Saudi Arabia is investing an unprecedented amount of money in tourism, in an effort to diversify the economy away from oil. I’ve been watching this with great interest. Not only have we never seen such a large investment in tourism, but so many of the country’s projects look downright outlandish, like they’re not even real.
Will this investment pay off, and will Saudi Arabia actually see a huge increase in non-religious international tourism? Or will this all be a money pit that’s eventually abandoned? There have definitely been some signs that things aren’t going quite as planned, though at least officially, Saudi Arabia is still moving forward with its major projects. Along those lines, there’s an interesting update…
In this post:
Saudi Arabia’s NEOM development faces major challenges
The Wall Street Journal has published a fascinating story entitled “What Went Wrong at Saudi Arabia’s Futuristic Metropolis in the Desert,” about NEOM, which is Saudi Arabia’s single most ambitious tourism project.
This story provides a fascinating look at how the costs for these projects has apparently been soaring and their viability has been brought into question, all while the crown prince has been shielded from these realities.
The story is reportedly based on reviewing project documents, including internal audits, plus interviewing both current and former employees. Let me of course emphasize that spokespeople for the project suggest the story is “incorrectly interpreting” certain details, and that NEOM “champions excellence, professionalism, diversity and ethical conduct,” while declining to provide any further information.
In October 2024, we saw the official launch party for Sindalah, one of NEOM’s simpler projects. This party reportedly cost $45 million, with all kinds of A-list celebrities in attendance.
However, the project was three years late, and three times over budget, with hotels unfinished, and much of the site under construction. The crown prince even no-showed, with many viewing that as reflecting his disapproval. Weeks later, NEOM’s boss quit.
Looking at the big picture of the project, an internal audit report reportedly found “evidence of deliberate manipulation” of finances by “certain members of management.” For what it’s worth, McKinsey & Co. has been consulting on this project, with fees being paid to the company topping $130 million in a single year.
Here are some of the more interesting details, as I see it:
- NEOM is expected to be completed to its “end-state” by 2080, at a cost of $8.8 trillion, more than 25 times Saudi Arabia’s annual budget
- While a good portion of NEOM was supposed to be completed by the end of the decade as part of the country’s “Vision 2030,” this is now being referred to as a generational investment that will bear fruit in decades to come
- Apparently a lot of NEOM’s over-the-top architectural and design choices are because the crown prince is a big fan of video games and sci-fi movies, but this has made the project infinitely more complicated, as many of these developments defy physics
- “The Line” is NEOM’s most ambitious project, and apparently the initial architect wanted to express concerns about costs to the crown prince, but NEOM executives rejected his requests
- One way that executives tried to hide the increasing costs of these projects was to beef up profit assumptions, by fudging the internal rate of return figures; for example, a “boutique hiking hotel” was first planned with an assumption of nightly rates being $489, but that was increased to $1,866, to make the math work
- The person who oversaw the vision for NEOM told colleagues and McKinsey consultants in an email to “not proactively mention cost at all,” and someone was “removed after they challenged cost estimates,” according to an audit report
- When it comes to “The Line,” the initial plan was for it to be 10 miles and have nine million residents by 2030; now the goal is for it to be 1.5 miles by 2034
Let’s see how Saudi Arabia’s ambitions evolve
It’s anyone’s guess how Saudi Arabia’s tourism ambitions evolve over the coming years. I think at this point we can all agree that Saudi Arabia was way over ambitious in its projections, with “The Line” being the perfect example. We’ve gone from a 10-mile structure by 2030, to a 1.5-mile structure by 2034… and that’s best case scenario.
But how, specifically, will this evolve?
- Will Saudi Arabia keep at least publicly claiming that everything is going along full speed ahead, pretending everything is great?
- Will Saudi Arabia keep investing in these projects, but in a scaled back manner?
- Will Saudi Arabia eventually realize that this isn’t the best way to ensure a sustainable future, and just cut its losses and move on?
Saudi Arabia of course has a young and large population, at least compared to other Gulf countries. So it certainly has the ability to diversify its economy, and increasingly become a business hub in the region. However, would it maybe make more sense to invest in other areas, rather than trying to build its own version of the Maldives, endless beach resorts, etc.?
