INTRO: Do you know how Dubai makes their money?
The most common guess is likely oil, and given that they’re surrounded by oil rich countries,
this is a fair guess, but it’s not actually true.
According to the CIA, 49.8% of Dubai’s GDP comes from industry, 49.2% comes from services,
and 0.9% comes from agriculture.
In other words, oil production accounts for less than 1% of their GDP today.
Meanwhile, Saudi Arabia is the exact opposite.
In Saudi Arabia, the petroleum sector accounts for 42% of their GDP, 87% of their budget,
and 90% of their export earnings.
And when you consider that their flagship company, Saudi Aramco, often pulls in over
$100 billion in profit per year, their dependence on oil hasn’t exactly been a problem.
But, as the world slowly transitions over to renewable energy, it’s not the best idea
to continue this dependence, and the Sauds are well aware of this.
This is the main reason that they’ve been investing so heavily into hospitality and
tourism over the past decade just like Dubai.
For example, they spent $3.8 billion building a phenomenal airport, they started handing
out tourist visas for the first time in 2019, and most iconically, they’ve been trying
to dethrone the Burj Khalifa with their own skyscraper called the Kingdom Tower.
Yet, despite their efforts, none of these plans have really led to much results.
Their multi-billion dollar airport often looks like this, and their kingdom tower which was
started construction in April of 2013 still looks like this.
Clearly, Saudi Arabia has had quite a bit of trouble completing these attractions and
attracting tourists.
So, why is Saudi Arabia failing to copy Dubai?
POOR MARKETING: By far, one of the biggest limiting factors
holding back Saudi Arabia is the negative stigma surrounding the country.
Whether it’s true or not, the western media has painted an extremely negative picture
when it comes to Saudi Arabia.
From women not even having simple rights like driving or watching movies to gay people being
executed.
Saudi Arabia has toned down a lot of their stances and policies over the past several
years to become more open to tourists, but the overall sentiment surrounding Saudi Arabia
hasn’t really changed.
According to tourists who have traveled to Saudi Arabia, the common theme seems to be
that if you’re respectful to their culture and you don’t push the boundaries, you shouldn't
have any problems whatsoever.
With that being said though, when someone is on vacation, they don’t necessarily want
to conform to guidelines like no drinking.
So, Saudi Arabia naturally falls down their list of vacation destinations.
Something else to consider is that, people don’t associate Saudi Arabia with vacation
in the first place.
Dubai had to work decades to create this association, and the primary way they accomplished this
was through their airlines.
We all know about the fancy middle eastern airlines and their lavish first class residences,
but even the economy seating at these airlines are the best in the world.
And given that maximizing profit is not a top priority for these airlines, they’re
able to offer extremely competitive rates despite their superior experience.
Over several years, as people traveled around the world for work and vacation, they started
to associate Emirates, Etihad, and Qatar Airways with luxury.
And naturally, this image carried over into their respective countries and cities as well.
If we’re being honest, no westerner would know about Doha or Abu Dhabi if it wasn’t
for Qatar Airways and Etihad, so clearly these airlines played a massive role in putting
these cities on the global map.
Saudi Arabia, however, doesn't have such an airline.
The average person likely doesn’t even know what their airline is called or what the capital
of Saudi Arabia is.
And when you’re trying to become a tourist destination, this is extremely bad news.
Not only does the average person not associate you with tourism, but they associate you with
negative things.
Now, this isn’t to say that Saudi Arabia is bad and that Dubai is perfect because the
truth is, Dubai has a lot of the same shortfalls as Saudi Arabia.
For example, I’m sure we’ve all heard about Saudi women trying to flee the country.
But, did you know that Princess Latifa, a daughter of the ruler of Dubai, tried to flee
the UAE.
She accused her father of holding her quote “hostage” and she was captured and taken
back to Dubai, so clearly, there’s something going on there too.
But, Dubai’s airline and hotel marketing far outweigh such stories, and in the end,
that’s all it comes down to: marketing.
Dubai has brilliant marketing while Saudi Arabia does not, and as long as that doesn’t
change, Saudi Arabia will struggle to replicate Dubai’s success.
INTERNAL TURMOIL: As we can see, Saudi Arabia is having a hard
time with branding, but this shouldn’t stop them from making internal progres right?
For example, successfully finishing the Kingdom tower has nothing to do with how the world
views Saudi Arabia.
The success of this project solely depends on factors that Saudi Arabia has control over
like budget, engineering talent, construction workers, etc.
Yet, Saudi Arabia is struggling in this sector as well, so what went wrong?
Well, the answer is that while Saudi Arabia has control over these factors, they haven’t
managed them particularly well.
Starting with the budget, the Kingdom tower was never really funded correctly.
Originally, the tower was supposed to be 1 mile or 1600 meters tall.
To put that in perspective, the Burj Khalifa is only about half that size coming in at
829 meters.
Given these sky high ambitions, the estimate for the building was also sky high coming
in at $28.5 billion.
While Saudi Arabia initially approved this plan, this proved to be too much even for
them.
They eventually reduced their blueprints to a km high tower which was ok, but the problem
was that they also reduced the budget down to $1.23 billion which is less than the Burj
Khalifa’s budget of $1.5 billion.
