Makkah Hotels: Makkah’s hotel sector has unlimited demand for growth, says JLL study

With the world’s 1.8 billion Muslims required to perform the Hajj pilgrimage in Makkah at least once in their lifetime the report addresses the trends and opportunities this presents across the city’s hotel, office, residential and retail sectors.

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Makkah Hotels: Makkah’s hotel sector has unlimited demand for growth

MAKKAH — JLL, the world’s leading real estate investment and advisory firm, released its first report on ‘Makkah, A City within a City’ which assesses the real estate market in Saudi Arabia’s most globally notable city given its status as Islam’s most holy city.

With the world’s 1.8 billion Muslims required to perform the Hajj pilgrimage in Makkah at least once in their lifetime the report addresses the trends and opportunities this presents across the city’s hotel, office, residential and retail sectors.

Earlier this year JLL signed a Memorandum of Understanding (MoU) with the Makkah Chamber of Commerce & Industry to help improve transparency in the Saudi real estate market. As part of the collaboration, JLL worked with key players and stakeholders in Makkah to release this first comprehensive report on the city’s real estate market.

The report addresses an almost unlimited global demand for hotel and other tourist facilities in Makkah due to the continued growth of religious tourism, creating huge opportunities for both developers and investors to upgrade existing properties and create new ones. The pace at which the potential growth can be tapped into will rely on overcoming constraints including pilgrim quotas and investment in supporting transport infrastructure.

Makkah is by far the largest hospitality market in Saudi, with around 27,000 quality rooms (compared to 11,000 in Riyadh and 9,400 in Jeddah). It is estimated that around 75% of the demand from pilgrims is accommodated in hotels (with the remaining 25% in other forms of accommodation). Around 60% of the current stock of hotel rooms are classified as ‘budget accommodation’ a much higher proportion than in other cities in Saudi.

The extreme seasonality of the market has meant that many hotels in Makkah have traditionally only operated during peak months. With the entry of more international operators, this pattern is now changing, with more hotels operating throughout the year.

Hotels in Makkah typically achieve 100% occupancy during the Hajj period and the Umrah high season. The highly seasonal nature of demand results in occupancies falling to just 30% – 40% during off peak seasons immediately after Ramadan and Hajj.

Pilgrim Accommodation: Although Makkah has a substantial number of hotel rooms, this supply is insufficient to accommodate all the demand from religious pilgrims. This has resulted in the creation of a unique sector of the market not seen in other major cities in the region. Pilgrim accommodation comprises rooms in hostels, and apartment buildings that are rented to pilgrims seeking lower cost accommodation than recognized hotels. More info

Source:  saudigazette.com.sa

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