The Iraqi city of Karbala, which is home to two of Shia Islam's holiest shrines, is attracting increasing interest from Gulf investors as an emerging centre of religious tourism. Range Hospitality is a new company that is building a five-star hotel apartment development in Karbala called Al Rawdatain Gardens to cater for the severe shortage of accommodation in the city, despite continuing security concerns. The city, which is located south-west of Baghdad, attracts millions of pilgrims each year.
"Obviously we do believe it is going to take some time to be 100 per cent secure," said Shafaat Rasool Hashmi, the marketing manager at Range Holdings. The company is based in the UK but largely operates out of its Dubai office. "The turbulent situation might prevail in Iraq as per our forecasts. However, it would finish in the next couple years, after looking at how the petroleum deals in Iraq are taking place and how investment is pouring in."
Noor Capital, based in Abu Dhabi, raised the seed capital that was required to help generate investor interest, Mr Hashmi said. Dewan Architects & Engineers, also based in the UAE, has been appointed as the lead architects and consultants for the project. "We can see a lot of investment being generated from the UAE," said Mr Hashmi. He said he expected the Iraq development to be completed within the next two to three years. The hotel management company Safir Hotels and Resorts opened a hotel in Karbala last year.
Helmut Meckelburg, the chief executive of Safir, said the majority of guests at its Hoda Al Wali hotel were religious travellers, most of whom came from Syria and Iran. But he pointed out Karbala was not an easy place in which to manage a hotel. "Challenges are not only security issues but professional staffing is [also] a real challenge," said Mr Meckelburg. Analysts agree Karbala has significant potential for hotel development as the security situation in the country slowly improves.
"Religious tourism is booming in Iraq, especially in Najaf and Karbala, where millions of Shia pilgrims visit the holy sites every year," analysts at Euromonitor said. "The number of pilgrims to these areas is expected to rise to 7 million to 10 million visitors annually, partly boosted by the introduction of more flights. "As soon as the old regime ended, Shiite travellers were able to practice their faith in two holy Shiite cities, Najaf and Karbala; these two continue to welcome many Shiite arrivals every year, mainly from Iran and the Lebanon."
A large number of Iranian pilgrims visit Iraq by virtue of a signed agreement between the Iraqi and Iranian governments that allows a certain number of Iranian pilgrims to enter Iraq every day. With an expected increase in travellers, they said more hotels, especially four and five-star properties, had been built in Karbala and Najaf, and added that the number of hotels was expected to increase further.
"Another area for potential profit is money or gifts donated by pilgrims visiting religious sites," Euromonitor said. "It is estimated that millions of US dollars are donated each year, mainly by Iranian and Gulf pilgrims. Unfortunately, this money is not used to promote religious tourism and the local government has nothing to do with managing holy sites in Najaf and elsewhere. "Domestic religious tourism also plays a part in boosting travel and tourism in Iraq. However, holy and historical sites are still neglected and some have been damaged, requiring much restoration in future to fully benefit the travel and tourism industry."