From a points perspective, it’s funny to me how there are now two Marriott Bonvoy properties in the Red Sea, including a St. Regis and Ritz-Carlton Reserve. The rates there are outrageously high, and based on everything I’ve heard, these properties are basically empty.
I had a reader stay at the St. Regis recently, and he said that only two other rooms were occupied. I… can’t decide if that sounds awful or amazing.
Bottom line
For years now, Saudi Arabia has been investing heavily in tourism, with hopes of diversifying the economy. Saudi Arabia’s tourism projects are futuristic, to the point that they’re unlike anything we’ve seen before.
However, not surprisingly, there are some challenges. These projects are consistently over budget, and in some cases, their viability is also uncertain. The crown prince has reportedly been shielded from a lot of these challenges, since he’s the one pushing for these projects, and those who have expressed concerns have been fired. Only time will tell how this evolves…
How do you see Saudi Arabia’s tourism ambitions evolving?
Saudi Arabia is the guardian of Islam's two holiest mosques that spread Islam's strictest Wahhabist belief in the region. It cannot be wholly open for tourism, due to the sensitive and restrictive Islam edicts. More than two decades ago, SA and Kuwait did not allow tourists on their soil. Only foreign expats were allowed in the country to work and live, who were required to have entry and exit visas issued by employers, which are...
Saudi Arabia is the guardian of Islam's two holiest mosques that spread Islam's strictest Wahhabist belief in the region. It cannot be wholly open for tourism, due to the sensitive and restrictive Islam edicts. More than two decades ago, SA and Kuwait did not allow tourists on their soil. Only foreign expats were allowed in the country to work and live, who were required to have entry and exit visas issued by employers, which are different from today's tourist visa. Their oil revenues were exorbitant compared to the minuscule tourist incomes. They are open to tourism today not so much to diversify its economy, but they see the urgent need and necessity to have westerners' presence in the country as they face constant threats of Iran, other foreign violent Sunni factions and domestic religious tribes. Both the Saudi and
Dubai rulers, more than two decades ago actually sent their commandos to capture/ kidnap their own two princesses who fled the country and nobody had ever heard or seen them again. The UAE and SA are much safer than the US, which is the lowest western hanging fruit benchmark. Both countries are the most corrupt countries in the region that finance wars and spread intolerant religious edicts. Contrary to popular wisdom, Qatar is US best ally that supports western causes in a discreet manner. When you have a young absolute/ dominant authority in the country, nothing positive comes out of it because maturity and experience count in domestic and global affairs. An example is the "rocket man".
As for its prospect and goal as a tourist destination that attempts to overtake Dubai, it is only a remote but overly ambitious dream that will require significant downsize or be abandoned. Contracting the project to an American company only hastens its severe cash crunch as there is no incentive to take the project pass the finish line in a timely and cost effective manner.
I'm excited about the Red Sea resorts as a vacation destination. It probably helps both Saudi Arabia and the rest of the world if they are able to diversify their economy. The tourism side is very much a chicken and the egg dilemma at the moment. They need to build a lot more hotels, and have much more reasonably priced options, before they can get a critical mass of tourists sufficient to support decent flight...
I'm excited about the Red Sea resorts as a vacation destination. It probably helps both Saudi Arabia and the rest of the world if they are able to diversify their economy. The tourism side is very much a chicken and the egg dilemma at the moment. They need to build a lot more hotels, and have much more reasonably priced options, before they can get a critical mass of tourists sufficient to support decent flight options. But, without good ways to travel there, it is hard to build and open that many hotels. Looking at flight options from the US, they are very limited, with many having either very long layovers or multiple connections within Saudi Arabia on the way.
Made all of the walls come crashing down on the perpetrators of 9/11 ! That's karma. Who would want to visit a repressive country and run the risk of being locked up for something that would not be considered a crime in the free world, anyways ? NOT ME, FOR SURE !!!
Journalists questioning the Kingdom?
Careful when you go into embassies.
I was in bothe Ritz Reserve and St Regis Red Sea during NYE.
Experience was outstanding specially in Ritz (they have a butler every two rooms) but occupation was lower than what they expected. Staff was disappointed, since it was NYE.
