InterContinental Hotel Group has chosen Mecca over Macao to build its largest Holiday Inn slated to open in 2016.
World's largest Holiday Inn set for Mecca
The New York-listed InterContinental Hotels Group (IHG) has chosen Mecca for its largest Holiday Inn.
The current largest Holiday Inn is in Macau with 1,224 rooms
To be built in partnership with Makkah Real Estate Company, the 1,238-room facility is expected to open in 2016 and will be on the pilgrimage route near the city's business district.
The location of the property is in line with the current Mecca hospitality sector as the hotels are trying to tap into guests away from nearby Al Haram, according to Chiheb Ben Mahmoud, the executive vice president and head of hotel advisory for Middle East and Africa at the consultancy Jones Lang LaSalle.
IHG entered the kingdom in 1975 and currently has 24 hotels with 5,880 rooms. It expects to open seven hotels and add 1,885 rooms in the next five years.
Tourism in Saudi Arabia is booming. Several other hotel groups, including Westin, Sheraton, Hyatt and Marriott, are rushing to claim a bigger stake in the lucrative market.
"We still need many international hotel chains in Saudi Arabia," said Majed Al Nefaie, the head of Mawasim Tours.
The Mecca-based company organises Haj and Umrah for pilgrims to Mecca and Medina.
The demand will rise with the expansion of the Grand Mosque, or Al Haram, in Mecca and the Prophet's Mosque, or Masjid Al Nabawi, in Medina. This is expected to increase the number of pilgrims from 5 million to 20 million a year, Mr Al Nefaie said.
There were nearly 9,000 internationally branded hotel rooms planned or currently under construction in Mecca through June, according to Tri Hospitality Consulting.
Of these, around 2,500 rooms are planned to open this year, in addition to a 1,795-room luxury hotel owned and operated by a Saudi-based group.
"The room rates and occupancy levels have been going up in Mecca and Medina for the last two years," said Rashid Aboobacker, a senior consultant with Tri Hospitality Consulting.
Growth in the number of visitors comes as the government is stepping up the number of Umrah and Haj visas.
"A modest correction in rates is likely during the next one to two years," Mr Aboobacker said.
"This will be primarily driven by the entry of a large supply of internationally branded midmarket hotels in the vicinity of Al Haram, and will have stronger impact on the hotels offering low quality facilities and those located further away from Al Haram."
In Medina, where expansion of the Prophet's Mosque is yet to begin, around 4,600 hotel rooms were planned or under construction early this year.
Saudi Arabia has 31,518 rooms under construction or in the pipeline as of July, said the consultancy STR Global.
The seasonality of the tourism sector of the two cities has undergone a major transformation. While five years ago Umrah season in Mecca and Medina was restricted to five months, now it can be done around nine months a year.
Almost 5 million Umrah pilgrims visited the kingdom last year, and this year 4.5 million pilgrims have already performed Umrah despite expansion work in Mecca, according to the deputy Haj minister Hatem Qadi.
"Currently, Umrah can be performed any time of the year other than one month after Ramadan and Haj when the mosques are shut for cleaning and renovations," Mr Aboobacker said.
"Consequently, hotels enjoy strong demand more or less throughout the year."
Last year, more than 3.5 million pilgrims went on Haj.
Mecca's Holiday Inn will be located 3.5 kilometres from Al Haram.