Demand for hotels in Makkah and Madinah held firm in early 2026 despite regional travel disruption, according to a new report from the consultancy Knight Frank. The findings point to continued strength in religious tourism even as the Kingdom presses ahead with a large expansion of accommodation around the two holy cities.
Knight Frank's Saudi Hospitality and Religious Tourism Report found that Makkah remained the Kingdom's strongest-performing hotel market during the first four months of the year. Average daily room rates reached SR775 (about $209), while revenue per available room grew 4.7 percent year on year. Madinah also performed well, with occupancy averaging 76 percent and room rates rising 2.7 percent.
A Major Building Programme
The report underlines how heavily Saudi Arabia is investing to house rising numbers of pilgrims. More than 105,000 hotel rooms are currently under construction or in advanced planning across the Kingdom. That pipeline would lift total hotel inventory from about 176,260 rooms today to more than 281,500 by 2030.
In the holy cities specifically, Knight Frank counted over 218,000 hotel rooms, branded residences and serviced apartments planned across major developments. These include Rua Al Haram and Masar Makkah near the Grand Mosque, Thakher Makkah, the Knowledge Economic City and Rua Al Madinah, and the Dar Al Hijrah Pilgrim City. Recent reforms that allow greater foreign participation in property investment are expected to draw additional international capital into the sector.
"The Holy Cities have long benefited from strong underlying demand, but recent regulatory reforms are creating new opportunities for international investors to participate in their long-term growth story," said Amar Hussain, an associate partner for research at Knight Frank in the Middle East and North Africa.
Pilgrim Numbers Keep Climbing
Religious tourism continues to drive much of this growth. The report found that 1.71 million pilgrims performed Hajj in 2026, up 2.2 percent on the previous year, arriving from 165 countries. International pilgrims accounted for roughly 1.55 million of the total, with Indonesia, Pakistan, India, Bangladesh and Nigeria remaining the largest source markets.
Wider tourism figures were also strong. Saudi Arabia welcomed 37.2 million domestic and international visitors during the first quarter of 2026, with visitor spending reaching SR82.7 billion. Domestic tourism led the way, with visitor numbers rising 16 percent to 28.9 million. Across 2025, the travel and tourism sector contributed an estimated $178 billion to the Kingdom's economy, about 46 percent of the Middle East's tourism output.
An Uneven Picture
Performance was not uniform across the country. While the holy cities benefited from steady pilgrimage demand, the Riyadh hotel market softened as new supply opened and business travel slowed amid regional tensions. Occupancy in the capital fell to 49.3 percent in the first four months of the year, and revenue per available room declined sharply.
Even so, Knight Frank said the long-term outlook remains positive, supported by government spending, airport expansion and the launch of Riyadh Air. Faisal Durrani, the firm's head of research for the region, said the market was "entering a new phase where product diversification will become increasingly important," noting that much of the future pipeline is concentrated in luxury properties and leaving room to grow midscale and budget options.
What It Means for Pilgrims
For pilgrims planning Umrah or Hajj, the expansion signals more choice and capacity over the coming years, but it does not remove the need to plan ahead. Rooms closest to the Grand Mosque and the Prophet's Mosque remain the most expensive and the first to sell out, so early booking is wise, especially in peak seasons. Travellers on a budget should look slightly further from the sanctuaries, where rates fall and shuttle or rail links are improving. Booking through licensed providers and the official Nusuk platform remains the safest way to secure verified accommodation.