Hajj offers enormous opportunities for start-ups
A Saudi incubator Wadi Makkah is supporting ideas that make the world's largest human gathering as seamless as possible for the pilgrims
As Hajj approaches, the millions of pilgrims descending on Makkah will test the city’s ability to cope to the absolute limit. Restaurants, accommodation providers and travel companies, every business will operate at its optimum.
Wadi Makkah is an investment company driven by the twofold goal of making the Hajj and Umrah experience as seamless as possible and to help fledgling Saudi businesses use the period as a commercial launch pad.
The company is an “incubator” offering free support to innovative start-ups seeking a place in the temporarily enlarged market and beyond.
Wadi Makkah invests in companies, offers workspace, access to expertise and legal or technical advice. As Ahmed Al Shehri, a Wadi Makkah business consultant, told The National, the company helps start-ups to flourish.
Among those start-ups the incubator has backed is an Airbnb-like company focused on Makkah that helps property owners let out their apartments to pilgrims. Another start-up aims to help visitors and travel agents navigate the dizzying array of hotels on offer.
Wadi Makkah is owned by Umm Al Qura University in partnership with several state bodies including the General Investment Authority, Ministry of Hajj and Umrah, and Makkah’s sustainable development chamber.
Gaining high-level, free-of-charge support of this level does not come easy and is fiercely competitive. Applications are open to everyone but Wadi Makkah’s location means most companies, about 80 per cent, have to be based in the holy city and usually have a Hajj or Umrah related business.
“You come to us and you say: ‘I have a business model, I have this idea, I need you guys to help start the company,’” says Mr Al Shehri. He says the investment company is an unusual venture capitalist that boasts the added dimension of providing training and free advice. The focus is to nurture and support companies through the year they spend working with Wadi Makkah.
The incubator’s university tie-up means recent graduates are among those who win Wadi Makkah’s support.
“Some of them are students only just graduated and they have good habits and good hopes and ideas and dreams, but they need guidelines,” says Mr Al Shehri.
“Now we’re trying to find people who have business ideas [and] a business model. We help them. We fund them to start up companies and we host them in our place and get them consultations, space, facilities and funds,” says Mr Al Shehri.
“So we say, ‘Yes, show us your business model.’ We say, ‘Ok you need to do market analysis, we’ll help you to conduct market analysis [and] it’s free of charge,’” he says.
Wadi Makkah can also help the start-ups draw a pitch to big investors as they try to enter the larger Saudi market. One of them, Mr Al Shehri says, is worth more than 4 billion Saudi riyals (Dh3.91bn) per year.
The demand for accommodation during Hajj – considered the world’s largest human gathering with almost 2.4 million pilgrims in 2018, according to Statista – rockets over the period.
This is where UmrahPro, which was backed by Wadi Makkah, steps in. In many ways it resembles hotel reservation website bookings.com. It is a website where users can pick accommodation for the period of Hajj and Umrah.
“Because we know how extremely frustrating it is to find high-quality hotels at the lowest prices, we wanted to make things easier for you and save your time by comparing an incredible number of hotels in Makkah,” writes Umrah Pro on its website.
It works closely with travel agents, who are often the first port of call for people planning their pilgrimage.
Another company is Mabet4u. It also advertises apartments for the Hajj season including some that are for women only.
There are also other services needed other than places to stay. Averos, which has offices in Makkah and Dubai, has developed a software that provides real-time data on crowds, flow and distribution, allowing customers to track people, staff and assets to improve operational efficiency.
This information is useful to know of crowd density and movement at and around the Great Mosque of Makkah as well as airports and hospitals, Mr Al Shehri says.
For all the success stories, many start-ups fail to get past the first hurdle. More than a 1,000 applied for support from Wadi Makkah last year for 47 places. From those selected, only 17 are expected to finish the year.
Mr Al Shehri says if they do not succeed in the first six months, “we advise them to go out”. But for those who do get through, it is worth the process.
Pilgrims usually arrive several days in advance and often stay on for a week or more, generating around $8bn (Dh29.4bn) in revenue, according to a 2018 report by the international body of accountants, Acca. The numbers make the Hajj Saudi Arabia’s second-largest income earner after hydrocarbons.
“The Hajj industry is probably one of Saudi Arabia’s most valuable treasures due to the money it generates for Makkah and Madinah, and the wider Hajj logistical train,” Theodore Karasik, a senior adviser to Gulf State Analytics, a consultancy in Washington DC, says in the report.
Umrah – the non-obligatory pilgrimage that can be performed any time of the year – attracted eight million pilgrims in 2017 and generated additional $4bn for Saudi Arabia, Acca says.
Under its Vision 2030, the government plans to attract 30 million a year for Umrah.
According to the Makkah Chamber of Commerce and Industry, 25 to 30 per cent of the private sector’s income in the region around Makkah and Madinah depends on pilgrimage.
While there is little broader data on the economic impact of the Hajj as a whole, it is undeniably huge.
“It is so all-encompassing, touching upon almost every aspect of the economy – not just Makkah and Madinah, but all of Saudi Arabia,” Thomas Wigley, partner at law firm Trowers & Hamlins in Oman, says in the Acca report.
“It is a staggering operation if you think about the number of people that arrive over a very short period of time,” he says.
Updated: August 5, 2019 09:50 AM