tourism destinations.
“When we launched Envi, we did not think that three of our first four projects would be in Saudi Arabia. We knew that the opportunities in Saudi Arabia were huge, but we didn’t know that they would come so quickly,” says Nader.
Envi’s projects in Saudi Arabia complement the goals of the larger projects being delivered by government and government-related entities with major international partners.
“The kingdom needs big operators and more established brands to deliver the big projects. They will create destinations because of their brand reputation and reach. We are very happy that this is happening because it gives Saudi Arabia international scale as a resort market,” says Nader.
Envi has the scope to expand in Saudi Arabia beyond the three ecolodges that have already been announced.
“Saudi Arabia alone can take five to seven Envi Lodges,” says Nader.
Growth in Saudi Arabia, combined with resorts in other regional markets such as the UAE and Oman as well as international markets, will give Envi a global portfolio.
In January, the operator announced its international debut in Costa Rica – a country widely regarded as a pioneer of sustainable tourism.
Nader says opportunities in Southeast Asia and Europe have also started emerging for the company.
“Potentially, within 10 years, we could be looking at more than 20 properties.”
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