The Islamic Tourism in Saudi Arabia is attracting huge investment in hotels, thanks to economic diversification policy that is gradually unburdening the country from the dependency of oil.

The dramatic fall in price of oil in past couple of years compelled Saudi Arabia to diversify its economy. As a result Muslim based faith tourism evolved strongly as one of the potential contributors to its economy.

The Persian Gulf Kingdom is a home for two prime pilgrimage sites of Islamic faith—Mecca and Medina. These holy sites together are projected to attract over 20 million pilgrims by 2020. In addition, the government’s plan to ease visa restrictions for Umrah pilgrims will further escalate the tourist volumes in future because the provision will allow them to extend their stay and visit sites other than religious. It is estimated that Saudi Arabia will receive 15 million Umrah performing pilgrims by 2020.

This is a significant surge to be met over the next 3 years. To meet the growing demands, the country is adding over 50,000 rooms with 70 new hotels around these sites. Besides, the government is spending over US $13 million every year to build infrastructures and renovate heritage sites so that the sector can lead the country in the post era of economic diversification.

With consistently increasing number of pilgrims, the hotel occupancy rates in Mecca are quite motivating for investors. Normally, the occupancy rates cross 90% in Umrah season and during mid-academic year vacations. Probably, this is one of the reasons for investors to invest aggressively in hospitality in the holy Kingdom.

With the country’s new Vision 2030 plan, the country plans to increase investment in the tourism sector by $8 billion to almost $46 billion in 2020 — a remarkably ambitious economic blueprint for shaking the country’s “addiction” to the oil industry!

Subarna Poudel is a researcher with Frost & Sullivan. He can be reached at

Sapan Agarwal drives content and marketing for Frost & Sullivan. Sapan is based out of Kuala Lumpur Malaysia and can be reached at | +603 6204 5830