The real estate market in Mecca is gradually shifting from the traditional model of selling land and residential units to investing in hotels and other assets that generate steady income. The main drivers of this change are the increasing flow of pilgrims for Hajj and Umrah, as well as the expansion of infrastructure within the framework of Saudi Vision 2030.
According to analysts quoted by Asharq Al-Awsat, the hospitality sector in Mecca is going through one of its strongest periods. The higher number of visitors, the expansion of the Grand Mosque and investments in transportation infrastructure are increasing the demand for hotel accommodation not only during peak periods, but also throughout most of the year.
The change is already visible in the results of major companies. Jabal Omar Development Company reported a net profit of SAR 158.1 million in the second quarter of 2026, following a loss of SAR 42.1 million a year earlier. Its revenue rose 42.5% to SAR 715.2 million. The company attributed the improvement to a better performance of its hotel business during the Hajj and the opening of a new Rotana hotel earlier in the year.
This reflects a broader shift in strategy among developers. More companies are choosing to hold onto hotels and serviced apartments as long-term assets rather than relying heavily on one-off sales revenue, making accommodation operations a more predictable source of cash flow.
Data from the Saudi Ministry of Tourism confirms the scale of the expansion. In the first half of 2025 alone, Mecca concentrated 61% of all newly licensed hotel rooms in the country’s major cities and regions. The city has recorded over 41,000 rooms in newly licensed hotels and other accommodation.
However, the growth of the sector also increases competition. New projects can temporarily put pressure on room rates, especially if a large part of the new supply is concentrated in the same class of hotels. According to experts, future profitability will increasingly depend on location, quality of service, revenue management and the ability of operators to maintain high occupancy outside the traditional peak seasons.
An additional risk is the rising costs of land, construction, labor, energy, maintenance and financing. This means that increasing the number of hotel rooms in itself will not guarantee good returns. Companies will need to monitor revenue per room and operational efficiency more closely.
Saudi authorities are also investing heavily in the infrastructure around Mecca. The Royal Commission for the City and Holy Places announced in May that projects worth about 6 billion riyals have been implemented through Kidana Development Company over the past four years, related to improving the infrastructure and conditions for accommodation and service for pilgrims.
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