Business Maverick

Business Maverick

Saudi Arabia plans $400m expansion of Burning Man-Born Habitas

Saudi Arabia plans $400m expansion of Burning Man-Born Habitas
Couple at the corniche in Jeddah, Saudi Arabia. (Photo: JamesDeavin, Sony World Photography Awards 2023)

Saudi Arabia is starting a 1.5 billion riyal ($400-million) fund to expand the free-spirited hospitality brand Habitas across the kingdom as part of its blitz to build a tourism industry from scratch.

The hotel and events company, which has its roots in creating camps at the Burning Man festival in the Nevada desert, plans to have as many as six new properties throughout the kingdom, in addition to two existing ones. The details aren’t finalised, but sites could range from the Red Sea coast to the inland capital of Riyadh. The aim is to attract new international visitors to Saudi Arabia – which first opened to tourists in 2019 – as well as locals that haven’t done much domestic travelling.

“What’s amazing about the kingdom is just how diverse the geography is,” CEO Oliver Ripley says, adding that the investment in infrastructure has opened up much more of the country to potential visitors. “A lot of these locations were difficult to access, or access was until recently restricted for religious reasons.”

The funding will be anchored by the Saudi Tourism Development Fund, or TDF, which was established in June 2020 with an initial pot of 15 billion riyal to finance the industry’s growth. The kingdom’s goal is to more than double the number of tourists, to 100 million annually by 2030, including domestic travel, and increase tourism’s share of the economy from 3% to 10%, according to a document on the fund’s website. A spokesman for the TDF declined to answer questions for this story.

Saudi officials have said they’ll commit at least $1-trillion creating enticing destinations in the country and expanding the tourism industry. The Habitas investment, ventures such as a new luxury airline, and a $500-million e-sports destination are part of the broader strategy. Saudi Arabia has almost 99,000 hotel rooms in the pipeline from various stages of development, according to figures from April from hotel data company STR. The country has also been on a spending spree in other areas, including luring international sports stars to its nascent athletic teams, to try to change its image abroad and create new entertainment options.

TDF has already made agreements with companies as large as Hilton and as small as a Dubai startup called Envi Lodges to create additional lodging. The Saudi fund often provides financing and receives an ownership stake in a string of planned hotels; the hotel companies licence their brands and manage the operations.

The planned Habitas fund is the same size as one set up for Accor’s Ennismore collection, which agreed to develop 10 to 12 hotels with 150 to 200 rooms each — though that deal spans several individual hotel brands. TDF has committed 10% — or $40-million — to the fund so far and will own the properties, an Ennismore spokesman said. As for Habitas, the company will likely build one property on the Red Sea on the country’s west coast and another near Jeddah, with Riyadh as a possible third spot, Ripley says. He anticipates that visitors will come for as little as three or four days or as long as two weeks and will travel in a circuit between the hotels in an experience called “A Journey of Discovery Through Saudi Arabia”.

Hotel circuits are becoming increasingly popular with travellers who want to see a swath of a country and have varied experiences while staying within one brand’s familiar confines—with all the transfers and logistics sorted out. Habitas’ circuit, if completed, could be one of the most comprehensive in the world.

Habitas — a company that grew out of camps at Burning Man and has a manifesto for “like-minded souls”— is an unlikely brand to commit so heavily to Saudi Arabia. With the six newly announced locations, 40% of the company’s current and upcoming properties will be in the kingdom. In other locations, from Tulum, Mexico to Namibia, its crowd is made up of liberal creative types who want to revel into the late hours of the night. Can Ripley draw that customer base to Saudi Arabia, which has been criticised for human rights violations and gender inequality — and where alcohol is banned?

So far, it has found some success in Al-Ula, a desert oasis in northwest Saudi Arabia where it opened a boho-luxe property with a mixed-gender infinity pool in 2021. Ripley says Habitas AlUla is 60% full in the summer, despite the desert heat. Of those who are coming, about 80% are local.

The absence of cocktails — a staple at other Habitas hotels — is one thing Ripley thinks is standing in the way of drawing more internationals. He says any decision made by the kingdom on whether to allow alcohol will affect his business plan, and he’d like to see it approved.

Yet he sees reason to be hopeful. When Ripley first started talking about opening in Saudi, his friends thought he was crazy to focus on the country. “There’s been a very positive change to people’s perceptions,” he says.

When asked if unmarried couples or people who are LGBTQ could come to the hotels, Ripley says he believes the kingdom is safe for all travellers. “Whether you are going as a boyfriend and girlfriend, whether you’re going as a boyfriend and boyfriend, there’s complete freedom in terms of how you can travel with your partner,” he says. 

Saudi’s official tourism website says unmarried couples can stay together and LGBTQ visitors are welcome but asked not to “disclose personal details” in what might be seen as a don’t ask, don’t tell policy.

Habitas is set to open its next properties in Saudi Arabia in 2024. DM


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