Will Saudi Arabiaâs Diriyah Gate be finished on schedule by 2030? Does it have the right mix of luxury and affordable hotels? Will tourists come year-round?
Those are some of the questions we had for Jerry Inzerillo, Group CEO of Diriyah Gate Development Authority, who was in New York City Tuesday for the United Nations General Assembly.
Inzerillo was previously CEO of Forbes Travel Guide and spent decades at Kerzner, where he drove the creation of One&Only Resorts and Atlantis.
Diriyah Gate, near Riyadh, is one of several major projects Saudi Arabia is developing as part of its Vision 2030 plan to spur its tourism economy.Â
Diriyahâs hotel development has seen some delays, but Inzerillo said the project is on track. âAfter six years, weâre on time and on budget,â he said. âWeâre roaring towards 2030 when Diriyah Gate will be finished.â
Hotel Lineup
Inzerillo said 37 hotel management deals are signed, with groundbreakings on about a dozen due in October. The plan allows room for five more hotels to be signed.
The first of the luxury hotels planned for Diriyah Gate â Marriott’s Bab Samhan, a Luxury Collection Hotel â has begun taking bookings for dates in January 2025. It was originally promised for 2023.
Other big tourism projects in Saudi Arabia, such as The Red Sea and AlUla, have begun to open hotels. The Red Sea has opened three of its 50 planned hotels and pushed forward some other opening dates.
“Giga projects are choppy in development because some of the buildings are very complex,” Inzerillo said.
Diriyah Gate’s 138-room Bab Samhan Hotel, with a Michael Mina restaurant, was the easiest to open because it was built in an area of the project with underground utilities and infrastructure already installed.
Unlike the now-open Bab Samhan Hotel, the other hotels are being built in a different area of Dirihyah Gate. In this spot, developers first wanted to install underground infrastructure, such as thousands of parking spaces, delivery tunnels, and power and water lines. But the site was rocky.
“We don’t use explosives for demolition,” Inzerillo said. “So we had to core drill [through the rock], which took time.” They’ve just filled the underground area, and the hotel construction can start, he said.
A mix of luxury and affordable
Diriyah Gate’s 37 hotels focus mostly on luxury. However, Inzerillo said that the project has different zones for different needs.
“We feel that Diriyah Gate should be very high-end, like Forbes Travel Guide Five-Star,” Inzerillo said. “We’re building it like a Florence, like a Marrakech. Saudi tourism will create urbanization so the hotels have decent occupancies and RevPARs [revenue per available room].”
“There will be other giga projects in other parts of the city dedicated to high volume tourism, with hotels in the one- and two-star range,” he said.
Luxury brands side-by-side
Diriyah Gate’s hotel roster includes ultra-luxury brands like Aman, Capella, and Four Seasons. The clustering of ultra-luxury brands raises questions about differentiation and occupancy for some peopleâ but not Inzerillo.
“It’s only a little over 6,000 [room] keys,” Inzerillo said.
“Riyadh is going to become 10 years from now a tourism powerhouse with an urban fabric that will be similar to today’s G10 countries,” he said.
But will the luxury and ultra-luxury brands dislike being clustered side-by-side?
“Look at London, Tokyo, Hong Kong, New York, and Paris,” he said. “They all have a very high concentration of luxury hotels.”
“In London, Rosewood is adding a second hotel,” he noted. “If you look at the Dorchester Collection, The Dorchester and 45 Park Lane are literally a stone’s throw from each other.”
Saudi as a warm-weather escape
Saudi Arabia’s inbound tourism is growing. This week, a UN World Tourism Barometer report said Saudi had seen a 73% increase in international tourist arrivals in the first seven months of 2024.
Inzerillo said significant outbound tourism markets that face damp weather much of the year, such as India, China, and Northern Europe, will flock to the reliably warm weather of the Gulf in key seasons.
The heat could become a negative during sweltering summers, but Inzerillo still thinks Saudi Arabia can attract visitors year-round.
“Other Gulf destinations use heat mitigation, a lot of indoor activities, a lot of water activities where they can position themselves throughout much of the year as tourism hubs, and we’ll do the same thing,” Inzerillo said.
“Diriyah is five to six degrees cooler than the rest of Riyadh because it’s elevated and surrounded by an oasis,” he said. “We don’t have the humidity factor of some other destinations, and we use traditional and the latest technologies to mitigate the heat, too.”
“Today, if you go to Seville or Barcelona in the summer, it could be 40 Celsius [about 104 Fahrenheit], but people still want to be there because of the programming,” he said. “We’ll do great programming.”
To encourage longer stays, Saudi and five other Gulf countries have approved a common visa system, which could let travelers hop across Saudi, the UAE, Bahrain, Kuwait, Qatar, and Oman. (The visa has yet to be implemented.)
“By 2030, the power of all the Gulf states, each promoting and developing tourism, will increase the average length of stay by a full two days in the region,” Inzerillo said.
What’s next?
Diriyah’s success hinges on broader Saudi reforms to ease foreign investment.
Inzerillo expects the kingdom to announce new laws easing restrictions on foreign ownership of real estate and businesses. “It’s just a question of a little bit more vetting, but an announcement is forthcoming,” he said.
“I expect it will be easier to do business in Saudi than even the Gulf states like Dubai and Abu Dhabi because, obviously, we learned from their good example,” he said.
“When I came to the kingdom six years ago, we didn’t have a ministry of tourism,” he said. “We didn’t have a ministry of culture. We didn’t have a ministry of sport. We didn’t have a ministry of investment. Look at our incredible accomplishments since. And wait to see what happens in the next few years.”
