How New Ultra-Luxe Hotels Represent Saudi Arabia’s Future — and What This Means for Brands

Riyadh, Saudi Arabia, at dusk is becoming an increasingly global city.

An archipelago sprawls in the lapis waters of the Red Sea, home to over 90 pristine islands with topographies as diverse as mountains and beaches and deserts. Its thriving marine ecosystem features centuries-old coral, part of one of the longest continuous reefs in the world. It’s about to become one of the world’s greatest luxury destinations.

And a representation of Saudi Arabia’s plan for its future.

First announced in 2017, the Red Sea Project embodies Saudi’s Vision 2030. The Red Sea Project will transform 22 of the islands into a luxury development, with the first phase —  3,000 hotels, residential properties and an airport — expected to be completed by 2022.

By introducing high-end accommodation to the region, the Red Sea Project opens up Saudi’s western coast as a destination for globetrotters while boosting Saudi’s GDP by a projected $5.86 billion per year and introducing more than 70,000 new jobs. Saudi Arabia, and the Middle East, are no strangers to luxury hospitality, but the Red Sea Project promises something bigger and bolder and ambitious — and also more ecologically sustainable. 

Here are some of the most significant changes coming to Saudi Arabia, and the opportunities this presents for brands, both Saudi-based and global. 

 

Vision 2030

Vision 2030 outlines Saudi’s blueprint for boosting the local culture and the economy, intended to revitalize Saudi’s presence on the world stage. The Kingdom opened its borders to visitors in September 2019, issuing more than 77,000 e-visas within its first few months. By highlighting historical and UNESCO World Heritage-recognized destinations, like AlUla and Al Ahsa, and expanding luxury hospitality offerings, it hopes to continue to ramp up the number of visitors. 

The city of Jeddah, Saudi Arabia, on the Red Sea

Vision 2030’s other major tenants include sustainability and a digital transformation, which focus on innovation, advances in technology and entrepreneurship, especially among young people. 

Sustainability

To yield a more diversified economy, Vision 2030 aims to reduce the Kingdom’s reliance on oil — in some cases, the transformation is taken literally. A former oil rig is being converted into a massive, 1.6 million-square-foot theme park, which will be home to the world’s largest roller coaster, the world’s largest drop tower and a superyacht marina for those who prefer to travel in luxury. 

In 2018, oil accounted for 42% of The Kingdom’s GDP. The Ministry of Energy aspires to grow its share of natural gas and renewable resources to 50% and encourages private- and public-sector collaboration on renewable energy technology. Saudi Arabia is focused on wind and solar energy, and opportunities for foreign investments in these spheres are ripe. For the Red Sea Project, the Kingdom inked a deal with Huawei Digital Power for a solar-charged battery, the largest off-grid energy storage project.

The Red Sea Project, like the other mega-projects within the Vision 2030 portfolio, stands as a poster child for Saudi’s ethos of sustainability. 

It’s located in a rich ecosystem — a 600-year-old coral colony was recently discovered nearby. Though the project is expected to receive one million visitors each year, 75% of the destination’s islands will remain untouched — less than 1% of the project area’s total 11,000 square miles will be developed — and nine islands will be designated as special conversation zones. 

The development will rely on renewable energy and incorporate technology to track metrics such as individual carbon footprints and water salinity, and prevent over-tourism. The developers are also seeking partnerships with innovators working on sustainability technology, opening the possibility for outside tech brands to enhance their presence in the Middle East. Saudi-based companies should reevaluate their own practices — to be part of Saudi’s next wave of development means adopting sustainability as a core value.

Digital 

Saudi’s digital transformation is also part of the foundation for Vision 2030. Between 2017 and 2020, connectivity grew from 1.2 million homes to 3.5 million (out of about 5.46 million). Enabling greater digitalization has helped promote online education, shopping and medical consultations, which was vital during the pandemic. 

Two young Saudi Arabian women smile and look at a phone at a cafe

It also speaks to a young population — about two-thirds of Saudis are under the age of 35. They’re used to tech, more willing to adopt it and know that being digitally savvy is an essential part of embarking within global academic pursuits and careers.

The ballooning digital reign reshapes consumer relationships with brands, companies and services. Companies that didn’t have to adapt to the online space originally face pressure to now do, and international brands that can satiate this digital hunger have an opportunity to tap into a new demographic — eager to engage and spend — in Saudi.  

 

Institutional Rebrands 

Growth demands change. In reaction to Saudi Arabia’s efforts for diversification and economic growth, some Saudi-based companies have scrapped previous approaches for more streamlined, approachable branding.

Al Tayyar Travel Group to Seera 

Seera means “journey,” a literal interpretation of the former Al Tayyar Travel Group’s own path towards becoming more global and appealing to a wanderlust-struck audience. The group consolidated and streamlined verticals and its approach, now offering omni-channel travel booking services. This change is meant to better serve Vision 2030’s agenda, and included rolling out three additional brands: one to service corporate and management clients; a car rental service, and a service provider for pilgrimage travel packages. 

Saudi Hollandi Bank to Alawwal Bank

Founded in 1926, Saudi Hollandi Bank has a long history as the Kingdom’s oldest bank in operation, and the one that serves the government. In 2016, the institution rebranded as Alawwal Bank, translating to “the first” in Arabic, to compete in a digital landscape and reach a new audience — primarily Saudi’s young population.

It launched a mobile banking platform, is investing in introducing more digital channels for streamlined customer services and offers training programs for young Saudis.

InterContinental Hotels Group

Partnering with Wasata Al Wosta Real Estate Co, InterContinental Hotels Group renovated and transformed local hotels in Saudi Arabia to attract international audiences. The five-star voco debuted in 2019, merging comfort and luxury, with the powerhouse backing of IHG’s brand. It underscores the Kingdom’s interest in leveraging partnerships with globally-recognized names.

 

A Seat at the Table

An entire industry that’s being overhauled by Saudi’s efforts to transform itself into a global destination? Dining. In Riyadh, American celebrity chefs like David Burke are setting up shop, introducing an influx of international, creative gastronomy. Think chocolate babkas, baby octopus and specialty coffees — fare that positions Riyadh to compete with the likes of culinary heavy hitters like Dubai

Luxury dining is expanding in Saudi ArabiaAnd with an emerging market of good food comes an emerging demand for it to be delivered with ease. Saudi Arabia’s online food delivery sector was valued at about $511 million in 2020, with an expected growth of 10.05% CAGR from 2021 to 2026

This is in part a reflection of a young, busy demographic accustomed to convenience. Current popular options, like Hungerstation and Talabat, fall under the umbrella of Delivery Hero, a German-owned delivery empire. ToYou, another food delivery service, fuses elements of DoorDash, Uber, courier services, InstaCart and social networking to elevate simplicity for users.

An increasingly global Saudi triggers steeper competition and a rich array of opportunities — brands within the Kingdom will need to stay agile to remain visible. For external brands, the Kingdom represents a new playing field and a new audience. This places the impetus on innovation and an eye for growth possibilities — and the strength of each brand’s story, digital footprint and reasoning why it should be part of Saudi’s vision of the future.

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Main & Rose has worked extensively with partners in the Middle East to hone and refine their branding, messaging and how they connect with their target audience. This period of substantial social and economic growth poses an opportunity for companies both within the Middle East and internationally to reimagine their strategic approach to branding. We would be delighted to discuss how our expertise can elevate your story and help you tap into new, loyal audiences. 

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