Makkah will see big increase in malls to meet pilgrim boom

Makkah has a shopping mall supply of 140 sq m per 1,000 persons — significantly lower than other primary cities. (Reuters)
Updated 18 September 2018

Makkah will see big increase in malls to meet pilgrim boom

  • The holy city’s retail sector at present is untapped and offers huge potential for investors
  • The city has much lower shopping mall density than neighboring Madinah, even though Makkah has a larger population base

DUBAI: The holy city of Makkah is set to see a sharp increase in the number of retail malls and outlets to cater for a projected boom of pilgrims making the annual Hajj. They are expected to increase by more than 200 percent by 2030.
Shopping mall supply is likely to increase from about 280,000 to 338,000 sq meters in 2020 and to 804,000 sq m by 2025 — a rise of almost 200 percent, according to new research published by real estate advisory firm Colliers International as Makkah looks to capitalize on the boom of international visitors over the next decade.
Imad Damrah, managing director of Colliers International KSA, said Makkah is going through a major strategic development phase to improve connectivity, increase capacity, and enhance the experience of Umrah and Hajj pilgrims throughout their stay. There are several strategic infrastructure and transportation projects, including the Holy Haram Expansion, Haramain High-Speed Railway, and King Abdulaziz International Airport.
However, the holy city’s retail sector at present is “untapped” and offers huge potential for investors.
Makkah currently has a shopping mall supply of 140 sq m per 1,000 persons — significantly lower than other primary cities considering that the holy city received about 8.5 million international pilgrims in 2017 (6.8 million Umrah
pilgrims and 1.7 Hajj pilgrims). The city has much lower shopping mall density than neighboring Madinah, even though Makkah has a larger population base, a higher number of visits from international pilgrims, and shares similar demographic and income-level structure, said Damrah.
“Makkah’s market is nascent and lagging behind, suggesting that there is either untapped potential for the development of shopping centers or market conditions are challenging to support supply growth,” he told Arab News. “Tenant mix in the resident malls is mainly focused on fashion (51 percent), health & beauty (8 percent), and entertainment (12 percent). Limited new brand exposure, combined with the aging quality of existing entertainment and experience offerings in these malls, is one of the draws motivating Makkah’s residents to shop and dine in Jeddah.”
About 77 percent of Makkah’s retail supply is fragmented, said Damrah, comprising traditional souqs and line shops, whereas showrooms and organized retail (i.e. shopping malls) account for the remaining 23 percent.
While there are challenges facing investment in Makkah — chiefly the shortage of suitable land plots, high land prices, high infrastructure cost given the holy city’s mountainous topography, and an existing preference of residents to shop in Jeddah, coupled with the completion of major infrastructure projects and a projected rise in Makkah’s population of 25 percent over the next 15 years — the holy city is prime for investment.
Developers and retailers are taking note, said Damrah, highlighting several key retail developments including the remaining phases of Jabal Omar, shopping malls within the King Abdul Aziz Road Development, Muzdifah Mall by Al-Hokair Group, and Abraj Kudai, a hotel currently under construction in Makkah.
The Colliers report highlighted that a third of visitors making the annual pilgrimage are domestic and GCC visitors with “high purchasing power.”
However, it warned that future shopping developments needed to offer more diversity to compete with other cities in the Kingdom such as as Jeddah, King Abdullah Economic City and Madinah.

Tour company Thomas Cook collapses, global bookings canceled

Updated 25 min 3 sec ago

Tour company Thomas Cook collapses, global bookings canceled

  • The bosses of the world’s oldest travel company seek to raise the $250 million they need to keep the company afloat

LONDON: Longtime British tour company Thomas Cook collapsed after failing to secure rescue funding, and travel bookings for its more than 600,000 global vacationers were canceled early Monday.

The British government said the return of the firm’s 150,000 British customers now abroad would be the largest repatriation in its peacetime history. The process began Monday and officials warned that delays are inevitable.

The Civil Aviation Authority said Thomas Cook has ceased trading, its four airlines will be grounded, and its 21,000 employees in 16 countries, including 9,000 in the UK, will lose their jobs. The company several months ago had blamed a slowdown in bookings because of Brexit uncertainty for contributing to its crushing debt burden.

The 178-year-old company had said Friday it was seeking £200 million ($250 million) to avoid going bust and was in weekend talks with shareholders and creditors to stave off failure. The prominent firm, whose airliners were a familiar sight in many parts of the world, also operated around 600 UK travel stores.

The company’s chief executive Peter Fankhauser said, “This marks a deeply sad day for the company which pioneered package holidays and made travel possible for millions of people around the world.”

He said a deal had been “largely agreed” but that “an additional facility” requested in the last few days presented an insurmountable challenge but provided no further details.

“I would like to apologize to our millions of customers, and thousands of employees,” he said in a statement.

Britain’s CAA said it had arranged an aircraft fleet for the complex British repatriation effort, which is expected to last two weeks.

“Due to the significant scale of the situation, some disruption is inevitable, but the Civil Aviation Authority will endeavor to get people home as close as possible to their planned dates,” the aviation authority said in a statement.

Describing the repatriation plan, British Transport Secretary Grant Shapps said dozens of charter planes, from as far afield as Malaysia, had been hired to fly customers home free of charge. He said hundreds of people were staffing call centers and airport operations centers.

“The task is enormous, the biggest peacetime repatriation in UK history. So, there are bound to be problems and delays,” he said.

A website set up by the aviation authority to aid the firm’s customers crashed shortly after the company collapse was announced.

Unions representing the Thomas Cook staff had urged the British government to intervene to prop up Thomas Cook to protect jobs and the traveling public.

Most of Thomas Cook’s British customers are protected by the government-run travel insurance program, which makes sure vacationers can get home if a British-based tour operator fails while they are abroad.

Thomas Cook, which began in 1841 with a one-day train excursion in England and now operates in 16 countries, has been struggling over the past few years. It only recently raised £900 million ($1.12 billion), including receiving money from leading Chinese shareholder Fosun.

An estimated 1 million future travelers will find their bookings for upcoming holidays canceled. They are likely to receive refunds under the terms of the government’s travel insurance plan.

Officials plan to post details on how to receive refunds later on Monday. Travelers holding reservations with Thomas Cook were told not to go to the airport because all flights had been canceled.

An earlier repatriation plan following the 2017 collapse of Monarch Airlines cost the government about 60 million pounds. The Thomas Cook effort is much larger and likely to be far more costly.

In May, the company reported a debt burden of 1.25 billion pounds and cautioned that political uncertainty related to Britain’s scheduled departure from the European Union at the end of October had hurt demand for summer holiday travel. Heat waves over the past couple of summers in Europe have also led many people to stay at home, while higher fuel and hotel costs have weighed on the travel business.

The company’s troubles were already affecting those traveling under the Thomas Cook banner.

A British vacationer told BBC radio on Sunday that the Les Orangers beach resort in the Tunisian town of Hammamet, near Tunis, demanded that guests who were about to leave pay extra money for fear it wouldn’t be paid what it is owed by Thomas Cook.

Ryan Farmer, of Leicestershire, said many tourists refused the demand, since they had already paid Thomas Cook, so security guards shut the hotel’s gates and “were not allowing anyone to leave.”

It was like “being held hostage,” said Farmer, who is due to leave Tuesday. He said he would also refuse to pay if the hotel asked him.

The Associated Press called the hotel, as well as the British Embassy in Tunis, but no officials or managers were available for comment.