DUBAI, April 27 (Reuters) – Saudi Arabia’s flagship tourism developer The Red Sea Development Company (TRSDC) has raised a “ green ” loan of 14.12 billion riyal (3.77 billion dollars) from four Saudi banks for 16 new hotels, chief executive John Pagano told Reuters on Tuesday.
The hotels are part of a new upscale tourism development across islands, deserts and mountains near the country’s west coast, powered by renewable energy. It will include an airport and housing as well as businesses, shops and leisure facilities.
âIt’s green finance, which is the first of its kind in a Saudi riyal denominated loan facility, so we’re very proud of it. It also helps banks with their own ESG (environmental, social and governance) credentials, âhe said.
The 15-year term loan and revolving credit facility have been signed with Banque Saudi Fransi, Saudi British Bank (SABB), Riyad Bank and Saudi National Bank (SNB), Pagano said in an interview.
Its interest rate is around 1% compared to the Saudi Interbank Offered Rate.
The project, wholly owned by the sovereign wealth fund the Public Investment Fund, is key to Saudi Arabia‘s Vision 2030, an economic transformation plan aimed at diversifying the economy away from oil.
The kingdom wants tourism to contribute 10% of gross domestic product by 2030. The renewable energy for the project will be supplied through a public-private partnership with a consortium led by ACWA Power.
The loan finances its first phase, with 16 hotels to be ready by the end of 2023, including 14 on islands in an archipelago and two mainland hotels – one in the desert and one in the mountains.
By the end of next year, three hotels will open and the Red Sea International Airport will start operating.
The TRSDC first contacted the banks in 2019 regarding the loan for the first phase, valued at around R 30 billion.
“It took a while, but like I said, it’s a complex project, it’s a complex journey, but it’s perfectly timed.”
The company has signed a dozen letters of intent with hotel brands regarding management agreements and will announce in the coming months “the stable of brands that will come,” said Pagano, which will be primarily luxury brands.
The CEO said he continued to expect 300,000 tourists a year in the first phase and said he was optimistic that global travel would rebound strongly.
$ 1 = 3.7501 riyals Reports by Saeed Azhar and Yousef Saba; edited by Philippa Fletcher