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Competing with Saudis?
Published in Al-Ahram Weekly on 24 - 08 - 2017

As part of Saudi Arabia's 2030 Vision to find new revenues to replace oil, Saudi Crown Prince Mohamed bin Sultan, also deputy prime minister and chair of the Public Investment Fund of Saudi Arabia (PIF), launched the Red Sea Project this week as a world-class tourist destination on the country's Red Sea coast.
The project covers an area of 34,000 square km between the cities of Al-Wajh and Amlaj on Saudi Arabia's western coast and will include resorts on more than 50 islands. It is ideal for scuba-diving, beach tourism, the exploration of dormant volcanoes, and health and relaxation at nature reserves. There are also historic sites along the 200km coast, and tourists from most nationalities will be able to enter without visa requirements.
Construction will begin in the third quarter of 2019 and the first phase will be completed in 2022 after the completion of the new resort's airport, seaport, luxury hotels and residences, infrastructure and transportation, including various types of boat.
The project, owned and funded by the PIF, aims to increase Saudi GDP by 15 billion riyals per year, attract one million visitors annually by 2035, increase state revenues by boosting PIF revenues and provide 35,000 job opportunities as part of Saudi Arabia's 2030 Vision.
Khaled Al-Rashid, director of the Arab Tourism Experts Union, said the Red Sea project was important as part of the 2030 Vision and indicated that Saudi Arabia was exploring its development potential, including its more than 2,000 islands.
The project took advantage of the tourism potential and strategic location of islands in the Red Sea that have an average temperature of 31 degrees C, as well as marine nature reserves in the area, he said.
Observers say the biggest challenges facing the project may be meeting its deadlines and overall vision, especially in the light of global economic conditions that may mean limited liquidity. Competition from Egypt, more experienced in Red Sea tourism, may also be significant. “We hope to provide a different resort experience,” Al-Rashid commented.
Investing in tourism projects is challenging because tourism is a seasonal industry, meaning investors need to make relatively high profits during the high seasons to cover for the lower ones. Tourism is also impacted by security concerns, and these have had a negative impact on tourism in Egypt.
Al-Rashid said the new resort would also focus on health tourism in order to avoid being simply a seasonal destination.
Investors should be offered incentives, he said, such as guarantees that protect their investment in such schemes. Facilitating investment through tax exemptions that in some countries can reach 35 per cent and arrangements targeting foreign investors were also a good idea.
Sameh Saad, a former marketing adviser to the Egyptian Ministry of Tourism, said the location of the Saudi islands across the Red Sea from Qusseir, Marsa Alam, Halayeb and Shalateen meant the weather was mild in winter allowing visitors to be targeted from Europe and some Arab countries.
However, without feasibility studies and figures on the number of rooms and their quality and the size of the planned airports on the islands, it would be difficult to estimate the number of potential visitors to the new resort, he said.
“Saudi Arabia has launched a publicity campaign about the Red Sea islands in order to attract attention to them as tourist destinations,” Saad said. “It would be a good idea for Egypt also to develop the Red Sea coast, especially as we also have islands and nature reserves. We must rethink how best to use them,” he said.
The Saudi tourist islands will have no restrictions in terms of clothing and alcoholic drinks, and they will be separate from Saudi Arabia in order to attract nationalities from around the globe.
In the Egyptian resort of Marsa Allam 207,000 rooms have been under construction since 2011, and hotel occupancy rates currently stand at 45 per cent, which is low despite prices dropping to attract more tourists.
At present, tourists mostly spend their entire stay in their hotels because other venues are too far away, Saad said, and this has been exacerbated by high airport fees and the airport's location some 70km from the city. This makes the resort more expensive for Egyptians, and foreign tourists tend to prefer Sharm El-Sheikh.
Atef Abdel-Latif, a member of the Marsa Alam Investors Association, said the Saudi plan was good for the region and would attract world attention.
“It will be a quantum leap for Arab and global tourism,” he said. “It is also an initiative for the Arab world because there is potential for cooperation between us and the Saudi islands in marketing and joint itineraries, with tourists visiting the Saudi islands for a couple of nights then coming to Marsa Alam for a few more.”
“Joint marketing of these sites would also promote Arab tourism and open up new markets.”
Small planes and boats could be used to transport tourists across the Red Sea and docks for boats and yachts could be built to enhance cooperation in the area. “There is 600km of coastline that could be used for tourism that we have not used,” he said.
Abdel-Latif warned against red tape and suggested that the Ministry of Environment should reconsider penalties against developing the beaches in the area at a time when advanced methods are used to transform rocky beaches into soft and sandy beaches without impacting marine life.
“The area between Qusseir and Halayeb consists of 110km of sandy beaches, and the rest are rocky that need to be transformed,” he said.
Adel Al-Gendi, director of international relations and strategic planning at the Egyptian Tourism Development Authority (TDA), said that “too often we view the Red Sea as a closed lake and not an open sea, whereas the latter would attract more tourists. They could visit Egypt and then travel by yacht to visit the Saudi islands.”
He added that Egypt had a competitive edge in the tourism market because of its long track-record of tourism development, including the building of 90,000 rooms to global standards on the Red Sea in fewer than 20 years.
The area still has the capacity for 70,000 more rooms, according to the strategic plan of the TDA, he said.
Al-Gendi said the development potential of the Red Sea was many times more than what had been done so far, and that Egypt had unique coastal nature reserves and the second-largest area of coral reefs in the world after Australia.
“We also have valleys such as Ghusun and Elba, and the area's environmental tourism resources can compete with any other destination,” he said.

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