Makkah hotel growth driven by religious tourism’s ‘unlimited demand’

The long-term prospects for the hotel sector in Makkah are positive, given the city’s heavy reliance on accommodation providers to support the global “unlimited demand” from religious pilgrims, real estate consultancy JLL said on Monday.

As part of Saudi Arabia’s Vision 2030 initiative, the kingdom plans to promote religious tourism as a means of diversifying the economy away from oil. It plans to double the capacity to accommodate both Umrah and Hajj visitors to roughly around 15 million and 5 million, respectively by 2020.

“In addition to increasing accommodation, the success of the Saudi Government’s plans to expand the number of religious visitors also relies heavily on the ability to address transportation capacity,” said Jamil Ghaznawi, national director and country head of JLL Saudi Arabia.

“While there have been significant investments to improve the networks serving Makkah, many of the projects have been affected by the stringent 2016 budget,” he added.

The extreme seasonality of the market has meant that many hotels in Makkah have historically only operated during peak months. Hotels in the city typically achieve 100 percent occupancy during the Hajj period and the Umrah season.

However, occupancy falls to just 30-40 percent during off peak seasons immediately after Ramadan and Hajj.

“With the entry of more international operators, this pattern is now changing, with more hotels operating throughout the year,” the JLL report said.

Makkah is Saudi Arabia’s largest hospitality market, with around 27,000 rooms (compared to 11,000 in Riyadh and 9,400 in Jeddah). Several international players operate in the market, and brands like Marriott, Best Western and Carlson Rezidor are looking to expand their presence in the holy city. 

Write to Jerusha Sequeira at jerusha.s@argaamnews.com