Makkah hotels optimistic as Saudi begins to lift Umrah restrictions

Hotels in Makkah are gearing up to receive guests as Saudi Arabia begins to lift the suspension imposed on Umrah in the wake of coronavirus outbreak.

A majority of them expect that arrival of pilgrims and visitors in the last quarter of 2020 and early 2021 will help counter some of the losses from the past six months.

The pilgrimage was suspended early March as part of measures to control the spread of coronavirus.

“We anticipate between 12,000 and 13,000 guests in Q4 2020; and for Q1 2021, expectations are more than 25,000 guests,” Shafqaat Bukhari, Cluster General Manager at Millennium and Copthorne Makkah Al Naseem, told Argaam.

Millennium Hotels and Resorts started bookings at its Makkah hotels from Oct. 4 -- the day Saudi Arabia implemented the first phase to restart Umrah.

Under the first phase, the Kingdom allowed Umrah at 30% capacity or 6,000 pilgrims a day, but restricted to citizens and residents within the country. The permissible limit will increase to 75% of the Grand Mosque’s capacity under the second phase that starts Oct. 18.

Full capacity and permission to pilgrims from outside the Kingdom is expected from Nov. 1, according to the Ministry of Interior.

Radisson Hotel Group is currently eyeing the full-capacity date to restart operations at its two Makkah hotels.

“Most of our hotels across Saudi Arabia have re-opened successfully. Only our Makkah hotels remained closed due to the restrictions and the international travel ban,” Basel Talal, Regional Director (Saudi Arabia, Kuwait and Levant) at Radisson Hotel Group, told Argaam.

Meanwhile, Accor Group, which currently has seven properties in Makkah and another six in the pipeline, is witnessing positive demand with a pickup in bookings since the beginning of this month.

“All our hotels in Makkah closed at the start of the lockdown due to the decrease in demand. During this time, our teams worked on completing all requirements for the ALL SAFE program (a health safety protocol by the group) in order to be ready for opening,” Eddy Tannous, Vice President-Operations (Saudi Arabia), at Accor Group said.

The group’s Makkah hotels are in line to open by mid-October, Tannous said.

Muted earnings

Looking forward, Talal is optimistic, although he noted that beyond Hajj, the Hijri months of Rajab, Shabaan and Ramadan (broadly spanning February-end to May this year) are the busiest period for Makkah properties as approximately 43% of Umrah pilgrim visit the city during the three months.

“With the ongoing pandemic, things are going to be very different. Whereas millions usually attend Umrah, just a few thousand will be given permits this year,” Talal commented on this year’s earnings expectations.

Bukhari, meanwhile, hoped that Millennium Group’s Makkah properties will be able to achieve “good performance” this year, despite COVID-19 pressures.

According to Jason Tuvey, senior emerging markets economist at Capital Economics, restarting Umrah is a “positive factor supporting Saudi Arabia’s economy”, which is facing the twin challenges of low oil prices and COVID-19.

“Even though pilgrimages will only resume at limited capacity, this will provide a boost to the recovery in the non-oil sector over the coming months,” he said in a recent report.

Write to Nadeshda Zareen at nadeshda.zareen@argaam.com