Medina plays catch-up to Mecca’s expansion

• Medina adding 20,000 hotel rooms
• 21% room revenue CAGR since 2022
• Average stay now 10 days

Hajj pilgrims arriving at the Grand Mosque in Mecca this week will be the first in more than a decade to see a skyline free of construction cranes.

Now that the long-delayed expansion of Islam’s holiest site is complete, the cranes that long dominated the area have been taken down. The renovations have doubled the mosque’s capacity to two million pilgrims.

Saudi Arabia, which is home to Islam’s two holiest sites, aims to increase the number of religious pilgrims to 30 million by 2030. 

Last year, a record 18.5 million travelled from abroad to perform the annual hajj and the year-round umrah. The government expects the number of this year to be higher still.

Yet experts say that work needs to be completed elsewhere to reach targets, particularly in Medina, 440km to the north and the burial place of the prophet Mohammed.

Much like in Mecca, the city of 1.6 million is undergoing its biggest transformation in probably more than a millennium. 

According to Oussama El Kadiri, head of Knight Frank’s hospitality, tourism and leisure advisory, the two cities are now “the first market” for hoteliers looking to expand in Saudi Arabia.

“Medina, in terms of what it offers, is something more spiritually relaxed in terms of experience so it goes quite well with wellness and cultural tourism,” says El Kadiri. “You don’t have those big pilgrim flows that you have in Mecca.”

While not an obligatory part of hajj, it is customary for pilgrims from among the world’s 2.2 billion Muslims to visit Medina and is typically included in package tours.

Yet the city has less than a third of the hotel rooms of Mecca. More though are under construction. 

US real estate data and analytics company CoStar counts a little over 20,000 hotel rooms at various stages of development in Medina. In Mecca, the figure is just under 18,000.

But, income for hotels in Medina is growing faster. Since 2022, revenue per room has increased an average of 21 percent per year, almost double that of Mecca, according to real estate consultancy JLL.

The largest project underway in Medina is Ruaa Al Madinah, a 1.5 million square metre mixed-use development near the Prophet’s Mosque. That is about the size of 280 American football fields.

Backed by the sovereign Public Investment Fund, work is underway on more than 3.5 km of underground roadways, over which will be built apartments, shopping centres, and 47,000 hotel rooms.

Most of the hotel operators are yet to be announced, but deals have already been signed with Hilton, Marriott International, and France’s Accor. The first phase of the project is scheduled to open next year, with the final opening date set for 2030.

In addition to religious tourism, Medina is also looking to market itself as a cultural and wellness destination. 

“The land is big and it’s not as mountainous as Mecca so it’s easier to develop wellness centre retirement homes,” says Fahd Hamidaddin, CEO of the Saudi Tourism Authority. 

• Saudi housing changes may stoke demand for smaller properties
• AI adoption could help meet ambitious Vision 2030 targets
• Saudi developer to build $400m ‘workshop city’

Since 2021, non-Muslims have been able to visit the city as part of Vision 2030 efforts to promote tolerance in Saudi Arabia, and increase the number of annual tourist visits to the country to 150 million.

Medina, which dates back more than three millenia, has sites of cultural and historic significance that could appeal to tourists beyond the religious.

Land and property prices in Medina also tend to be lower than in Mecca. Apartments range from SAR2,500 to SAR5,100 per square metre, compared to around SAR2,600 to SAR5,400 per sqm in the suburbs of Mecca.

“Affluent Muslims from around the world would love to have property and retire in a city with that tranquil offering,” says Hamidaddin.