BEFORE the discovery of oil in the 1930s, Saudi Arabia was largely dependent on money made from pilgrims. This was especially true of Makkah where large numbers of Muslims from all over the world converged on the holy city for the annual Haj. Some three quarters of a century later, the manner in which Haj is conducted in regard to transport, accommodation and shopping has been transformed dramatically and the pilgrimage has become a full-fledged hospitality business. The majority of modern-day pilgrims pay their transport, housing and food expenses but thousands of others come as guests of the Saudi government, which spends billions of dollars from oil revenues to provide the necessary infrastructure and services.
In the 25-year period ending in 1995 the Kingdom spent some SR53 billion ($14.13 billion) on Haj services and related projects, according to statistics by the Ministry of Planning. To this must be added the SR70 billion spent by the government on the massive expansion of the Grand Mosque in Makkah and the Prophet’s Mosque in Madinah; the expansions allow each to accommodate more than one million worshippers. Over time the holy sites have been transformed from small desert towns into modern cities with impressive networks of bridges, roads and state-of-the-art telephone and electricity services.
Figures indicate that the Kingdom spends about SR2.12 billion annually supporting pilgrim services. The figure however, does not include expenditures on security, electricity and communications.
Haj and Umrah — the lesser pilgrimage — have now developed into a multibillion-dollar hospitality business. According to local chamber of commerce estimates, the amount spent by pilgrims during last year’s Haj was SR10 billion ($2.7 billion). One million Muslims from outside the Kingdom came for Haj and were joined by a similar number, both Saudis and non-Saudis, from inside the country.
While every able-bodied Muslim who can afford Haj must perform the pilgrimage at least once in a lifetime, Umrah is optional. Yet hundreds of thousands of Muslims come to the Kingdom every year for Umrah, with the holy month of Ramadan being the peak time. With the introduction a year ago of the new Umrah law which allows visits all year round, longer periods of stay and the opportunity for pilgrims to travel to parts of the Kingdom outside Makkah and Madinah, economists expect that the country could host up to 10 million pilgrims a year over the next few years. Spending is expected to be run into tens of billions of riyals. According to officials at the Ministry of Haj, up to one million Umrah visitors were expected in the first year of the new system.
In pre-oil days, the Haj was central to the Kingdom’s economy. The local population sold their goods to pilgrims who came from various countries, sometimes by camel caravan, while the pilgrims, in turn, brought goods to barter. They also introduced many new ideas and languages — and, over the years, this helped to develop the tawafa business — the catering for pilgrims by Saudis. Local tawafa establishments continue to do the job while caring for Umrah visitors has been assigned to private companies set up under the new law specifically for this purpose.
"The invisible earnings from Umrah and Haj account for up to 40 percent of the Saudi services and tourism sector," said Harith Muhammad Baharith, of Umrah and Tourism Service (UTS), one of the more than 200 companies licensed to provide Umrah services. He said Umrah would continue to be a catalyst for every development that takes place in Makkah. At present, a further 5,000 new rooms — in hotels and apartment blocks — are being built for visitors. These will become available within the next 18 months.
The real estate sector in Makkah alone is expected to attract investments of up to SR10 billion over the next two years, according to Muhammad Al-Jabir, chairman of Makkah International Company for Development. He said his firm plans to invest SR580 million in real estate in the holy city.
The transportation sector has also witnessed rapid expansion to meet the growing demands of travelers who are brought into the Kingdom and then moved from one place to another within the country. Before modern transport, pilgrims from Asian and African countries might spend up to two years in getting to the Kingdom, trekking through mountains, plains and deserts. Some might remain in the Kingdom for several months before embarking on the arduous journey back home. Hundreds of planes and thousands of buses, vans and taxis now transport pilgrims and this provides jobs to many and also helps drive the economy. The bulk of the pilgrims come through King Abdul Aziz International Airport in Jeddah. The national carrier, Saudi Arabian Airlines, operates around 3,000 flights to bring in pilgrims from Asia, Africa, North America and Europe, according to Dr. Khaled ibn Bakr, the airline’s director general.