They were even doing aggressive promotions near the dates.
But I have strong hopes, the whole country seems pro tourism… people show interest into you, thanks for visiting, etc
Would you return to the Ritz? Any comparison of it against other top resorts or something like the Maldives?
I guess there's a market for halal family tourism. Dubai seems to be doing well, and young Muslims say that "Allah can't see you in Dubai". Saudi Arabia is a different matter, though.
I just got back from the ritz reserve red sea, I was told occupancy was 1/3 though I only ever saw one other guest. Honestly I thought it was great, facilities were world-class and the water was an unreal blue, totally untouched diving too. Also went to six senses southern dunes and desert rock, both good.
I'm glad Saudi Arabia is brining in tourists and opening up to the world, who really cares whether the...
I just got back from the ritz reserve red sea, I was told occupancy was 1/3 though I only ever saw one other guest. Honestly I thought it was great, facilities were world-class and the water was an unreal blue, totally untouched diving too. Also went to six senses southern dunes and desert rock, both good.
I'm glad Saudi Arabia is brining in tourists and opening up to the world, who really cares whether the rich royals who effectively own the country make money off these projects, this move will undoubtedly liberalize saudi arabia by making it more in touch with the outside world.
Would you return to the Ritz? Any comparison of it against other top resorts or something like the Maldives? Was the diving/snorkeling close to the rooms?
I’m not optimistic. People claiming Dubai is safe are uninformed. Tell that to a member of the LGBT community. Homosexuality is a crime in many Islamic nations. Even a straight couple was arrested for PDA. Lastly, crimes are underreported. This is very well known.
Ha! Try convincing anyone that's actually been to Dubai that's it unsafe. Good luck.
But really, I am so tired of basic gays using "safety" to justify limiting travels to the same ~20 countries. As a queer man, I promise the rest of the world is not as dangerous as you've convinced yourself.
"Safety" is subjective.
One muscle blogger belives Ukraine is safe and is even trying to bring his young children to Syria.
Do you look and act gay in Dubai? Maybe you just don't attract any negative attention, hence no problems.
After this post, add Saudi Arabia to the list of countries you can’t visit…
NEOM is a vanity project that would make Ozymandias blush. Perhaps one day the wealthy despots and oligarchs of the world will learn that leveraging their power and money to build massive things that will eventually disappear into the sands of time will not change the fact that, like all people, their bodies will decline, expire, and decay like everyone else. Self-conscious attempts to so tightly control and craft legacy are almost doomed to fail.
What about NEOM airlines?
Made all of the walls come crashing down on the perpetrators of 9/11 ! That's karma. Who would want to visit a repressive country and run the risk of being locked up for something that would not be considered a crime in the free world, anyways ? NOT ME, FOR SURE !!!
Of course the immoral crooks of McKinsey are involved in this lol. Overpaid charlatans that deliver failure after failure!
McKinsey is just a group of big hearted, principled corporate consultants heading up humanitarian projects like:
-Helping MBS dox critics on Twitter
-Helping Purdue exacerbate a once in a generation opioid drug crisis
-Enron
-Other conflicts of interest, work with despotic regimes, etc, ad nauseam
The narcissist MBA of MBB.
Even after they left they still call themselves ex-.
Mayor Pete learned well in his time there.
The St Regis data point is very interesting as Hyatt appears to be close to opening the Miraval Red Sea this year, which it currently has marked as a category 6 (suggesting a price point way below any current Miraval).
Think I will stick to Dubai.
The irony of that statement....
Dubai is weaponized, industrial scale, Veblen effect faux-luxury for the consumption of gullible rubes made manifest.
Great vacation, forced to wear an abaya if you are a woman.
The world is a big place. No need to visit a tyrant's house.
Idk why there's so much negative talk about what Saudi Arabia is trying to accomplish. If they can even pull off 10% of what they are proposing, it would be historic. Especially considering their low tourist footprint as of today.
People said that what Dubai and Abu Dhabi were trying to pull off was nuts. Now Dubai is the safest and most visited city in the world. Abu Dhabi is making strides. It's honestly amazing...
