More hotel rooms booked for Mecca

Thousands of new hotel rooms are set to open in Islam's holiest city as a flood of international operators prepare to open or expand their presence in Mecca.

Muslims circle the Kaaba at the Grand Mosque in the holy city of Mecca. Hotel room rates in Mecca have been rising since 2009. Amr Abdallah Dalsh / Reuters

Thousands of hotel rooms are set to open in Mecca as a flood of international operators prepare to open or expand their presence in the holy city.

More than 6,000 rooms are currently under construction, adding to the existing 61,000 rooms in the Saudi Arabian city, according to tophotelprojects.com.

Dubai-based Emaar has become the latest international operator to move in to the market, having just started the handover of the country's first five-star fully serviced homes in the Mecca Clock Tower, overlooking the Kaaba and Masjid Al Haram, or Grand Mosque.

The 316-apartment Emaar Residences property is located on levels 30 to 41 of the clock tower, a Fairmont Hotel and one of the world's tallest hotel towers.

"It gives us tremendous pride to commence the handover … during the holy month of Ramadan," said Ahmad Al Matrooshi, the managing director. "These five-star serviced apartments, a first of its kind in the kingdom, are designed to provide an inspiring experience for residents, who visit or stay in the holy city of Mecca."

Room rates have been rising in the city since 2009, according to Gabriel Matar, Jones Lang LaSalle's regional director for the hotels and hospitality group.

They tend to reach a peak during certain times of the year, such as at Haj and in Ramadan due to the pressure placed on accommodation by pilgrims, but rates may not rise in the same way this year, he said.

"You need to keep in mind that the volume of the business is highly dependent on the number of visas that are given by the authorities," said Mr Matar.

"This year there has been a decision … to reduce the number of visas by 50 per cent for domestic pilgrims and 20 per cent for international pilgrims and this is related to the works that are under way on the [Grand Mosque]," he added.

Rates will likely resume their upwards trend after Ramadan and Haj, he said, but some analysts argue that the increasing hotel supply could bring down the cost of staying in the city - albeit modestly.

"There could be an impact on the rates, but I don't think the rates are going to slump or drop down drastically. It could come down to a slightly more reasonable level," said Rashid Aboobacker, a senior consultant with Tri Hospitality Consulting.

Others say the dips will not be permanent.

"Likely there will be a few stops probably when you have many hotels entering the market," said Mr Matar. "But the trend is there is no sufficient supply and you have the potential of demand, which is today untapped."