Saudi Arabia seeks funding for new developments

Park Inn by Radisson Makkah Aziziyah
The Park Inn by Radisson Makkah Aziziyah is Radisson Hotel Group's second hotel in Makkah, Saudi Arabia. Photo credit: Radisson Hotel Group

Saudi Arabia's Red Sea Development Co.—a closed joint stock company owned by the Public Investment Fund, Saudi Arabia’s sovereign wealth fund—reportedly has started discussions with local lenders to acquire $3.5 billion in what would be its first borrowing. The funds would go toward development along the country's Red Sea coastline in a bid to reduce dependence on oil, Bloomberg reported.

“We are in active discussions with a number [of] banks to provide debt financing and are encouraged by the overwhelming positive response we have received," Jay Rosen, head of finance and investments at the Red Sea Development Co., told Bloomberg. According to the report, the loan would have a 15-year tenor and is likely to be backed by the Public Investment Fund, although the terms of the financing could still change.

According to Red Sea Development's website, the Red Sea Project will "respond to international global tourism trends as well as capturing a share of the SAR62 billion in outbound tourism spend from Saudi Arabia." The destination will operate as a Special Economic Zone, with its own laws and regulatory framework that will "encourage investment opportunities and commercial activities."

FREE DAILY NEWSLETTER

Like this story? Subscribe to IHIF!

The hospitality industry turns to IHIF International Hotel Investment News as the must-read source for investment and development coverage worldwide. Sign up today to get inside the deal with the latest transactions, openings, financing, and more delivered to your inbox and read on the go.

The first phase of the Red Sea project is expected to be completed by 2022. In total, the project is meant to cover 90 islands and 11,000 square miles.

Saudi Arabia also lis ooking to spend $500 billion on a new city along the northwest coast. Neom will be a luxury destination with high-end hotels and villas alongside entertainment and athletic facilities. 

Branded Growth

The development plans come as global hospitality companies seek to gain ground across the kingdom. The number of Hyatt properties in Saudi Arabia, for example, is poised to double by 2023, with five additional Hyatt-branded hotels in the pipeline.

Last month, Radisson Hotel Group opened its second upper-midscale Park Inn property in Makkah (also known as Mecca), weeks after signing the second Radisson Collection hotel for the country.

Around the same time, IHG signed its second Voco for the country, the company's fourth hotel in Makkah.

Suggested Articles

The 600-room Secrets Baby Beach Aruba will open on Baby Beach, close to San Nicolas, in the southern part of the island.

The brand's French debut was held in Paris last month, followed by the second in Lyon.

The hotels will open between 2021 and 2024 in New Caledonia, an archipelago 750 miles east of Australia.