Saudi Arabia is revising its ambitious Red Sea tourism strategy, scaling back plans to build 81 luxury resorts by 2030 as the kingdom reassesses the scope and pace of its multi-billion-dollar diversification projects, according to sources familiar with the matter.
Stubbornly low oil prices and patchy demand have forced a rethink of the flamboyant “giga-projects” – centrepieces of Crown Prince Mohammed bin Salman’s Vision 2030 program to diversify Saudi Arabia’s economy.
Red Sea Global (RSG) denied plans to downsize, saying the project would continue after the initial phase of 27 resorts is completed this year.
But sources with knowledge of the plans said construction would halt at the end of 2026, costing dozens of jobs at RSG and hundreds at contracting firms.
The sources spoke on condition of anonymity due to the sensitivity of the matter.
“A decision was taken to stop work on Phase Two of the Red Sea projects,” a senior RSG source told AFP.
“Current operating costs exceed revenues in a way that has become unsustainable,” another source at the company added.
Seven sources at RSG, other giga-projects and related companies and consultancies said the Red Sea construction would be put on pause.
However, RSG insisted that it was pressing on with phase two of construction, including on the residential development of Laheq Island.
“As with any large-scale, long-term destination, Phase Two is being delivered through a sequenced approach,” RSG said in a statement to AFP.
“Several projects are currently in design development, approvals, and commercial structuring, which is exactly where they should be at this stage.”
Government officials acknowledge a pullback in the sprawling giga-projects after Saudi Arabia also took on board the large-scale infrastructure commitments of Expo 2030 in Riyadh and the 2034 World Cup.
“Some (giga-projects) will be scaled down. Some will be delayed,” Finance Minister Mohammed al-Jadaan told AFP last month in Davos.
Low oil prices are also impacting Saudi budgets. Profits have fallen for 11 straight quarters at Saudi Aramco, the world’s top oil exporter and the country’s main earner.
“The consensus is that it’s impossible to work on all these projects at the same time,” a source at a company backed by the country’s wealth fund told AFP.
“It was believed that the Red Sea project would attract more capital and generate huge returns, and that it would eventually become financially sustainable,” another source working with a government project added. More