Since hundreds of thousands of animals are slaughtered during Haj, the market for live animals becomes hectic at that time of year. The Kingdom, in cooperation with the Jeddah-based Islamic Development Bank, started a project to make use of the sacrificial meat by distributing it among the poor all over the world. Last year, 650,000 sheep, cattle and camels were slaughtered in the world’s largest slaughterhouse built outside Makkah at a cost of SR500 million.
Debate continues to surround the implementation of the new Umrah law, first introduced in April 2001. The law requires that licensed agents have capital of at least SR500,000 and produce a bank guarantee for SR200,000 to the Ministry of Haj to ensure they comply with the rules. At the beginning, Muslim governments said they needed more time to study and comprehend the system before sending pilgrims. There were also complaints about financial arrangements which include insurance premiums being deposited in the Kingdom by foreign agents operating in the counties that send pilgrims.
"The (Umrah) law itself is excellent but has to be implemented all over the world. No leeway should be given to this or that country. A lot of teething problems, correcting and adjusting has yet to be done," said Zainal E. Alireza, member of the supervisory board of Haji Abdullah Alireza and Co. Ltd. and director of Alireza Travel and Tour’s Umrah Division.
The law requires those coming for Umrah to have a return ticket and also a draft issued by one of the banks approved by the Saudi Arabian Monetary Agency. The draft must be in the name of the agent; agents are responsible for receiving pilgrims at their point of entry, making arrangements for their transportation, looking after their comfort throughout their stay and providing medical services.
Although the law states that agents must ensure the pilgrims return home before their visas expire, there have been many cases reported of pilgrims who have vanished without their local agent’s knowledge. The Ministry of Haj recently closed down 25 companies for neglecting their contractual obligations to the pilgrims or being involved in inappropriate and questionable dealings. Deputy Minister of Haj for Umrah Affairs, Dr. Muhammad Bantan, said the ministry has improved inspections in Makkah — checking on pilgrims who vanish; these inspections followed complaints from the agents that some pilgrims were disappearing as soon as they arrived in the Kingdom. Agents have also urged the ministry to waive the fines imposed on them as a result of pilgrims for whom they were responsible disappearing; they say they should not be held responsible in such circumstances. They want runaway pilgrims to be deported rather then being housed at the agents’ expense in luxury hotels.
Packages range from five or eight days to 15 days with accommodation in a range of hotels ranging from five-star to two-star. Some companies ask for full compensation in the event of cancellation before arrival. "We require full payment upon confirmation of the booking with all the package cost transfers to be made to our account in local Saudi banks. In case of cancellation, the other party must pay 15 percent during low season, 25 percent during mid-season and 100 percent during high season," said Wajdi Obaid, operations manager, Arabia Umrah Travel Services.
Their package, he explained, includes transportation, accommodation, visits to religious sites and holy places and escorts speaking Arabic, English, Urdu, Malay and Indonesian.
While more than 250 companies have been licensed to serve the pilgrims, only 15 percent are yet operating. Conflicts between Saudi operators and their foreign agents have prompted calls for more cooperation to make maximum use of the law. "The market is large enough to accommodate new companies but they should first study the market thoroughly to avoid losses," said Yasser Al-Kholi, executive president of Labbaik company. Some operators say they have been considering mergers in the wake of losses incurred over the past few months since the new system began. They report that business has been affected significantly by the Sept. 11 attacks, in addition to the teething problems caused by the new agency system.
While Baharith estimates there has been a 30 percent decline in visitor traffic by pilgrims this year, with a 10 to 15 percent drop after Sept. 11, Alireza says the attacks had no serious effect on traffic — apart from an initial two to three-week drop. His company, which has 30 agents worldwide — from Canada to Japan and Thailand to West Africa — has continued to receive pilgrims from the United States and elsewhere. As for the proposed mergers, he said only those companies not capable of doing the job are thinking of merger. He also mentioned of plans to hire Saudi women to assist women coming for Umrah.