AlUla seeks investors as focus shifts to PPP for next phase

• Emphasis on public-private partnerships
• State funding reduced for giga-projects
• Tourism chief: ‘Multiple opportunities’

Saudi Arabia’s desert oasis and heritage destination AlUla is seeking public-private partnerships for the next phase of its expansion, with officials preparing new projects to attract investors.

The Saudi government now expects giga-projects to shoulder more of their own funding, while the Royal Commission for AlUla (RCU) aims to triple hotel capacity to at least 3,000 rooms by 2030 – although the regional conflict could delay its goal of attracting 1 million annual visitors by then.

“Early on, almost all the development was paid for by RCU,” Phillip Jones, chief tourism officer at the state-run commission, told AGBI.

“As we go into phase two, the emphasis is on partnerships with the private sector, so we can encourage more private sector investment to come in and develop the hotels that we need.

“We have multiple opportunities that will be floated to the market at some point in the near future.”

The sovereign Public Investment Fund, which financed the first wave of giga-projects and the wider Vision 2030 economic diversification programme, has cut spending since 2024 as lower oil prices and rising costs forced the government to rethink some plans. 

Foreign direct investment has remained below official ambitions despite years of efforts to attract overseas investors to the developments.

AlUla, in northwest Saudi Arabia and home to the Unesco-listed archaeological site of Hegra, attracted about 320,000 visitors last year.

Jones said AlUla’s “track record of proving that we can deliver” should reassure investors, even as some high-profile Saudi projects have scaled back or revised timelines.

“The Crown Prince … wants his vision for AlUla to be sort of the benchmark for other projects in the kingdom because he understands that we have a unique opportunity with AlUla and he wants us to get it right,” he said.

Jones acknowledged, however, that the war between the US, Israel and Iran had disrupted travel patterns and could affect that timetable. “We may not reach that number [of 1 million visitors] by 2030,” he told the Future Hospitality Investment Forum in Riyadh last month.

Room rates at AlUla were modestly reduced during the conflict, but double-digit occupancy growth is expected over the summer.

“We pivoted to local because we know that there was a reticence to travel,” Jones said.

AlUla’s location near Jeddah and the holy cities of Mecca and Medina have shielded it from the worst of the disruption.

Unlike some of Saudi Arabia’s larger tourism developments, AlUla will continue to prioritise higher-spending visitors over volume, he said. “We’re never going to be mass tourism.”

The next phase of AlUla’s investment case rests on cultural assets. The commission is building a contemporary art museum and a Museum of the Incense Road, the world’s first institution dedicated to the ancient northwest Arabian trade networks. About 40 percent of the collection has already been acquired, Jones said.

Jones cited internal research showing 70 percent of AlUla’s visitors were interested in cultural experiences, 71 percent in heritage and 64 percent in the arts – and pointed to Unesco estimates valuing the global creative economy at more than $4 trillion.

That demand-led approach echoes the government’s shift in its pitch to investors.

“We do not believe investors should be asked to invest on promise alone,” Mahmoud Abdulhadi, Saudi deputy tourism minister for destination enablement, told the Future Hospitality Investment Forum.

Capital, he said, should go “where demand is forming, where destinations are opening, where reforms and regulations ease and clarify the investment process”.

There were more than 120 million foreign visitors to Saudi Arabia in 2025, spending more than SAR304 billion ($81 billion).

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Saudi Arabia has the largest tourism development pipeline in the Middle East, with more than 200,000 hotel keys expected by 2030. Nearly half of that pipeline is now privately funded.

Jones said future investment structures at AlUla would vary rather than follow a single model. “It depends on what the developer’s looking for,” he said.

New hospitality projects already announced at AlUla include properties for Hyatt Place, Marriott’s Autograph Collection and Six Senses.

AlUla aims to complete as much of its masterplan before Saudi Arabia hosts the 2030 Expo and the 2034 World Cup, Jones said.

“We want to be the welcome mat for visitors globally.”