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John Pagano: the CEO trying to grow Saudi tourism
00:21:42
We meet the real estate executive with projects spanning Canary Wharf to the Red Sea
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- [00:00]
BBC Announcer
This BBC podcast is supported by ads outside the uk.
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Aramco Narrator
Who drives the world forward?
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The one with the answers or the one asking the right questions?
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At Aramco, we start every day by asking how?
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How can innovation help deliver reliable energy to the world? How can technology help develop new materials to reshape cities? How can collaboration help us overcome the biggest challenges? To get to the answer, we first need to ask the right question.
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Search Aramco Powered by How Aramco is.
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An energy and chemicals company with oil and gas production as its primary business.
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SAP Concur Representative
Hey, let's talk about your expense report.
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John Pagano
I didn't submit an expense report. You will.
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SAP Concur Representative
Custom saddles and dog training services are not within policy.
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John Pagano
What are you talking about?
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SAP Concur Representative
SAP Concur uses advanced AI to audit and automatically detect out of policy expenses. It's the breakthrough I needed to focus more on our future.
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John Pagano
These are my future expenses.
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Liana Byrne
Yes.
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SAP Concur Representative
And self defense classes are out of policy.
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John Pagano
I'll need self defense classes.
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SAP Concur Representative
You will?
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Liana Byrne
For what?
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SAP Concur Representative
It's a big dog.
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SAP Concur Announcer
SAP Concur helps your move forward faster. Learn more@concur.com.
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Liana Byrne
Hi, I'm Liana Byrne and you're listening to Business Daily on the BBC World Service. Today we meet a globe trotting developer who's transformed landscapes into multi billion dollar financial hubs and tourism destinations. We hear about his journey in business from delivering newspapers and clearing tables in a restaurant at weekends.
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John Pagano
As a student, I think it's part of my makeup. I always aspire to do better. So I started as a busboy, then I wanted to be a waiter and then I wanted to be a cook. So I ended up in the kitchen.
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Liana Byrne
Cooking to working for the Crown Prince of Saudi Arabia, building luxury hotels along the Red Sea coast.
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John Pagano
And when I arrived and they took me to the west coast and along the Red Sea, I was literally astonished by what I saw.
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Liana Byrne
That's Red Sea Global CEO John Pagano, my guest today on Business Daily from the BBC. Born in Canada to Italian immigrant parents, John Pagano developed a love for work from an early age.
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John Pagano
I say I came from humble beginnings. My parents were, you know, immigrants to Canada. They left Italy in the 50s to, you know, find a new world and new opportunities. Italy was not doing so well back then. So, you know, they worked hard, they put me through school and I was always active. As a kid I wanted to work. So I started with a paper route when I was 8. If you want to get that granular, you know. My first job was I worked in a restaurant as a busboy.
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Liana Byrne
An Italian restaurant.
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John Pagano
No no, it was not. It was a sort of English, English restaurant that open 24 hours a day anyway.
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Liana Byrne
Foreshadowing?
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John Pagano
Yes, indeed, who knew? But what happened was I again, and I think it's part of my makeup, I always aspire to do better, I always try to do. So I started as a busboy, then I wanted to be a waiter and then I wanted to be a cook. So I ended up in the kitchen cooking and, you know, so it went on. So I always worked, you know, while I was at school, I worked on weekends, et cetera, just to earn some money.
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Liana Byrne
John went to the University of Toronto to study mechanical engineering. That training would open up a world of business opportunities and eventually taking him across the Atlantic.
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John Pagano
I have an engineering mind. I like to figure out how things work and I think engineering as a discipline was perfectly suited to me because I like to solve problems, I like to figure out how things work and so on. I started life as a consultant in the engineering space, but soon wanted to move up the so called food chain and I wanted to get into real estate development and I did. I moved to one of the largest real estate private developers in the world at that time, called Olympia and York. And that's what ultimately brought me here to London. I moved to London in the late 80s, working on a project that you might be familiar with.
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SAP Concur Announcer
Canary Wharf, east of Tower Bridge. London becomes a very different city. You leave behind the political capital, the financial centre, the cultural headquarters, and you come to a working town based on a river, a port with great dock basins dug out in the 19th century.
