How is Saudi Arabia trying to revive its income through luxury...

A luxury Saudi ship is sailing near blue islands and lakes, on a voyage aimed at re-launching tourism despite fears of the emerging Corona virus, and a review of mega projects on the Red Sea coast.

Last August, a ship launched Silver Spirit Offering trips off the coast along hundreds of kilometers in an area that the oil-rich kingdom hopes to turn into a global tourist site and an investment attraction center, as part of an ambitious plan to diversify the economy that depends on crude.

The luxury vessel, which was chartered for two months by a company owned by the Saudi Public Investment Fund, provides a window to view projects worth billions of dollars that the Kingdom is developing on the Red Sea coast despite austerity measures.

“We are introducing the Red Sea to the world (…) and highlighting its value,” Tourism Minister Ahmed Al-Khatib said on board the ship.

Famous social media marketing

A number of well-known social media account holders were invited to take part in the full-cost paid trip, during which they took pictures on the white sandy beaches.

During a four-day cruise last week, the ship sailed near huge development projects, including the “Red Sea” project, which aims to convert dozens of islands and a group of mountain sites on the Red Sea coast into luxurious tourist resorts.

For a few hours, the ship anchored on two islands, between them, Sendala, which are part of the NEOM project, the huge area slated to be built at a cost of 500 billion dollars along the Red Sea coast and in areas of Jordan and Egypt.

Passengers on the ship were allowed to roam the small island littered with coral reefs – which people are usually prohibited from entering – by golf carts and ate in a makeshift restaurant set up on the beach.

Deficit offset by spending

Some question the feasibility of these mega projects that come in the midst of a decline in government revenues due to the shock of low oil prices in addition to the emerging Corona virus crisis.

Saudi Arabia, the world’s largest oil exporter, announced that it plans to cut government spending by more than 7 percent next year, while the public budget is expected to record a deficit of 12 percent of GDP in 2020.

Meanwhile, Saudi Arabia is awarding billions of dollars worth of contracts for mega construction projects.

The Saudi Public Investment Fund recently awarded contracts to develop NEOM to the American project management company, Bechtel, and the AECOM company.

According to the Middle East Economic Digest, the Red Sea project has awarded contracts worth five billion riyals ($ 1.33 billion) and is expected to award contracts worth more than 3.5 billion riyals ($ 933 million) by the end of this year.

“New projects on the Red Sea coast are moving forward despite Covid-19 and lower oil prices,” said Colin Furman, an editor of the bulletin. “During the next three years, the Saudi government will be smaller, but its projects will be bigger.”

For his part, the Saudi Minister of Tourism says that the projects are moving at a “very fast” rate, stressing that they have “unlimited support” from the Saudi leadership.

Trips start at $ 1,600

The kingdom presented the luxury ship for the first time while the Covid-19 pandemic affected global tourism.

And in late August, the Silver Spirit cruise ship was forced to return in the middle of the road after it was suspected of being infected with the new Corona virus on board. The ship’s workers said they were quarantined for two weeks in guest rooms.

However, the flights were resumed shortly afterwards, while the majority of the passengers were tested twice for the virus before boarding the ship.

Last year, Saudi Arabia launched tourist visas and opened the door to tourism as part of Saudi Crown Prince Mohammed bin Salman’s plan to diversify the economy.

وتبدأ Fares for a trip on the ship from six thousand riyals (1600 dollars)And it seems that it aims to attract wealthy tourists from inside Saudi Arabia, with the suspension of travel due to the virus.

The cruise offers spacious suites as well as a personal butler service. Almost none of the women wore the gowns imposed on Saudi women on board.

The trip set off from King Abdullah Economic City, a huge project near Jeddah that cost billions of dollars, but it is a warning of the fate of some mega projects.

The mega project, launched more than ten years ago as part of a diversification plan to build new cities, appears nearly empty and reflects the difficulties the Kingdom faces in attracting investments in sectors other than the hydrocarbon sector.

“The political commitment to moving forward with mega projects appears to exist,” said Karen Young of the American Enterprise Institute.

However, she pointed out that “spending limited state resources on projects that do not focus on creating job opportunities or removing the largest possible number of people from government sector salaries is not a positive step towards further economic diversification.”