Strategy Bites: Jay Rosen, CFO, The Red Sea Development Company Jay Rosen, CFO, The Red Sea Development Company, on leading the world's most ambitious regenerative tourism project based on the west coast of Saudi Arabia.
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Strategy Bites is a series of interviews that LIRA Strategy Partners founder and Managing Director Raffaella Campagnoli is conducting with some of Saudi Arabia's most notable business executives for Entrepreneur.com. In this edition, she talks to Jay Rosen, CFO, The Red Sea Development Company (TRSDC).
Could you start by giving us an introduction to The Red Sea Project and its mandate?
The Red Sea Project is the world's most ambitious regenerative tourism project, based on the west coast of Saudi Arabia. Once complete, it will comprise of 50 resorts across 28,000 sq. km. along Saudi Arabia's pristine coast. The stunning location includes an archipelago of more than 90 islands, one of the few thriving coral reefs in the world, and around 50 dormant volcanic cones. Alongside this, the project area incorporates a diverse ecosystem, with an abundance of flora and fauna. Regenerative tourism is at the heart of The Red Sea Project, with a recognition that nature is the destination's greatest asset, and it must be developed to protect and enhance the stunning and unique natural beauty around it.
The Read Sea Project
Source: The Red Sea Development Company (TRSDC)
The Red Sea Project will set new standards in sustainable development, pioneering a new relationship between luxury tourism and the natural environment. The destination forms an important part of Saudi Arabia's Vision 2030, an ambition to open the Kingdom to the world, and diversify the country's economy away from oil dependency. Tourism is one of the key sectors to reaching Vision 2030 goals, and at TRSDC, we have been tasked with leading the way in building a tourism industry that has previously not existed on this scale in the country. The Red Sea Project will showcase the Kingdom's natural beauty, as well as regenerate the local area and provide economic, social, and environment benefits for generations to come. Offering a diverse array of seamless personalized experiences, The Red Sea Project will encourage visitors to explore the wonders and rich cultural heritage of Saudi Arabia's Red Sea Coast according to three key commitments: offer access to some of Saudi Arabia's most important cultural treasures; protect, preserve and enhance the local environment; and set a new standard in sustainable development.
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As CFO of one of the largest projects in Saudi Arabia, what can you tell us about your role in supporting The Red Sea Project's objectives?
I have been CFO of The Red Sea Development Company for the past four years. Prior to this role, I worked alongside the CEO John Pagno at another large development in the Bahamas. We have a strong working relationship, and it's been fantastic to work with him on another large-scale project. My role at The Red Sea Project is unique, relative to conventional CFO mandates, given my broad background and experience in hospitality and real estate. Aside from driving long-term strategic value by planning, implementing, managing, and controlling all financial and investment related activities of the company, I also oversee business planning, feasibility, investments, capital markets, strategic partnersihps, investor relations, accounting, finance, insurance, and asset management. One of the greatest achievements has been closing a SAR14.120 billion (US$3.76 billion) green loan facility with four Saudi banks. Banque Saudi Fransi, Riyad Bank, Saudi British Bank, and Saudi National Bank acted as mandated lead arrangers. HSBC served as the green loan coordinator on the transaction. The green financing accreditation was awarded due to TRSDC's market leading approach to social and environmental sustainability and the Red Sea Project's international recognition as a green project. The financing is the first riyal-denominated credit facility to receive green financing accreditation. This financing adds another level of credibility for our project, as we now have a fully committed capital structure for the delivery of Phase One, and it further demonstrates our ambition to deliver on our environmental, social and governance commitments.
The Read Sea Project
Source: The Red Sea Development Company (TRSDC)
How is development proceeding on the masterplan- did you face any delays as a result of the COVID-19 crisis?
We have an exciting year ahead at TRSDC as our focus shifts from design to delivery, and we continue to move forward with our plans to welcome the first guests by the end of 2022. The first few hotels will be completed by the end of 2022 along with our dedicated international airport, with the remainder of Phase One completing by the end of 2023. Phase One of the project will offer 16 hotels and 3,000 rooms across five islands and two inland resorts, as well as commercial, retail and leisure facilities and other infrastructure. We have now completed the horizontal infrastructure enablement of the development including roads, utilities and marine infrastructure, which includes the construction of a 3.3km crossing to Shaura Island, the main hub island. Development has also begun at the Coastal Village, which will be home to around 14,000 people who will work at the destination. Despite the COVID-19 pandemic posing a very real threat to our business, we have made significant progress on the ground. More than 10,000 workers are now onsite, and we have awarded over 600 contracts to date, worth over SAR18 billion ($4.7 billion). We have been able to maintain our workforce onsite safely, which has allowed construction to remain on target. To ensure that everyone had enough space to social distance, we moved a proportion of workers to temporary accommodation outside of our construction village, including four local schools. Many key contracts have been awarded this year, including a substantial contract for the airside infrastructure works to an all-Saudi joint venture ahead of the airport opening in 2022. We also awarded our highest-value contract to date to a consortium led by ACWA Power to design, build, operate, and transfer The Red Sea Project's utilities infrastructure. The contract will cover the design, construction, and operation of the systems providing utilities. Such monumental contracts demonstrate that we've still been able to operate normally, despite the turbulence of last year.
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What impresses you the most, personally, about the development of The Red Sea Project?
What most impresses me about The Red Sea Project is the pristine, stunning, natural surroundings. I was blown away by its beauty the minute I stepped foot at the destination. Our unwavering commitment to our fundamental sustainability values means that we haven't cut any corners when developing the destination, and protecting the natural environment informs every decision we make. An example of this is the marine spatial planning exercise we conducted before finalizing the master plan. In partnership with King Abdullah University of Science and Technology (KAUST), we undertook the largest marine spatial planning simulation ever done. Following the simulation, we decided that only 22 islands would be developed, leaving 75% of the islands untouched, equivalent to only 1% of the entire destination. Nine islands will be designated as special conservation zones to protect the species that live and thrive there. As part of the overarching plan for the destination based on the simulation, we are targeting a 30% net conservation benefit by 2040m which is being achieved by enhancing biologically diverse habitats like coral, mangroves, sea grass, and land vegetation.
The Read Sea Project
Source: The Red Sea Development Company (TRSDC)
Saudi Arabia has opened its borders to tourism now. What message would you send to people who have never visited the country?
What most impressed me when I first visited Saudi Arabia was the immense sense of hospitality infused in the Saudi culture. There really is no where else in the world quite like it. The cultural heritage of the region is rich and diverse, and the people welcome you with open arms. The area where The Red Sea Project is being developed is notable for its position on the pilgrimage route from Egypt to the Holy Cities of Makkah and Madinah, with visitors able to walk in the footsteps of the ancient traders, and explore the relics left behind. Additionally, we were granted permission to supervise the excavation of a shipwreck within The Red Sea Project area. It's the largest and most well-preserved wooden shipwreck anywhere in the entire Red Sea, and it highlights a fascinating but little-known part of Saudi maritime history, with the wreck occurring between approximately 1725-1750. There really is so much to see and do, from significant ancient heritage sites that are completely unique to the region, to exploring vast mountain ranges and swimming in crystal clear waters– I'm excited to see the tourism industry boom here, as more people come to explore its wonders.
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