Saudi Arabia's AlUla will embark on a roadshow in the Middle East, London and New York to woo investors with a package of 21 projects worth six billion Saudi riyals ($1.6 billion) to raise private sector funding for expansion.
The tourism destination will start offering projects covering four-and-five star hotels, wellness facilities, restaurants, adventure tourism products and infrastructure to private investors by December, Phillip Jones, chief tourism officer at the Royal Commission for AlUla, told The National.
“We've proven that we're a destination that can deliver in terms of visitation, job creation and brand position, so that has set us up nicely to hopefully attract investors for the long haul,” he said in an interview in Abu Dhabi.
“To be successful and sustainable for the long haul, we need to have private sector investment. It can't all be just public sector-led.”
The target is for private investment to constitute 40 per cent of the total funding, though an even split of 50-50 between public and private funding would be ideal, Mr Jones said.
Developing the historical site is part of the kingdom's Vision 2030 agenda, which was launched by Crown Prince Mohammed bin Salman in 2016 to transform the economy, reduce its reliance on hydrocarbons and develop strategic non-oil sectors such as tourism, hospitality and aviation.
Saudi Arabia exceeded its Vision 2030 target of 100 million visitors years ahead of schedule after receiving 116 million domestic and inbound tourists in 2024, a 6 per cent increase compared with 2023, according to the Ministry of Tourism.
Located in the northwestern region of the kingdom, the historic AlUla region is the former capital of the ancient Arabian kingdom of Lihyan. The region includes Hegra, made up of Nabataean rock formations and has been granted Unesco World Heritage status. More than 110 well-preserved tombs, ancient inscriptions and carvings give visitors insight into a bygone era.
“There's something mystical and magical about it,” Mr Jones said. “We don't have to build from the ground up like Red Sea [tourism project] and Neom, we have 7,000 years of history that we're building on. Multiple civilisations have left their mark and we have heritage sites dedicated to them and that's what sets us apart.”
Private residences
Besides hotels, AlUla plans to offer private residences to international private sector investors.
Saudi Arabia this year updated its rules to allow foreigners to buy property in specific zones, a move that is attracting the attention of new buyers to luxury residences in AlUla from the US, France and the Middle East, according to the tourism chief.
“We're seeing quite a lot of interest from the American investor market in private residences – that's the area that we have the most potential,” Mr Jones said, noting that venture capitalists from the US and the region have flown into AlUla to inspect the project.
While hotels such as the Four Seasons and Six Senses will have some private residences, the master plan also features specific zones for the development of about 400 private homes.
“That could grow based on interest and demand, we have lots of land,” Mr Jones said. However, about 60 per cent of AlUla is designated a national park and cannot be developed.
IPO-readiness
AlUla could consider an initial public offering in the future, Mr Jones said, adding that they are going to “look at all options for investors” and that “nothing is off the table”.
But the timing for a listing at this stage is still too premature and will probably be considered during phase two of the project, perhaps in 2029, he said.
“I don't think we're ready for it,” Mr Jones said. “We need to get the initial investor packages out and see what kind of response we get.
“We've made it easier for investors now in Saudi Arabia, so now what we have to do is capitalise on that and when you host events like FII, big initiatives where investors are coming in, we have to have an investor package ready to go,” he said, referring to the Future Investment Initiative in Riyadh starting Monday.
No budget cut
AlUla has not been affected by the government's spending rationalisation programme across the kingdom and its budget has been secured by the PIF until 2030, Mr Jones said. AlUla's budget stands at 14 billion Saudi riyals for this year and a similar amount for 2026, he added.
“We're lucky, we've been able to maintain our budget, as opposed to cut our budget, but we haven't been able to grow our budget other than with private sector investment,” he said.
The biggest chunk of the budget will be spent on infrastructure works, including water and sewage, in the tourist areas such as the Old Town and on operations.
Alula, which has just completed phase one of development and is starting on phase two, has finished roughly 35 per cent of the total project, Mr Jones. The plan is to complete phase two by 2030, though some assets will not be finished until 2035.
Saudi Arabia has awarded contracts worth $196 billion to develop its commissioned giga projects, up 20 per cent on 2024, according to a Knight Frank report. The total value of projects in the pipeline in the kingdom currently stands at $80 billion, it said.
The $15 billion AlUla has commissioned projects to date worth $2.2 billion, while the value of projects in the pipeline is $11.1 billion, it said.
Boosting international flights
AlUla welcomed 265,000 visitors last year and is forecasting 300,000 by the end of 2025, before ultimately targeting one million by 2030, according to Mr Jones.
About 30 per cent of visitors to the historical, cultural and art site are international travellers. Its top source markets, after Saudi Arabia and the Gulf, are the US, UK, China, India, Italy, France and Germany.
AlUla, which currently has about 1,200 rooms, aims to reach 2,000 rooms by early 2028. “Our demand in the season outstrips our capacity,” Mr Jones said, acknowledging that the desert destination is a “harder sell” during the hot summer months.
AlUla is attracting high-end visitors interested in “experiential” travel and last year it had hundreds of private jets flying in.
The commission is also seeking to boost international flights to the luxury destination. Currently it has 30 flights a week, including services from Saudia, flynas, flydubai, Qatar Airways and Royal Jordanian.
Talks are under way with international carriers as well as airline alliances, Mr Jones said. With Saudia already a part of the Sky Team airline alliance and Qatar Airways a Oneworld alliance member, that leaves Star Alliance, whose member airlines include United, Lufthansa and Air China. “We need better connectivity from Asia,” Mr Jones said.
Saudi start-up carrier Riyadh Air will also start flying to AlUla, Mr Jones said. The airline, which has yet to start selling tickets to the general public, will take delivery of its Airbus A321 Neo narrow-bodies in 2026.
Meanwhile, work is under way to increase AlUla International Airport's capacity to one million passengers by January 2026, up from 400,000 currently, he said.