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Liana Byrne
Canary Wharf, part of London's Docklands, was once the site of a major shipping hub and named for its trade with the Canary Islands. But when modern container ships arrived in the 1960s, the docks couldn't cope with the larger vessels and the area went through a steep economic decline.
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BBC Announcer
Between 1966 and 1981, at least 18,000 jobs disappeared from London's docks. Changing world trade and containerisation put an end to a way of life that had existed for 200 years. Unemployment rose to 24%.
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Liana Byrne
A plan was formed in the 1980s and to regenerate the area and turn it into a bustling financial district to rival those in Europe. John was brought in to help oversee it.
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John Pagano
London was suffering from a lack of modern office space to really attract the financial services sector. We were under threat, London versus Frankfurt, you know, and Paris, even trying to become the financial center for Europe. So we were an important part of providing the accommodation and the space for the bankers and financiers that ultimately came and made London the financial centre of Europe.
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Liana Byrne
The landscape was transformed with the skyline dominated by massive skyscrapers.
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John Pagano
Londoners are getting used to changes in the skyline, but the newest is the biggest and it'll be the hardest yet to get used to. The tower at Canary Wharf, east of the city.
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Liana Byrne
Despite initial resistance from local groups and periods of falling property prices, the regeneration of the area has generally been considered an economic success story. But a post pandemic decline in demand for office space has threatened its prosperity again with some major banks pulling out.
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John Pagano
If we had the benefit of hindsight, we'd say perhaps we should have been looking at a more balanced mixed use development. Because more and more cities are moving away from a central business district and its only business. It's becoming much more mixed in its use. And London is going through that same evolution. Canary Wharf has done the same and even before I left, we were already moving into that space. I think the evolution of the city through the introduction of more residential and more of a mixed use feel to it, I think is a healthy thing because that's the way modern cities are evolving. People want to live and work nearby, they want to have the amenities, the retail. And yes, it's sad to see some people moving out, but I think they'll be replaced by others.
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Liana Byrne
After 23 years and several executive roles at Canary Wharf broken up by a four year spell in Nassau, in the Bahamas overseeing the creation of a 1000 acre luxury holiday resort, in 2018, John was asked to lead another ambitious project, this time in Saudi Arabia.
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John Pagano
Your reputation gets out there and so executive search companies are constantly, you know, reaching out. Well, at first I wasn't interested. Let me, I'll be honest, it was not place that I thought I would, you know, move to, to the Middle East. But they were persistent and so eventually they asked me to come and actually see what they had on offer. And I got there and I was frankly surprised by what I saw, you know, because as somebody living in the west, you have a perception of what the Middle east is. And it's, you know, in my mind it was all sand dunes and desert and so on. And when I arrived and they took me to the west coast and along the Red Sea, I was literally astonished by what I saw. I saw beautiful turquoise water, brilliant islands, pristine corals. And I was like, wow, this is Saudi Arabia. I mean, who knew? I happened to meet the Crown Prince, His Royal Highness Mohammed bin Salman, on my very first visit and he shared his vision with me both for what he had in mind for the redevelopment of what the Red Sea became, but also his vision for the country. And I was quite captivated by it. He was very humble, modest, but very passionate. And, you know, he sort of made the point that this environment is super precious. And he wanted to make sure that whatever we did, we protected it for future generations to enjoy.
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Liana Byrne
Crown Prince Mohammed bin Salman, known as MbS, has been de facto ruler of Saudi Arabia for eight years. He's vowed to modernize the country and diversify its economy, reducing its dependence on oil exports. Part of this Vision 2030 strategy is the creation of jobs and domestic tourism. And that's why John was brought in as chief executive of the state owned company Red Sea Global.
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John Pagano
Our goal is to develop two major projects on the Red Sea coast. One is called the Red Sea Project, the other one is Amala, which are separated by about 150km. And I'm proud to say that, you know, we're now open and operating. We've got more hotels that are coming. We opened 10 resorts and hotels to date and by May next year we'll have all 27 hotels and resorts across the Red Sea and Amala project. So we're helping to deliver on that promise of transforming the kingdom and also on diversifying the economy in terms of moving away purely from oil resources to tourism, which is, as you well know, a very important economic sector. It's a great creator of jobs and it's also a great bridge between cultures.
