Sir Richard Branson will go down in the record books as the first international investor to back a scheme aiming to convert 50 Saudi Arabian Islands into world-class tourist destinations. The Virgin Group founder is backing the kingdom’s new ambitious Red Sea project that clearly signals Saudi Arabia’s intent to open its doors to international tourism.
While on a recent visit to Saudi Arabia, Branson took time to pose for some pictures during a trip to the tombs at Mada’in Saleh. The pictures are seen by industry experts as a PR move by the aviation magnate to help position the kingdom as an investment and tourism hub.
Saudi Arabia intends to convert more than 13,000 square miles of prime Red Sea beach front land into luxury hotels and resorts. This is seen as the kingdom’s first serious foray into the development of its tourism sector. The initiative is the brainchild of the new Saudi Crown Prince Mohammed Bin Salman and part of his Vision 2030 economic plan that seeks to wean the kingdom from its heavy dependence on oil revenue.
With weak oil prices and heavy budget deficits, the kingdom is hoping to diversify its economic portfolio. Prince Mohammed is hopeful that the initiative will attract international tourists to the kingdom.The diversification of the economy is also targeting the annual Muslim pilgrimage to the holy cities of Makah and Medina. According to financial experts, the just concluded Hajj 2017 netted the kingdom more than USD 10 billion.
The Saudi government is betting heavily on the possible success of its tourism industry. It hopes that 35,000 jobs will be created through the project and billions of badly needed tourist dollars will help fill the gaping holes in the kingdom’s budget left by loss revenue from its oil sector.
The Kingdom That Had It All Tightens Its Purse Strings
Saudi Arabia reduced its oil output earlier in the year, further reducing the kingdom’s Gross Domestic Product (GDP). The reduction in oil output is inline with agreement with other member countries of OPEC, the cartel of major oil producing countries that seeks to cut down output as a tool to boosting oil prices. With further reductions in output expected, the kingdom is aware that the oil sector may not quickly bounce back.
With its pool of cash quickly drying up, the kingdom is on a cost cutting binge to avoid a financial crisis since its non-oil state sector is also struggling. Available data indicates that the non-oil state sector saw only a negligible 0.1% growth in the first quarter of 2017.
With an unemployment rate of 12.7%, the kingdom and its new heir to the throne are both desperate to show results. It looks like they have found a partner in Sir Richard Branson who is willing to help boost the tourism and investment sectors thereby speeding up the march towards an economy independent of the ever dwindling reserves of petrodollars.