Hotels in Makkah and Madinah continued to outperform the wider Saudi market in the first quarter of 2026, underlining how central pilgrimage remains to the Kingdom's fast-growing tourism economy. Tourist spending across Saudi Arabia reached SAR82.7bn, about 22.1bn dollars, as total visitor numbers rose 8 percent year-on-year to 37.2 million, according to a report by real estate consultancy Cavendish Maxwell.

The figures, released during the Future Hospitality Summit Saudi Arabia in Riyadh, show religious tourism holding firm even as some other segments softened. For the two holy cities, demand from Umrah pilgrims and visitors kept hotels fuller than in almost any other part of the country.

Holy cities outperform the market

Occupancy in Makkah reached nearly 84 percent in January and stood at just under 73 percent for the year to date by May, up 12 percent from a year earlier. Madinah recorded almost 85 percent occupancy in January, with a cumulative rate of 76 percent by May. By comparison, nationwide hotel occupancy peaked at nearly 75 percent in January before easing to 63 percent year to date by May.

Room rates in the holy cities also climbed. Average daily rates in Makkah rose 24 percent to SAR918, the strongest growth of any Saudi city, while Madinah increased about 5.7 percent to SAR878. Across the Kingdom, average daily rates stood at SAR662 in January, rising to SAR825 by May.

"Religious tourism is a key demand driver for Saudi Arabia, with Makkah and Madinah continuing to outperform other destinations," said Kevin Duffield, director of Built Asset Consulting at Cavendish Maxwell.

Domestic travel offsets fewer foreign arrivals

The wider picture showed strong domestic demand cushioning a decline in overseas arrivals. Domestic tourists increased 16 percent to nearly 29 million between January and March, accounting for 78 percent of all visitors. Inbound arrivals fell 13 percent to 8.3 million over the same period.

Despite making up only about a fifth of total visitors, international tourists generated almost 60 percent of tourism spending, contributing SAR48bn compared with SAR34.7bn from domestic travellers. The report noted that although overseas visitor numbers fell, their total spending dropped by only 7 percent, pointing to higher average spending per visitor.

Analysts linked the dip in international arrivals partly to regional geopolitical tension, while noting that pilgrimage activity during Ramadan, Eid and the Hajj season continued to support the sector.

More rooms on the way

Saudi Arabia currently has more than 176,000 hotel rooms and expects to add around 105,500 rooms across 382 hotels by 2030 under its Vision 2030 tourism strategy. About 18,150 rooms across 82 hotels are scheduled for delivery this year, with Makkah and Madinah accounting for roughly 40 percent of the new supply.

The Kingdom is targeting 150 million domestic and international visitors annually by 2030. Sustained pilgrimage demand, alongside continued investment in accommodation and transport, is expected to keep the holy cities at the center of that growth.

What it means for pilgrims

For pilgrims planning Umrah, high occupancy and rising room rates carry practical lessons. The following steps can help manage cost and secure accommodation:

  • Book early. Makkah and Madinah hotels fill quickly, especially around Ramadan and school holidays, so reserving ahead protects both availability and price.
  • Consider quieter periods. Rates and crowds tend to ease outside peak seasons, making travel more affordable and comfortable.
  • Compare package and individual bookings. The Nusuk platform lets pilgrims choose full packages or book services separately, so it is worth comparing options.
  • Factor accommodation into your budget. With room rates in Makkah up sharply, allow room in your plans for higher hotel costs than in past years.

Careful timing and early booking remain the most reliable ways to keep an Umrah trip within budget while the holy cities stay in high demand.