- [09:37]
Liana Byrne
You're listening to Business Daily on the BBC World Service.
- [09:44]
Aramco Narrator
Who drives the world forward?
- [09:45]
The one with the answers or the one asking the right questions?
- [09:49]
At Aramco, we start every day by asking how?
- [09:52]
How can innovation help deliver reliable energy to the world? How can technology help develop new materials to reshape cities? How can collaboration help us overcome the biggest challenges? To get to the answer, we first need to ask the right question.
- [10:06]
Search Aramco Powered by how Aramco is.
- [10:10]
An energy and chemicals company with oil and gas production as its primary business.
- [10:14]
John Pagano
Mmm, I love ravioli.
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SAP Concur Representative
Otanta fame.
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John Pagano
Since when do you speak Italian?
- [10:17]
SAP Concur Representative
Since we partnered with SAP Concur. Their integrated travel and expense platform and breakthrough solutions with AI gave me time back to dive into our financial future. We expand into Europe in 2027. So I'm getting ready.
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John Pagano
Well, you can predict the future.
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SAP Concur Representative
I can predict you'll like that message.
- [10:32]
John Pagano
What message? Oh, hey, we all got bonuses.
- [10:34]
SAP Concur Representative
You can save for college now.
- [10:36]
John Pagano
I don't have kids.
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SAP Concur Announcer
You don't say SAP Concur helps your business move Forward faster. Learn more@concur.com.
- [10:47]
Liana Byrne
I'm Liana Byrne and today I'm speaking to John Pagano, a veteran of large scale real estate developments currently tasked with bringing Crown Prince Mohammed bin Salman's vision for Saudi Arabian tourism to life.
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Aramco Narrator
Our vision born on the Red Sea coast of Saudi Arabia, an ambition to prioritize people and planet.
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Liana Byrne
Saudi Arabia is pouring billions of dollars into tourism. The kingdom wants to attract 150 million visitors annually by 2030 and to create 1.6 million tourism related jobs. John Pagano's Red Sea Global is a big part of that plan with a focus on sustainable or what it calls regenerative tourism. Critics have, however, raised concerns about the impact on fragile ecosystems like coral reefs. The plan is to build 50 hotels and 8,000 rooms by 2030 on previously undeveloped land.
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John Pagano
We started with a clean sheet of paper with pristine land. And the words of His Royal Highness were echoing in my mind. We needed to do something different. We needed to make sure that whatever we did protected and indeed enhanced the local environment before we even developed a single piece of the destination. We spent, you know, a year or more just doing baseline surveys. We brought scientists into our discussions to understand the marine biodiversity, the corals, the sea grasses, the mangroves. So Red Sea is an archipelago of 90 islands across a lagoon that spans two and a half thousand square kilometers. So when we first got there, it was like, you're spoiled for choice. Which island will I develop? But actually, when we started to really dig into it, it was a lot more complicated. For example, we found beautiful islands, one in particular, which is called Al Waqati. And it was perfect. It had the right orientation. It was white sandy beaches, beautiful waters and corals nearby. And we thought, fantastic, this is a spot. We're going to develop this island because it's so pristine and so beautiful. When we further studied it, we realized that this was a favored nesting site for the critically endangered hawksbill sea turtle. And so I was faced with a dilemma. I have an opportunity to develop an island where I'm absolutely certain this is going to be, you know, a first rate resort that's going to be on the COVID of all the, you know, the big travel magazines. On the other hand, if I develop it, I'm potentially going to accelerate the extinction of a beautiful turtle species. And so the decision didn't take long to make. We set that island aside and are not going to develop that island because we wanted to ensure that this particular critical species was not going to be endangered by anything that we did we wanted to be sustainable. And that's, you know, that was the sort of buzzword of the time. And I looked at and thought about it and I said, what does sustainability actually mean? And if you look at up the definition, it says, sir, maintain the status quo. And I said, we're past the point of maintaining the status quo. Actually, you know, we need to do better. We need to actually try to improve the destination because, you know, we have taken our environment and nature for granted for far too long. So instead of just simply maintaining the status quo, we set ourselves the goal of actually increasing the net conservation value of the entire destination by 30% over the coming two decades. So by 2040, so that we actually made it better, we built the biggest tourism destination in the world that is completely off grid, 24 hours a day.
