The hajj sell

Joanne Bladd reveals how Saudi's religious travel market is bucking Gulf tourism's downward trend.
The hajj is the world’s largest annual pilgrimage, attracting more than three million Muslims from 150 countries each year.
By Joanne Bladd
Fri 14 Aug 2009 04:00 AM

Bucking the downward slide of the Gulf's tourism industry, one sector of the travel market is posting record growth. Joanne Bladd reveals why Saudi Arabia has faith in the rise of religious tourism.In the dash to diversify Saudi Arabia's petrodollar economy, religious travel has emerged as a surprise contender. For Saudi, a state less associated with sun, sea and sand than straitlaced Sharia law, religious travel offers a lucrative - but suitably devout - bite of the Gulf's tourism cherry.

According to Saudi's Supreme Commission for Tourism and Antiquities (SCTA), pilgrims account for more than half of the Gulf's state's 47 million annual visitors. While the credit crunch has seen tourism figures dip across the Middle East, the faith-based market is seemingly immune to economic maladies - in the first quarter of the year, the Kingdom raked in a 30 percent rise in pilgrims.

During the same period, according to Deloitte data, the holy city of Makkah ranked as one of the Middle East's top performing hotel markets, notching up a 32.7 percent rise in revenue per available room (RevPAR).

The industry has immense potential, says Saif Sadedin, a Riyadh-based analyst with Shuaa Capital: a fact that has pushed it to the front of the queue for state funding. Tourism secured a record SR385m ($103m) slice of Saudi's expansionary 2009 budget; a 10.9 percent increase from the previous year's SR347m ($93m) allocation.

"In 2008 there were 10 million visitors to Makkah, and the [SCTA] is expecting that number to double by 2020," Sadedin says. "In terms of Saudi Arabia's non-oil sectors, tourism is becoming increasingly important to a balanced portfolio."

And the Gulf Kingdom can bank on a ready market. Saudi is home to Islam's holy cities of Madinah and Makkah, and the site of the world's largest annual pilgrimage, the hajj. More than three million Muslims from 150 countries are expected to descend on Makkah for the hajj this year, which will fall in November.

An additional 3.5 million Muslims are expected to perform the minor pilgrimage of umrah, attendance for which peaks during the fasting month of Ramadan.

The crowds would be even larger, notes Sadedin, if the infrastructure could support it. The numbers still represent only a fraction of the world's 1.3 billion Muslims.

"The number of visas handed out each year is capped, a limit that reflects the number of pilgrims the holy cities can accommodate," he says. "But this also means capping the revenue from the religious tourism industry."

Little surprise then, that Saudi is pouring billions of riyals into overhauling the infrastructure that feeds the two cities. Topping the project list is the 444km-long Makkah-Madinah rail link, a $6bn system that will ferry pilgrims between the two cities, via Jeddah, in around 30 minutes. The journey by road can take between four to five hours.

Madinah airport is also earmarked for a $2.4bn upgrade, a move that would allow the terminal to handle 12 million passengers a year; a four-fold increase on its current capacity.

Luxury travel operators have also been quick to scent rich pickings in Saudi's faithful. Whereas religious tourism was traditionally associated with sackcloth and ashes, the industry is now witnessing a rising demand for high-end travel. Makkah, for example, is now home to a glut of five-star hotels, with brands such as Hilton and Le Meridien counted among them, while tour operators are lining up to offer gold-class hajj packages.

"Religious tourism is one of the greatest stories never told in the travel industry," says Kevin Wright, president of the World Religious Travel Association (WRTA).

"It's a very large business - or, rather, it takes business to help people fulfil their faith traditions."

The industry has come a long way from its stripped-down roots, he notes.

"Across the board, we've seen a shift from the budget, almost penitential, mentality to a demand for high quality."Faith-based travel is worth an estimated $18bn a year, according to the WRTA, and Saudi ranks among the world's top three most popular destinations.

Religious travel in the Gulf state currently generates around $7bn a year.

"For the hajj, that's more than three million people using planes, hotels, restaurants and tour guides. Even at a minimum of $500 each, the value of the industry is substantial," says Wright.

"Islam is one of the world's fastest growing religions, and the hajj is a requirement. Whether it's one year or fifty years from now, that market will always be there. It's not a fad."

Saudi Arabia's Elaf Group is one company keen to cash in on the boom. The firm is poised to launch five hotels in Makkah, Jeddah and Madinah, part of a SR1.25bn ($333m) investment from the Saudi Economic and Development Co (SEDCO), of which it is a subsidiary.

"The religious tourism market is constantly changing," Ziyad Bin Mahfouz, president of the Elaf Group, told Arabian Business. "Previously the period of umrah and hajj only lasted for three months, while now umrah can be performed all year round. There are companies to escort pilgrims from the time they arrive, to the time they depart."

Two other luxury travel operators, Raffles Hotels and Resorts and the Rezidor Hotel Group, have announced plans to set up shop in the holy cities, while Hyatt Hotels & Resorts opened its first property in Saudi Arabia, the Park Hyatt Jeddah, in June of this year.

Still, at a time when the tourism industry is reeling from the double hit of a recession and a global swine flu epidemic, religious tourism has not emerged untouched. Hajj tour operators have reported a spike in booking cancellations, as swine flu fears take their toll on pilgrims.

Regionally Saudi Arabia has been worst-hit by the disease, with more than 595 confirmed H1N1 infections, leading Arab health ministries to advise certain high-risk groups, such as the elderly or children, to avoid the journey.

Jafar Sadak, of the Dubai-based Al Hamar Hajj and Umrah Services agency, said pilgrim bookings had halved.

"We normally take 1,000 a month [on pilgrimage], now we are down to 500," he said. "Five-star hotels normally have very high prices in peak season, but the prices for umrah have barely increased because there aren't enough customers."

At Abu Dhabi-based Abdullah Bin Karam Travel & Tourism, however, a spokesperson said the operator had seen minimum cancellations.

"We haven't seen any real drop in bookings. Some families might cancel, but most of our customers are young men."

At the Makkah Hilton & Towers, popular for its close proximity to the Al Haram Mosque , bookings for the Ramadan season are down 20 percent.

"We're not fully booked for this coming Ramadan which is very unusual," says Mohammed Amin, a marketing department employee. "Less people are coming because of swine flu and the financial crisis. It has really made a difference."

The five-star 1014-room hotel is still expecting to reach full occupancy during the hajj season this year, Amin added.

At Le Meridien Towers Makkah, occupancy is still falling, according to marketing coordinator Malik Mustafa. "Since the summer we've lost around 500 nights because of swine flu. During Ramadan we were fully booked, but we're receiving cancellations from all around the world... people are afraid to travel."

Despite this, Wright still believes religious travel is well-placed to weather the pandemic - and the recession - better than the rest of the leisure industry.

"A person of faith looks not just at their circumstances, but at their religious obligations," he says. "It's a very resilient industry. Is it being hit? Yes. But not as hard and that is the key point."

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