The hotel occupancy rate in the central district of Makkah and the neighborhoods near the Grand Mosque reached 70%, a decrease of 30%. Investors in the Makkah hotel sector estimated that the hotel occupancy rate dropped by 30% after the holy month of Ramadan compared to what it was during the Umrah season.
In the same vein, Saleh Al-Zahrani, an investor in the Makkah hotel sector, confirmed that he typically observes a decline in occupancy rates after the end of the Hajj season, as many guests of the Sacred Mosque return to their home countries after performing the Hajj rituals with ease and convenience, thanks to the massive projects being implemented by the Kingdom’s government in Makkah, Madinah, and the holy sites.
Al-Zahrani added that hotel occupancy rates typically decline during this time of year, especially in neighborhoods far from the Sacred Mosque, noting that occupancy rates often reach 70% in the central area and neighborhoods close to the Grand Mosque, emphasizing that rates increase depending on the hotel’s proximity to the Grand Mosque, as well as whether the room offers a direct view of the Grand Mosque.
The hotel investment sector in Mecca and Medina is considered the fastest-growing in the world, both in terms of hotel expansion and the volume of investments. Estimates suggest that the number of hotels in the region is increasing at a rate of 15% annually, and they predict that the Holy City will surpass the 1,200-hotel mark by 2020. Unlike real estate markets in other regions of the Kingdom, where demand exceeds supply, the real estate market in Makkah is characterized by a gap in the types of hotel products meeting demand; five-star hotels are abundant in the central area, while other categories—such as high-quality three- and four-star hotels—are scarce.
Investors in Makkah are aware that the next challenge will arise once the expansion work within the Grand Mosque is completed, and the number of Umrah and Hajj pilgrims begins to rise again. They note that new investments in the hotel market will help provide the highest standards in the hospitality industry in terms of services, quality, and adherence to international standards.