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Liana Byrne
Surely there will be some sort of environmental toll on having people on a section of coastline that was previously clear of human interference.
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John Pagano
Yeah, that's a valid point. But the approach, again, that we took, and we didn't do this thing through, we did it through science. We undertook what we called a marine spatial planning simulation, which actually modeled what happens when you bring tourists in. And so we're very careful about how we operate, not only how we build it, but also how we operate the destination. With a destination of the size of Red Sea, if I tell you that we cover a land area, a total area of 28,000 square kilometers, which, to put that into a context, it's a little bit smaller than Belgium. Now, I could develop accommodation for tens of millions of visitors, but rather than do that, we chose to limit the number of visitors by design to no more than a million. When we fully build out the entire plan for the destination, I have 90 islands. As I said, we're going to develop no more than 20 odd islands. So trying to strike that balance and doing it in a manner that people can actually enjoy nature in its purest form rather than just simply leaving it there, barren and not touched.
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Liana Byrne
And would they be luxury tourists as well?
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John Pagano
That you're targeting luxury and sort of four star, five star is the positioning of our destinations. We did not want to go mass market. If you go down into the lower parts of the chain scale, then all of a sudden it becomes much more accessible. More people will want to come. And that would be the opposite of what we want to do, which is to limit numbers of visitors to be in harmony with our environment rather than, you know, fighting it.
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Liana Byrne
One of the things that sometimes crops up in my mind is I'm a woman you know, would Saudi Arabia be.
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John Pagano
For me, the biggest changes that have occurred has been around women. You can come as a Westerner, walk around in your normal business attire or whatever. You have to be culturally sensitive. But you would, if you go to the Vatican, you would be sensitive to, you know, what you wear, because there's an expectation. And the same is true in Saudi. But gone are the days of having to wear an abaya. It's now about giving people choices. So some Saudi ladies will be still very traditional and will wear abayas and burqas and the like, or headscarves. And many don't women drive. Guardianship rules have been removed, which used to be restrictive. Women in the workforce, when I joined, they were relatively small percentage, highly educated, a huge resource for the country that weren't really deployed. They set the goal of 30% women in the workplace by 2030. They achieved that a couple of years ago. So the country is changing. And more so in the space where we're talking about ladies than we are about more generally, just that's been the biggest, the biggest changes.
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Liana Byrne
Rights for women in Saudi Arabia are still far from equal, but there have been some positive changes since MBS came to power. However, the kingdom is near the bottom of the World Economic Forum's Global Gender Index, ranking 132nd out of 148 countries in this year's report. And despite reforms, the country continues to be accused of violating human rights. Amnesty International and Human Rights Watch have both documented exploitative working conditions for migrant laborers. Yet while those concerns remain unresolved, the kingdom is pushing ahead economically. Several major infrastructure projects are in the works, although some are now in doubt due to funding issues. Saudi Arabia has committed projects valued at more than $1.3 trillion for Vision 2030. But he's also recently paused a lot of those mega projects like the futuristic Giga projects like the Line a super yacht island. Also, I believe the reason why they're scaling back is because of the falling oil prices, or is it because they thought that some of this wasn't working?
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John Pagano
The ambition of Saudi Arabia is on a. On a scale that is unprecedented globally. So as you progress through projects, you sometimes pause and reflect and make sure that you're heading in the right direction. All these projects are still ongoing. These are not projects that are going to be done in a matter of five years, etc. These are projects that are going to run for a very, very long time. It's not unusual, and I think it's highly appropriate. Along the journey, you pause and make sure that you're heading in the right direction. And if you have to course correct, you course correct.
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Liana Byrne
As Saudi Arabia works through this economic transition, another chapter in the Kingdom's recent history continues to cast a shadow. This resurfaced recently during Crown Prince Mohammed bin Salman's visit to the United States when questions arose at an Oval Office press conference about the murder of the journalist Jamal Khashoggi in October 2018.
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John Pagano
Your Royal Highness, the US intelligence concluded that you orchestrated the brutal murder of a journalist. 911 families are furious that you are.
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Aramco Narrator
Here in the Oval Office.
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Liana Byrne
Here's how the Crown Prince responded to that clip from an ABC News about the journalists.
