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Makkah prices drop


15 Jul 2013

The price for a suite with a view of the Kaaba used to be more than SR180,000 ($48,000) for the last 10 days of Ramadan. It’s now down to SR70,000 ($18,600) for the entire month. The price for a suite with a view of the Kaaba used to be more than SR180,000 ($48,000) for the last 10 days of Ramadan. It’s now down to SR70,000 ($18,600) for the entire month.

A tourism official in Makkah has confirmed that the prices of hotels have undergone radical change and returned to their normal rates. “We have witnessed a 150-percent decline in both the prices of hotels around the Grand Mosque and suites with direct views of the Kaaba,” said Fahad Al-Wethyiani, head of the Hotels and Tourism Committee at the Makkah Chamber of Commerce and Industry.

Development projects around the Grand Mosque will lead to the construction of massive hotels with tens of thousands of new rooms, he said, adding that these hotels will set the actual prices of hotels in the holy city. “The decline in occupancy rates of rooms this year is 15 to 20 percent. Investors are now offering rooms at lower prices to the local market to muster a higher percentage of occupancy,” he said.

Al-Wethyiani said that the prices of hotels are now becoming low after many years, adding that foreign tourism companies and representatives of Haj service providers played a major role in creating a speculative market on the prices of hotels. “The prices used to be more than SR180,000 for a suite with a view of the Kaaba during the last ten days of Ramadan,” he said, adding that the price has now decreased to SR70,000 for the entire month.

“This represents a 150 percent decline,” he said. “Although there are fewer pilgrims this year, which has resulted in less profitability, I personally welcome the decision.” He added that this is not a personal issue, as development projects implemented by the Saudi government will benefit Muslims across the world, as well as the Kingdom’s private sector.

The Kingdom has so far spent SR100 billion to develop Makkah into a modern city with improved services to meet the needs of millions of pilgrims. Development projects in the area of the Grand Mosque have culminated in a considerable number of construction and hotel projects, such as the Jabal Omar project, which will lead to the construction of two hotels every six months. “These will contribute to price stability and limit speculation on prices that led to the rise in prices witnessed in the past,” he said.

Hafez Al-Juhani, vice chairman of the Advisory Committee of the Saudi Commission for Tourism and Antiquities, agreed that prices have been high. “There is a drive to lower the prices of hotels between 20 and 50 percent,” he said. “The number of visas has been reduced from 1.5 million to 500,000 because of the development projects. This has forced hotels to reduce prices,” said Al-Juhani, adding that the sector is expecting losses this year, something that has propelled the restructuring of plans and prices to attract local and Gulf pilgrims.

Saad Al-Qurashi estimated the losses to be SR450 million, according to surveys conducted during Shaban and Ramadan. “It is projected that losses will reach SR700 million in the Haj season,” he said, adding that these figures are not yet official. He also said that the price of hotels came down 50 to 60 percent to attract domestic and GCC pilgrims who do not require visas.

Hotelliers upset

Meanwhile, investors and hotel owners in the central area of Makkah have estimated losses of up to 60 percent this year. They claimed that these losses are due to the Haj Ministry’s decision to reduce the number of Umrah visitors and cut down their period of stay this Ramadan. Many investors and hotel owners have asked the ministry to compensate them for their losses. They said they will file lawsuits against Umrah services establishments for breaching their contracts.

Deputy Minister of Haj Hatem Al-Qadhi said the ministry has nothing to do with contracts between investors and hotel owners. As such, the ministry is not obliged to compensate hotels for their losses. He said the ministry had notified Haj and Umrah establishments of the decision 60 days before its issuance. He added that the new regulations are for the safety of pilgrims.

He said the ministry would be obliged to compensate the losses if it had approved the contracts between the investors and hotel owners. He pointed out that some Haj and Umrah establishments were granted large numbers of visas, but they only utilize them during Ramadan. The head of the hotels committee at the Makkah Chamber of Commerce and Industry, Waleed Abu Sab’ah, said the situation in hotels around the Grand Mosque is very discouraging.

Hotel reservations have greatly declined due to the decrease in the number of Umrah visitors. He said hotel prices have dropped 30 percent in comparison to last year, and expects that the Haj season will also witness a decrease in pilgrim numbers.He said hotels cannot recover their losses from local Umrah visitors either, since their numbers have also decreased from last year.

Saleh Al-Sulaimani, a hotel investor, said the Saudi Commission for Tourism and Antiquities (SCTA) has enforced international standards on hotels in Makkah’s central area. The SCTA has also set rates in accordance with these standards, and therefore, hotels cannot raise their rates to recuperate some of their losses. He said most hotels guests are from outside the country and that local visitors do not usually stay in hotels.

Fahad Al-Wethiani, an investor, said investors have to bear their losses in the cause of the country and they should be able to recuperate their losses in coming years. He doubted that the dispute between investors and hotel owners will reach the courts, and believes that an amicable solution would be found. ARAB NEWS/SAUDI GAZETTE

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