Hajj and Umrah Boost Saudi Hotel Industry
Hajj and Umrah pilgrimages have become a cornerstone for the resilience of Saudi Arabia's hotel industry amid disruptions in international travel. As of June 2026, hotel occupancy in Madinah reached 75.1%, the highest in the Kingdom, while Makkah's occupancy rose to 68.2%. A recent JLL report titled 'KSA Hotels Market Dynamics Q2 2026' indicates that religious tourism centers have shown stronger performance compared to business travel-oriented hotel markets. This performance is supported by strong pilgrim visits, ongoing domestic travel, and industry strategies for revenue and cost optimization.
These conditions have made the Saudi hotel market relatively shielded from the broader impacts of international travel disruptions. Meanwhile, the commercial market faces weakened corporate demand and increased new hotel supply. Makkah recorded the strongest hotel performance growth throughout the year until June 2026, with occupancy increasing by 4 percentage points compared to the same period last year, reaching 68.2%. Revenue per Available Room (RevPAR) also grew by 8.7%, reinforcing Makkah's position as a resilient primary market amid broader travel disruptions.
The growth was supported by an increase in pilgrim arrivals during the Hajj season compared to the previous year. Accommodation demand did not weaken immediately after the Hajj season ended, with post-Hajj demand effects extending to Madinah and maintaining the hospitality industry's performance in both Holy Cities throughout Q2 2026. Madinah recorded the highest occupancy rate in Saudi Arabia at 75.1%. Stable pilgrimage travel demand limited the RevPAR decline to 2.4%, despite a weakening Average Daily Rate (ADR).
Saud Al Sulaimani, CEO of JLL for Saudi Arabia and Head of Capital Markets KSA, stated that domestic travel and pilgrim visits provide a stable occupancy foundation for the hospitality industry. He noted that the Saudi hotel market continues to demonstrate long-term structural resilience as domestic tourists and pilgrims provide a stable occupancy foundation. As the Kingdom continues to achieve Vision 2030 goals, strategic investments in infrastructure and asset diversification are transforming the sector. These measures will elevate the Kingdom into a multifaceted primary destination ready to attract a highly diverse international audience, far beyond its traditional pilgrimage travel market.
Hajj and Umrah travel provide Makkah and Madinah with a relatively stable demand source. This religious tourism resilience is evident as hotel performance in business centers faces greater pressure. Riyadh recorded the deepest decline due to weakened corporate demand and increased hotel supply competition. The capital's occupancy rate fell by 9.2 percentage points to 47.6%, while RevPAR plummeted by 23.2%. Jeddah showed more resilient performance, with occupancy dropping by 0.9 percentage points to 66.4%. However, a decline in ADR caused RevPAR to decrease by 7.2%, despite ongoing domestic leisure travel activity.
The resilience of religious tourism and domestic travel continues to attract investment to markets with strong demand fundamentals. Makkah and Madinah are increasing accommodation capacity to support the growth targets for religious tourism and pilgrim visits to Saudi Arabia. Makkah's hotel inventory increased by approximately 1,100 rooms in Q2 2026. During the same period, Madinah added about 220 rooms, bringing the total accommodation supply in both Holy Cities to 354,800 rooms. Expansion is also occurring in other cities. Riyadh's hotel inventory grew by about 490 rooms, while Jeddah added around 180 rooms in Q2 2026. The increase in hotel supply in major cities is expected to intensify competition, making asset quality, differentiated guest experiences, and brand positioning increasingly important for maintaining performance. Hotel operators are also focusing on revenue optimization, cost efficiency, and technology-based operational activities to address changing demand patterns and protect profitability.