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Crown Prince Mohammed bin Salman
It's really painful to hear, you know, anyone that been losing his life for, you know, no real purpose or not in a legal way and it's been paid painful for us in Saudi Arabia. We've did all the right steps of investigation, et cetera in Saudi Arabia and we've improved our system to be sure that nothing happened like that. And it's painful and it's a huge mistake and we are doing our best that this doesn't happen again.
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Liana Byrne
The Kingdom's official explanation has been that Mr. Khashoggi died in a rogue operation ordered by an intelligence officer, not following orders from the government. A UN report had concluded that his death constituted an extrajudicial killing for which the state of the Kingdom of Saudi Arabia is responsible. 2018 was the year John Pagano joined Red Sea Global. What was that first year like for you leading such a high profile project at a time when the government you were working for was under such scrutiny?
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John Pagano
I can't speak for the government. Yes, it was unfortunate what happened and the attention was clearly not wanted, but it didn't distract us from what we were trying to do. We pressed ahead to try to deliver on our commitments to helping the Saudi economy. And I have to say it's not just about environment. It's about uplifting societies, about creating opportunities for the Saudi citizens. We work with our local communities. We've created a co op for 3,000 farmers. We've trained thousands of young Saudis to give them, you know, life changing opportunities that they previously didn't have. Unemployment was relatively high back and so we were doing so much good that that was our focus. Continue to focus on our task at hand, which is to, you know, help reposition the kingdom and, you know, move forward.
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Liana Byrne
So you were never attempted to leave, maybe go back to the Bahamas for a quieter life because I'm sure it's difficult to Reconcile leading a major Saudi project and then those international concerns at the same time?
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John Pagano
No, look, it never crossed my mind. I didn't feel that. No. I believed in the ultimate vision of the kingdom and His Royal Highness, his commitment to really transforming the country, opening the country up to the rest of the world, helping to diversify the economy. And I think those are commendable ambitions, and that's what ultimately kept me there.
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Liana Byrne
Seven years on, John has embraced the country and its culture. Last month, he was granted citizenship for his contribution to Saudi tourism. He has also converted to Islam. Would you describe Saudi Arabia as your home now?
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John Pagano
I would, and it is. I was always welcomed in Saudi Arabia right from the very beginning. As I said, they're very hospitable people. But when granted the citizenship and the announcement was made, I was overwhelmed by the messages that I received from all over Saudi Arabia. I love the fact that there's so much positivity across society, across the population. I mean, contrast that to the West. I don't see the same level of optimism about their future as I do in Saudi Arabia. And that's, you know, quite an exciting place for me to be.
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Liana Byrne
My last question for you, John, is, you know, you clearly have this massive love for overseeing gigantic development projects. It seems like a lot of hard work. I don't even know where you would begin on something like that. But just tell me why you love these projects so much and you know that you've just focused on them for all your life.
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John Pagano
I consider myself blessed and lucky to have been given the opportunity to do so. I love building teams. I love building the organization. It's what keeps me going. It's what gets me up in the morning. I'm super excited about it. I love what I do. I love the people around me. I love watching them grow. It's just amazing. And I love what I do.
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Liana Byrne
So that's what you want your legacy to be?
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John Pagano
Absolutely. I think I've left some legacies behind. I've got Canary Wharf. I did something in the Bahamas, and now I'm doing something on a much even bigger scale in Saudi Arabia.
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Liana Byrne
That's John Pagano, real estate developer and chief executive of Robert Red Sea Global. Where's the next big project? John says he has no plans to move yet. He's got a lot to do where he is. But it's time for me to say goodbye as that's it for today's program with me, Liana Byrne. You can find plenty more episodes. Just search for business daily. Wherever you get your BBC podcasts.
- [23:57]
Aramco Narrator
Who drives the world forward?
- [23:59]
The one with the answers or the one asking the right questions?
- [24:02]
At Aramco, we start every day by asking how?
- [24:05]
How can innovation help deliver reliable energy to the world? How can technology help develop new materials to reshape cities? How can collaboration help us overcome the biggest challenges? To get to the answer, we first need to ask the right question.
- [24:20]
Search Aramco Powered by How Aramco is.
- [24:23]
An energy and chemicals company with oil and gas production as its primary business.