Makkah is currently experiencing extensive expansion of its infrastructure and the Holy Mosque to accommodate gradually increasing numbers of pilgrims to the city.
Why Saudi Arabia’s new Extended Umrah Tourism Programme will increase confidence in the mammoth hotel developments underway in the holy cities of Makkah and Madinah
The Kingdom of Saudi Arabia is currently implementing the Extended Umrah Tourism Programme, announced at the end of last year, allowing foreign nationals travelling to the country for Islamic pilgrimage to stay for a longer period.
The programme will see visitors from 65 countries having their Umrah visa converted to a 30-day tourist visa following their pilgrimage.
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Since Saudi Arabia does not currently issue tourist visas to visitors from any country, the programme will be one way for foreign visitors to experience the tourism offering of the Kingdom, and will be crucial to boosting inbound leisure tourism in the mean time. Religious tourism is the focus, but historic and cultural tourism will be developed side-by-side.
As reported by Arabian Business, Prince Sultan bin Salman, head of the Saudi Commission for Tourism and Antiquities (SCTA) said: “We’re now moving to Islamic history sites to revive those to make them more presentable and to create museums and experiences.”
In combination with this, religious quotas are being revised to allow more pilgrims into the country year on year.
The government is expecting to see revenues total SAR 60.9 billion (US $16.2 billion) by 2023 due to an increase in the number of Hajj and Umrah tourists. As a result, the Saudi government has outlined a plan to invest more than US $30 billion in its airports by 2020, including $10 billion in private investment.
Pascal Gauvin, Intercontinental Hotels Group chief operating officer, India, Middle East and Africa, believes that the programme is instilling confidence in hoteliers looking to expand in the holy cities of Makkah and Madinah. He says: “I see Makkah transforming tremendously and I think SCTA’s Extended Umrah Tourism Programme is a very clever way to attract people to stay for longer.”
Makkah, the Eastern Province, Riyadh and Madinah are the core travel areas of Saudi Arabia, and combined attract 86% of overall visitation to the Kingdom. The number of tourists visiting the Kingdom is expected to increase at a CAGR of 2% to 21.3 million over the next 10 years — largely attributable to the push on religious tourism.
Of overall inbound visitation, 40% is made up of religious tourists, representing the largest segment of visitors.
While Makkah and Madinah attract most of the religious tourism, and are currently experiencing heavy expansion and development as a result, Jeddah to an extent is benefiting from religious stop-over tourists, supplementing its natural market share of corporate visitors.
With a more gradual increase in supply than Riyadh, and a steady increase in demand from the corporate segment, Jeddah is currently faring well in terms of occupancy, and in February saw a 1.5% growth in occupancy to 79.3%, rising for the fourth consecutive month. Meanwhile, average room rates saw an increase of 5.2%, closing the month at US $252.2 and boosting RevPAR by 7.2% to US $199.9.
Christopher Hewett, senior consultant, TRI Hospitality Consulting comments: “The majority of demand in Jeddah is driven by the corporate segment but there is a percentage from the religious sector.
They normally travel in groups and go directly to the Holy City but on their way back they often stop in Jeddah so that helps supplement demand for accommodation within the city and as new infrastructure is developed I think you’ll see more visitors spending time in Jeddah.”
Hewett refers to the development of a Haramain high speed passenger line, Saudi Arabia’s first high-speed passenger rail line, which will link the holy cities of Makkah and Madinah.
The 480-kilometre railway line is expected to carry more than three million passengers annually and will pass through Jeddah, cutting travel time between the holy cities to just two hours.
Construction was originally scheduled for completion in January 2014 but it will most likely be finished by the end of 2015.
However, according to Sherif El Mansoury, DOSM, Rosewood Corniche, Jeddah stop-over pilgrims are generally looking for economical options for accommodation, so luxury hotels are not likely to capture much demand from the segment.
El Mansoury comments: “Some religious visitors come and stay one night coming back from or going to Makkah for Hajj and Umrah.
“However, a lot of the groups coming to Jeddah are looking for package rates so we attract very few of them – they don’t mind where they stay.”
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