Makkah hotels set to cash-in on Ramadan pilgrims

Hotels in Saudi city ramp up room prices by up to 243% during holy month of Ramadan
Makkah hotels set to cash-in on Ramadan pilgrims
Holy Kaaba, Mecca, Saudi Arabia, Hajj, Sharia, Sharia compliance, sukuk, Islamic finance
By Claire Ferris-Lay
Wed 15 Jun 2011 12:03 PM

Hotels prices in Makkah are to soar by more than 200
percent during August as the kingdom prepares for millions of pilgrims set to descend
on the city during the holy month of Ramadan. 

Properties in Makkah polled by Arabian Business said they
would more than double, and in some cases triple, the cost of a double-bed room
as hotels rush to cash in on a spike in demand.

A twin room at the Raffles Makkah Palace will set tourists
back SR1,100 ($293) a night on July 14 but will soar to a hefty SR3,500 a month
later, the hotel said – a price hike of 218 percent.

A double room in the Movenpick Makkah, described as “superbly
located” on the Haram Court, costs SR602 on July 14. A month later, the price
soars to SR2070 – a 243 percent jump.

Of the five hotels polled by Arabian Business, the lowest
price hike was at the Makkah Clock Royal Tower Fairmont Makkah. A double-bed
room at the property would cost SR940 on July 14, and SR2,200 a month later –
still an increase of 134 percent.

Hoteliers have flocked to sign deals to operate properties
in Saudi Arabia’s twin holy cities, where demand from tourists undertaking the
pilgrimages hajj and umrah still outstrip supply.

Fairmont Hotels and Resorts said in May it plans as many as
12 hotels in Saudi Arabia in the next three to four years, requiring up to
10,000 additional employees.

Hoteliers Hilton Worldwide, Marriott International and Hyatt
International last month signed deals to operate 12 properties in Makkah, as
part of a $5.5bn mega-project in the city.

The number of pilgrims entering the kingdom is expected to
grow to almost 14 million by the end of the decade.

According to travel experts, room prices in the holy city
increased by around 30 percent last year and are likely to be just as expensive
this year.

“During Ramadan last year we saw that prices went up by
about 29 percent. This year it is unlikely to be anything different,” said
Lizann Peppard, spokesperson for Hotels.com, a subsidiary of Expedia.com. “It
is an issue of supply and demand. If demand exceeds supply, wherever you are
the prices will go up.”

Hotelscombined.com said the average listed price on its
website had increased 150 percent from July to August this year. “While we
would expect Makkah hotel prices to go up by 20-30 percent year on year, this
year the increase is closer to 100 percent,” said Hichame Assia.

Some hotels are already at reaching 100 percent occupancy.
Double rooms at the Intercontinental Makkah are already at full capacity on
August 14, said the hotel.  Hotelscombined.com said it expected the number
of searches with the word Mekkah in to increase 300 percent in July.

Saudi Arabia is investing heavily in the hospitality
industry as it seeks to diversify its economy away from oil. Tourism
contributes 3.2 percent of the kingdom’s GDP but could rise to as much as nine
percent, Abdullah Al-Juhani, vice president of the Saudi Commission for Tourism
and Antiquities said in March. 

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