Saudi Arabia's Red Sea Global, the developer of luxury resorts on the kingdom's west coast, said funding from its sovereign wealth fund owner is secured and its projects are unaffected by government spending reviews.
"We are one of the exemplar companies, we've delivered and we are delivering, so our funding is committed from the PIF," Red Sea Global chief executive John Pagano told The National.
RSG, which is owned by Saudi Arabia's $1 trillion sovereign wealth fund, the PIF, has also tapped sources of capital, from joint venture partnerships to concession agreements, to finance specific projects and is considering a potential initial public offering (IPO) within three to four years, he said.
The developer will soon announce a deal with three banks to raise 6.5 billion Saudi riyals ($1.73 billion) in senior debt for the Amaala project, Mr Pagano said in an interview in Abu Dhabi.
"Is there an IPO or public market event down the road? It's still a consideration because that's what you do ultimately as the company matures and its balance sheet strengthens, and [if] you have a demonstrated track record of revenue and profit, then that's the right opportunity," he said. "To do it any time before that will be premature and I don't think the market would be receptive to that."
Building these luxury resorts is part of Saudi Arabia's Vision 2030 programme aimed at transforming the kingdom's oil-based economy and developing strategic sectors such as tourism and aviation to attract international visitors.
However, the PIF took an $8 billion write-down on some of the kingdom's giga-projects, according to its 2024 annual report. This comes amid lower oil prices and Saudi Arabia's growing fiscal deficit.
But RSG is "in a very good place" as it continues to deliver projects on schedule, Mr Pagano said.
The company has grown from a handful of staff at its establishment in July 2017 to 11,000 employees.
The developer is working towards opening 16 resorts at the Red Sea project and eight at Amaala. So far, it has opened eight resorts at the Red Sea, in addition to a golf course and an international airport. It also launched the Thuwal Private Retreat that will be available only to buy, as well as opening the 144-room Turtle Bay Hotel.
Adding to the 10 resorts that are up and running, the company is planning to open another 17 hotels by May 2026, Mr Pagano said, as well as a yacht club and marine life institute called the Corallium in Amaala.
$2 billion in residential sales
Saudi Arabia this year updated its rules to allow foreigners to buy property in specific zones, a move that will attract new buyers to the luxury homes on the Red Sea coast as people from overseas will not need residency to invest, Mr Pagano said.
"It's huge for us," he said. "The new law is going to be much more straightforward, you don't need residency in order to buy. So for us, it just opens up our market much greater."
RSG has already sold $2 billion in residential units and the new property law increases its "addressable market", he added.
"If you look at the influx of people buying second homes within the region, there is a large influx of foreign buyers, whether they're European or Asian, and I see ourselves taking advantage of that because we offer a more differentiated project," he said, highlighting the project's regenerative development principles.
In January, RSG launched sales for luxury homes on the Red Sea and on October 23 announced residential sales at Amaala.
These are mainly embedded within existing resorts such as the Four Seasons on Shura Island, the main hub of the Red Sea tourism project. These 305 units are scheduled for handover by the end of 2025.
Another 349 luxury homes in Amaala will be ready for handover between the first and third quarter of 2026.
Direct flights from Milan
RSG is pushing to boost international flight connections to the ultra-luxury resort destination. Qatar Airways is the latest airline to fly in and out of Red Sea International Airport (RSI), with its inaugural service on October 21. The Doha-based carrier will run three weekly flights from Hamad International Airport.
RSI opened in 2023 for domestic flights from Riyadh and Jeddah via Saudia. The following year, it welcomed its first international flight, from Dubai International Airport via flydubai. Saudi budget airline flynas operated its first flight from King Fahd International Airport in Dammam to RSI in December 2024.
"Another airline is going to start later this month," Mr Pagano said, declining to identify which one. "It will be flying from Milan to the Red Sea. It's our first direct flight from Europe."
Airlines with significant operations from Milan include Ita Airways, Neos, easyJet and Wizz Air.
"Airlines will only come as footfall increases, so we're now laying the foundations for an increase in air capacity as we open up the destination," Mr Pagano said. "There's lots of interest from airlines, some of them are a little bit more conservative and they want to see the footfall before they commit."
Talks are under way to increase the number of international flights through to 2026, in a push to connect the leisure destination with global markets.
"We're having a lot of discussions around introducing airlift next year for some of the more international carriers," Mr Pagano said.
No risk of oversupply
The ultra-luxury and wellness destination, with its natural islands and private beaches, has attracted about 50,000 visitors this year.
RSG is targeting a six-fold increase to at least 300,000 visitors by the time it completes phase one of the project early next year as more hotel rooms become available, Mr Pagano said.
While the first hotels that opened on the Red Sea coast were "hyper-luxury" resorts that were "unapologetically" expensive, the four-star hotels in Shura Island will cost about $600 a night and attract a "much bigger clientele" at that spending level, the RSG boss said.
"As we start to open up Shura, we're now opening up the market to a much broader-cross section," he said. "Our addressable demand is going to increase dramatically because our entry level is a four-star product."
Asked if demand would match the number of hotels built, Mr Pagano said Saudi Arabia is undersupplied in terms of hotel rooms catering to leisure tourists.
"We are the leisure offering in Saudi Arabia – yes, lots of hotels in the city, in Riyadh and Jeddah – but when you start to look at pure leisure offerings? We're it," he said.
Once RSG fully opens the two leisure resorts, Red Sea and Amaala, it will have reached 4,000 hotel rooms, a modest supply compared to places such as Cancun or Maldives.
"I don't think we're oversupplying where we needed to build," he said.
Reaching 'critical mass'
Mr Pagano's strategy is to build enough "critical mass" of hotel supply to address the targeted rise in leisure tourism demand in the kingdom, as well as attract international airlines to serve the destination.
"Key to my strategy is that you need to create a destination and in order to do so, you need a certain critical mass because of all the interdependencies: airlift won't come if I build a boutique hotel with a 100 keys ... it's going to be next to impossible," he said.
"The idea of critical mass is hugely important to build this new industry in the kingdom and start to attract a lot of foreign business."
The destination is already approaching a 50-50 split of domestic and regional visitors versus international guests, in line with RSG's targets, he said, citing the example of Brazilian travellers from Sao Paulo visiting Sheybarah Island.
The company is taking a "relatively measured approach" in adding hotel supply in line with demand from holidaymakers.
Mr Pagano said: "There is much more room for that segment to grow and I don't think that we're building too much ... the demand is there."
Saudi Arabia has a population of about 30 million people, with millions of visitors arriving for Umrah and Hajj pilgrimage, who will "naturally tag on" a holiday. "It's a rich seam of business," he said.