It’s not that this can’t be done, but trying to accomplish an engineering feat and
a financial feat at the same time makes the entire project magnitudes harder.
Aside from limited capital, the Kingdom tower was also hammered by the 2017 Saudi Arabian
purge.
If y'all aren’t aware of this event, it was basically when the crown prince of Saudi
Arabia, Mohammed Bin Salman, arrested the most influential princes, ministers, and businessmen
in the country to apparently crack down on corruption.
Now, these guys weren’t actually put in jail.
Rather, they were put in a Ritz-Carlton Hotel and they were barred from leaving until they
paid a hefty fine.
And when I say hefty, I mean hundreds of millions if not billions.
By the end of the purge, Saudi Arabia recovered a mind boggling $107 billion.
Clearly, the purge was extremely successful, but the thing to note is that a lot of the
businessmen who were arrested were the ones that were responsible for building the Kingdom
Tower.
Shortly after, in January of 2018, the construction company would halt construction on the Kingdom
tower.
Now, the official reasoning is that this company had labor issues with contractors, but honestly
I think it has more to do with the purge.
I mean, if you milk these businessmen out of $107 billion, it’s not crazy to think
that they may be pissed off, and that they might halt construction in retaliation.
More recent news suggests that there has been movement around the tower and that construction
has resumed.
But, the purge literally added half a decade onto the project.
Here’s a side by side comparison of how the tower looked in 2017 and 2022.
Clearly, not much progress was made during this timeframe.
And as the construction continues to drag on, the primary question has transitioned
from whether Saudi Arabia can build the tower to if they should build the tower.
JUST WHY: The concept of skyscrapers was born out of
necessity.
Cities with limited space couldn’t afford to build horizontally, so they built vertically.
This gave construction companies a new challenge as they tried to build the tallest, strongest,
and most practical towers in the world.
But, with mega projects like the Burj Khalifa, the Shanghai Tower, the One World Trade Center,
and the Kingdom Tower, the most important factor has completely disappeared from the
equation: practicality.
Much of these buildings aren’t even occupiable.
For example, 29% of the Burj Khalifa is unoccupiable and 39% of the Burj Al Arab is unoccupiable.
In contrast, less than 1% of the Empire State Building is unoccupiable.
Aside from wasting so much space, the space that is used isn’t even used that efficiently.
B1M recently posted a phenomenal video about how the buildings on Billionaire’s Row are
half empty.
The billionaires who buy these properties have little interest in actually living there.
For them, it’s just a good place to park some cash and it gives them some pride.
So, while these skyscrapers are insane feats of engineering, they serve very little value
to society, and countries are starting to take notice.
China, for example, is cracking down on what they deem vanity projects.
Considering this, the question becomes, is the Kingdom Tower even worth it for Saudi
Arabia?
Let’s say everything goes perfectly for Saudi Arabia.
Let’s say they’re able to rebrand themselves and that they finish the tower?
Will tourists just start flooding in?
Well, I think the answer is not really.
I mean that’s exactly what Doha did, and how many more people go to Dubai vs Doha.
The truth is, Dubai was the city that invented the desert kingdom image, and unless they
screw up really badly, they’re always going to be tourist’s top choice.
Simply building a taller tower or a larger airport isn’t going to take that title away
from Dubai.
Not to mention, Dubai is building something called the Creek Tower which is supposed to
beat out the Kingdom Tower.
So, it’s not clear how long Saudi Arabia could even hold onto the title of having the
world’s tallest tower.
In other words, Saudi Arabia can’t just build their way into replacing Dubai.
SOLUTION: At the end of the day, to really understand
why Saudi Arabia is struggling to emulate Dubai’s success, we have to think about
why people even travel in the first place.
They travel to experience something new and unique and to relax and have fun.
If Riyadh is just a copy of Dubai, what’s new or unique about it?
Also, you don’t have to have crazy architecture to attract loads of tourists.
In fact, most tourist destinations don’t have the architecture or luxury that Dubai
does, yet they remain extremely attractive destinations.
Take Tokyo, for example, their skyline isn’t anything particularly remarkable.
But, it’s one of the most popular travel destinations thanks to its rich culture and
food.
Similarly, why do people go to Singapore?
It’s not because they have crazy buildings, it’s once again because of culture and food,
and I’m not sure why Saudi Arabia doesn’t embrace these aspects more.
Saudi Arabia is literally the center of Islamic culture and heritage.
Now, I’m not suggesting opening up Mecca to the public, but there’s so many historical
monuments and mosques that you can’t find anywhere else.
Why not embrace what no one else has instead of trying to become a soulless lavish place
like Dubai?
This isn’t to say that Saudi Arabia should abandon the Kingdom Tower.
I know this falls under the sunk cost fallacy, but they’ve already spent so many resources
and so much effort on this tower that they might as well finish it.
With that being said though, I don’t think they should start any other vanity projects.
Instead, I think the bulk of their efforts should go into embracing what makes them unique.
After all, 2.5 million pilgrims already travel to Saudi Arabia every year.
Why not embrace their culture and make this tens of millions, but that’s just what I
think.
Would you guys ever travel to Saudi Arabia?
Comment that down below.
Also, drop a like if you agree that copying Dubai is not the way to go.
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