In the first week of July 2026, John Pagano, group chief executive of Red Sea Global, weighed the model that had built The Red Sea and AMAALA, two luxury destinations on Saudi Arabia’s northwestern coast. The company owned its islands, resorts, airport, and utilities outright, paid marquee brands to operate its hotels, and capped visitors at one million a year at The Red Sea and half a million at AMAALA. Eleven hotels were open. Occupancy ran between 40 and 60 percent, residences at AMAALA were selling faster than forecast, and the owner, Saudi Arabia’s Public Investment Fund, had told its companies to bring in private co-investors and to return capital sooner. The case asks whether capped rooms built at several times the industry’s luxury development-cost benchmark can recover the capital sunk into them, and whether residence sales, co-investment, public-market recycling, or an own brand can deliver the owner’s return without lifting the cap. Students take the owner’s chair, an unusual seat in an industry whose largest companies spent two decades shedding real estate, and build a recommendation for an owner whose fiscal squeeze sets the timeline.
This case was written for EMBA and executive audiences in hospitality, real estate, and sovereign investment.