Idk why there's so much negative talk about what Saudi Arabia is trying to accomplish. If they can even pull off 10% of what they are proposing, it would be historic. Especially considering their low tourist footprint as of today.
People said that what Dubai and Abu Dhabi were trying to pull off was nuts. Now Dubai is the safest and most visited city in the world. Abu Dhabi is making strides. It's honestly amazing that a country who doesn't build their culture around drinking/alcohol can pull off these insane numbers for tourism.
exactly. i have absolutely no horse in this race but the amount of pessimism is insane! everyones acting like saudi is using their personal tax dollars to fund these projects lmao
as cities around the world become increasingly architecturally boring it's cool to see someone trying to bring the sci fi age we were all promised to life!
Dubai is not the most visited city in the world. I believe it is 8th or 9th on the list. And further, visitors' numbers would be massively skewed because it is the hub of EK. To compare apples to apples, it is obvious one would have to extract connecting traffic from true visitors.
Now whether it is the safest, I do not know as I have never checked.
Iceland is the safest country in the world . Scandinavian countries, as well as several Western European countries, are also considered amongst the safest. in Asia it is Singapore, in the south Pacific. It is New Zealand.
Absolutely no idea how the OP derived Dubai as the “safest” country in the world.
Mainly because you can walk around with your Rolex on and leave your Lamborghini unlocked at night without fear. But you wouldn't know anything about that Lil Willy boy.
You sound like an absolute knob
LOL definition of a self-own. I also know nothing about that and I'm delighted to say so.
@TravelinWilly
I'm gonna save you from being called names by another reader.
Don't take 'Willy' too serious.
He still thinks Dubai is a country.
That's why he has no idea how OP derived. OP was talking about cities.
Alonzo, safe for who? Gays and lesbians? You must be kidding. If it’s not safe for gays and women (which it isn’t) even though I am a straight white man- count me out. I want no part in it. Also crimes are under reported. Big shocker there….
@Alonzo, that's not a very bright assessment in any stretch of the imagination. To effectively say, "yes, wasting massive amounts of money, resources, time, effort to only achieve even 10% of what you set out is a great success!" It's akin to suggesting poor management, completely idiotic expectations, timelines, and goals, along with complete ignorance is a hallmark of historic achievement.
I pray you are let no where near any sensible projects or plans, as...
@Alonzo, that's not a very bright assessment in any stretch of the imagination. To effectively say, "yes, wasting massive amounts of money, resources, time, effort to only achieve even 10% of what you set out is a great success!" It's akin to suggesting poor management, completely idiotic expectations, timelines, and goals, along with complete ignorance is a hallmark of historic achievement.
I pray you are let no where near any sensible projects or plans, as I'd assume it would be a glorious mess of mismanagement, terrible planning, and a bottomless pit of a waste of money with zero deliverables achieved.
@Derek H we are talking about a country that has money and resources to waste. Saudi Arabia is #1 in the world in oil reserves. You think they care about burning through money to build tourism from the ground up? Nope. So take your fake ass Grant Cardone rant somewhere else you jabroni. Maybe one day you'll be crowned your companies best project manager lmao.
@Alonzo
Hate to break this to you but KSA isn't #1 in oil reserves.
Why do you think CIA denies any alleged assassination attempts.
Obama almost got his mineral monopoly a decade after he planted his seeds. Obama just didn't expect 2 narcissist (which 2 is up to your imagination) to negotiate over it.
Interesting article. I had actually bought a ticket to go to Saudi Arabia for a few days later this month (March 2025). I've got a US passport, so I need a visa, but their website is a frustrating mess. I tried two times to get a visa (paid the fee each time) and the status of my application just stays at "Send to embassy". It's been weeks and the status hasn't changed and there's seemingly...
Interesting article. I had actually bought a ticket to go to Saudi Arabia for a few days later this month (March 2025). I've got a US passport, so I need a visa, but their website is a frustrating mess. I tried two times to get a visa (paid the fee each time) and the status of my application just stays at "Send to embassy". It's been weeks and the status hasn't changed and there's seemingly nothing I can do to fix it. I eventually just cancelled my flight. I see online that many other people have complained about this problem for years. If they want to increase tourism, spend a few thousand dollars of that $8 trillion and get the website fixed.
