In conversation with Jay Rosen, Head of Investment & Finance, The Red Sea Development Company
Posted on February 20, 2019
We caught up with Jay Rosen, Head of Investment & Finance, The Red Sea Development Company to understand more about the master developer's plans and objectives as the ramp up towards the world's most most ambitious and exciting tourism and hospitality project.
What is the Red Sea Development Company? How is it structured and what are its objectives?
The Red Sea Development Company is the master developer of The Red Sea Project, a unique, luxury tourism destination that will embrace nature, culture and adventure, setting new standards in sustainable development and position Saudi Arabia on the global tourism map. Located on the Red Sea coast of Saudi Arabia, the destination will feature a unique and diverse range of authentic visitor experiences complemented by comprehensive food and beverage, retail, leisure, wellness and entertainment offerings supported by state-of-the-art hard and soft infrastructure.
The first phase of the development is planned to open in 2022 and will include hotels, unique attractions, residential properties, marinas, leisure, commercial and entertainment amenities and all supporting infrastructure. The destination is expected to be fully completed by 2030. The approved master plan will steer the development of 22 of the 90+ islands at the destination, providing up to 8,000 hotel rooms across island resorts, mountain retreats and desert hideaways. The destination will also offer luxury residential properties and a wide range of commercial, retail and recreational facilities.
The master plan is underpinned by an extensive smart destination management system that will support a wide range of seamless, highly personalized products and services designed to appeal to the modern luxury traveler. The system will also help to manage visitor flows to ensure that everyone who comes to the destination can enjoy an experience free of over-crowding and delays.
TRSDC is developing a range of policies including zero waste-to-landfill, zero discharge to the sea, and zero single-use plastics, and has made a commitment to achieve 100% carbon neutrality. The destination will rely solely on renewable energy and have no connection to the national grid.
What will the Red Sea Project bring to the market?
Hospitality is the anchor of the project. We are creating a diverse range of Hyper Luxury, Luxury and Upper Upscale hospitality options, from mono-island luxury properties to design-driven beachfront resorts, holistic wellness retreats and innovative, unique inland experiences in the mountains and desert dunes.
We are also developing a competitive, comprehensive residential offering for investors who seek a more permanent connection with the destination, either as an investment or as a personal retreat. This will be the first leisure-based second home offering in Saudi Arabia and will provide an aspirational destination for investors who are currently looking to other markets in the GCC for their second homes and investment properties. Residential is a natural progression to develop a fully-realized mixed use location and a planned total of 1,300 units will be offered in both branded and nonbranded communities.
Supporting the hospitality offer will be an array of fully integrated lifestyle options including food and beverage, luxury retail, entertainment, cultural experiences, and recreational activities. Our holistic approach to wellness will include destination spas as well as excursions and various outdoor activities.
Our strategy is to partner with best-in-class brands with the reach and credibility needed to support our activities. We will partner with third parties who are interested in working with us on realizing the objectives of the project and who share our commitment to enhance, not exploit, the natural ecosystems that make the destination so unique.
We require our partners to share in our vision of sustainable development and will be held to the highest of standards. We are seeking partners with extensive distribution platforms and capabilities.
What is the investment model being used? Is everything a JV with the Red Sea Development Company? Is a local partner always required or is 100 per cent foreign ownership possible?
We are exploring investment opportunities through joint venture partnerships to develop the commercial components of the project such as hospitality, residential, retail, entertainment, among others. And we are looking at public-private-partnerships to support utility infrastructure, power generation, transportation and other hard infrastructure.
Our intent is to maintain complete control over the development of the project to ensure our vision is achieved and that best practices in sustainability and governance are properly implemented. One of our primary goals is to become the world leader in environmental sustainability across all phases of development (i.e. planning, construction and operation).
How will the Red Sea Project meet the needs of international investors and visitors?
According to a recent report on the future of luxury travel by Amadeus, luxury tourism is the fastest-growing segment of the global travel industry. The luxury travel market has grown approximately 18% since 2014 – nearly twice as much as international travel in general. By some forecasts the luxury travel market could grow over the next decade by 6.2% per year, to as much as USD1.1 trillion by 2022. The majority of luxury travelers are still coming from Western Europe and North America, but Asia is an emerging force as well. In particular, the Middle Eastern tourism and leisure market is forecast to grow faster than average, led by visitors from Asia and Europe. This presents a sounds opportunity for investors both regionally and international.
The Red Sea Project will be the first fully integrated luxury mixed-use destination in the Middle East offering a temperate year-round climate. There is currently no competing destination in the world, so we are able to offer, for the first time, a compelling reason for international tourists to visit the Middle East and experience the richness of the culture and the famously warm hospitality of the Saudi people.
The unique nature of the project creates an exciting and attractive opportunity for international investors who will be supported in many ways, not least by the implementation of a Special Economic Zone (SEZ). The SEZ will feature a regulatory framework designed to attract both investors and visitors. We will create an environment to attract international tourists with relaxed social norms and an investor friendly environment.
Will there be special visas for visitors and investors to the Red Sea Project?
The Kingdom is taking significant steps forward to establish the framework and processes required to support a growing tourism sector and will be addressed under the regulatory framework of the Special Economic Zone.
In December 2018 the Saudi government for the first time issued e-visas for tourists solely for the 2018 Saudia Ad Diriyah E-Prix debut in the Saudi capital of Riyadh which saw approximately 1,000 tourists from 80 nationalities in attendance for the racing event. It is expected that this system will soon be available to the nationals of the 26 Schengen member countries.
Access to the Red Sea Project destination will be further facilitated by the construction of a dedicated airport to serve the destination. The airport also allows us to streamline entry processes and control the destination for the benefit of visitors, investors and partners.
How has the international investment community responded to the Red Sea investment opportunity?
The response from the investment community, both domestic and international, has been overwhelming which says a lot about our project and the positive changes that are taking place here in The Kingdom as part of Vision 2030. Investors have reacted positively to the vision and positioning of the destination. We are well positioned against the most significant emerging trends in the luxury travel market, which center around immersive experiences. The project’s offerings emphasize ‘being’ over ‘owning’ in a pristine environment. It’s a very compelling combination and one that is attracting a lot of investor interest.
We are firm believers that if we create and develop a destination that is attractive to the consumer, investors will follow. The initial/preliminary feedback we have received from the investment community validates what we are doing.