Business

Saudi Arabia to Lure Ultra-Luxe Travelers With Palace Stays

The Red Palace located in Saudi Arabia’s capital of Riyadh (Source: Boutique Group)

(Bloomberg) -- In the south of Riyadh, nestled into downtown streets steeped in rare desert greenery, sits a 365,000 square-foot palace once lived in by King Saud bin Abdulaziz, the second ruler of modern Saudi Arabia.

The Red Palace was built in the 1940s for the then-crown prince. Now, the 9-acre, art-deco manse is being transformed into an ultra-luxury hotel designed to give guests a taste of the Saudi royal life.

The conversion, by hospitality company Boutique Group, is the kind of rarified tourism project that doubles as historic preservation. The Red Palace served as a government headquarters as the kingdom emerged a global energy superpower; when it opens in 2025, it will have 70 rooms that preserve not just the physical spaces but the entire lifestyle that came with them.

Menus will feature the Saud family’s favorite recipes. Spa treatments will use the area’s ancient healing rituals. Scents from the native Taif rose—a favorite of King Saud—will waft through the air. 

Boutique Group says the Red Palace will be a first-of-its-kind experience in the country, which only five years ago starting widely allowing tourists into the country for leisure. And it will likely cost more than most anything in the global luxury market.

“It’s the experience of being treated like royalty, where everything is taken care of for you down to every detail,” Mark De Cocinis, chief executive officer of Boutique Group, says in an interview in Riyadh. “Even more so, it’s about the history and the culture, about living through the story of kings, families and guests they entertained.”

Boutique Group, wholly-owned and funded by Saudi Arabia’s sovereign wealth fund, says its effort to overhaul the Red Palace is part of a broader push by the kingdom to diversify its economy away from petroleum wealth by creating new industries like tourism.

Saudi Arabia itself plans to pour $800 billion into tourism over the next decade as it dreams of hosting 150 million tourists a year. It welcomed more than 100 million in 2023, though the majority of those people were locals exploring a country that had long been closed off to entertainment. 

Now, citizens find dozens of upscale restaurants and a regular cadence of events that range from UFC boxing matches to Alicia Keys and Backstreet Boys concerts and marathon races.

Less than a third of Saudi Arabia’s tourists came from abroad in 2023, underscoring the challenge the kingdom faces in luring westerners, in particular, who may still be skeptical of visiting a place that has been associated with human rights violations.

No Limits

Foreigners that do come hunting for luxury typically head to the new resorts on the Red Sea resembling those on pristine beaches in the Maldives or in the desert oasis of AlUla. Both destinations have much greater appeal than Riyadh, a less-than-glamorous metropolis that’s currently more of a hotbed of construction than anything else.

Boutique Group’s Red Palace may get travelers thinking twice about the capital. 

An hour or so from the city’s main airport, guests will be greeted by staff whose uniforms will be a modern take on traditional Saudi attire.

On-site experiences will tell the story of the Red Palace in its heyday. A heritage lounge will be decorated with artifacts from King Saud’s era—the first and second editions of Saudi Arabia’s 100 riyal bank note featured the Red Palace. Spa treatments will use traditional ingredients like black seeds. 

“We’ve really had to engage with the [royal] family,” Boutique Group’s De Cocinis says about the research process that the company undertook to ensure the palace experience would be truly authentic. It’s a level of detail that is difficult to find in other destinations—though a handful of hotels like Le Grand Contrôle, set within the gates of the Château de Versailles in France, have followed a similar approach.

As part of the experience, Red Palace travelers will have dedicated palace hosts trained to fulfill almost any request.

“There is really no limit. As long as it’s moral and ethical, we’ll do it,” De Cocinis says.

Boutique Group hopes most of its hospitality team will be local. To train Saudi talent, it’s partnering with Swiss hospitality educator Sommet Education, among others, to create development programs unique for its employees.

Complex History

Though its location in Riyadh is just minutes from one of the busiest stretches of highway in Saudi Arabia, the Red Palace should be accessible by a new metro system when it opens, making it easier to get around a city with traffic that rivals Los Angeles in rush hour.

It’s also within walking distance to landmarks including the National Museum of Saudi Arabia and Murabba Historical Palace—a rarity in the capital, where almost nothing is walkable. 

Deera Square—where Saudi Arabia has carried out public executions—is a short distance away, too, serving as a reminder of the complexities that exist in the kingdom’s history.

While the Red Palace is designed to be a boutique luxury palace hotel unlike any other in Saudi Arabia, it will eventually have company. 

Boutique Group is working on converting two other royal palaces into luxury resorts—Tuwaiq Palace in Riyadh and Al Hamra Palace in the coastal city of Jeddah—and is studying three more.

“What we are doing, we don’t have anything to compare to,” De Cocinis says. “We are providing the location, the palace, the history, the culture and also the exclusivity of that service in Saudi Arabia.”

©2024 Bloomberg L.P.