Visa on Arrival.
Much easier than the fake Western world visa aka ETA.
If Saudi Arabia really wanted to encourage tourism, they would open up various Islamic and Arabic religious and cultural historical sites to non Muslims.
Having so many historical sites and trying to keep those closed and instead opening insane resorts in the middle of nowhere to try to get tourists is such an new rich oil country thing to do
Yeah. That's such a weird tourism strategy that they have adopted. Perhaps they are doing one of those - build it and they will come.
To a degree the logic tracks (if not the implementation). Look at all the people who travel to Amangiri with zero interest in exploring the natural wonders surrounding it. The primary client base for that hotel is status seekers who want to post their visits at an overpriced celeb haunted hotel with bad service.
This!!!!
as a muslim i've long questioned why they close it off, it honestly doesn't make sense. the only possible answer is that these sites are already quite overcrowded, opening it up would only make it worse
Agreed, being able to see Mecca during the non pilgrimage season is literally the only thing I would consider visiting Saudi for.
Most tourists like to enjoy alcoholic beverages and “liberal” social activities such as free interactions with the opposite sex. Why would anyone go to Saudi Arabia when they can go to Turkiye, Greece, Spain, Thailand, Philipinnes and other places that have beautiful seas and beaches…
Same reason as why anyone would not go to California.
CA have 'beautiful seas and beaches…' + enjoy alcoholic beverages + “liberal” social activities.
Everything you asked for.
"Saudi Arabia of course has a young and large population, at least compared to other Gulf countries."
But also much more income inequality, especially when you get to the smaller cities and more rural areas outside of the big 3 cities (Riyadh, Jeddah, Khobar/Dammam).
If McKinsey & Co. are involved, you know there is going to financial management, number and profit fudging, corruption, etc, related to the project.
“When McKinsey Comes to Town” is a book very much worth a read for some primer-level background.
The simplest and most effective way to increase tourism is by getting rid of visa requirements if possible and create a simple evisa system for the ones needed. For example, an alternative visa is the most commonly used method but government officers are not in the best interest of getting rid of their control and a small and insignificant revenue from visa. They always underestimate the impact of visa on tourism. So instead of reducing...
The simplest and most effective way to increase tourism is by getting rid of visa requirements if possible and create a simple evisa system for the ones needed. For example, an alternative visa is the most commonly used method but government officers are not in the best interest of getting rid of their control and a small and insignificant revenue from visa. They always underestimate the impact of visa on tourism. So instead of reducing the visa fee, Saudi charges one of the most expensive visas...as if they need that small amount of money.
Have you seen Desert Rock Resort?
Saudi Arabia's goals are beyond lofty but let's be real.
If they achieve only a single digit percent of what they are planning, the increase in their size in tourism will be very remarkable.
Saudi Arabia has waited far too long to modernize but their sheer size compared to many Middle East states gives them a level of opportunity that other countries would die for.
Sure. And nothing says relaxation like unwinding at an isolated 1%er resort in a country ruled by a mercurial despot with a taste for chopping up his critics.
Everyone knows that Vision 2030 is a lot of crap and basically a boon on steroids for white western consultants to fill their pockets from a society that has way too much wealth than they can fathom.
Not to mention that climate change is going to make Saudi Arabia uninhabitable for much of the year.
I think it's historic. We are actually watching them burn oil money fast than we can burn oil. They will be left with nothing but rubble in the end.
Saudi population is about 35 million, with 13 million being non-citizen immigrant workers. A large population? Somewhere between Texas and California. Calling NEOM a tourist project is like calling Brasilia (population 3 million) a tourist project.
I think that Saudi Arabia has a lot of untapped potential as a destination, but I don't think that trying to outdo Dubai with the crazy public works projects is the way to go.
One is aware that oil revenue monies can be well spent on some amazing projects. However, maintaining such ambitious buildings, etc, is not a priority for many Middle Eastern authorities.
Because it's not BA or British or Denver.
McKinsey charging $130m in a year should be the heading if someone had to list the failures of this project…
When the budget is billions, 130m is a footnote. That being said, the STUB formerly known as the LINE was always going to be a disastrous moneysink.