Fewer pilgrims in 4Q2016

Fewer pilgrims in 4Q2016 as currencies weaken

The number of foreigners arriving to Saudi Arabia for Hajj and Umrah is an interesting barometer of economic health across the Muslim World.

Eng. Mohammed Kamel M. Othman, CEO of the Ports Projects Management and Development Company (PPMDC), suggests that this is due to the depreciation of the MENA region’s primary currencies against the dollar in the latter half of the year.

“Umrah figures were down YoY in the last three months. A strong dollar, weak currencies in Egypt and Turkey, and political instability contributed to this drop”, claimed Othman in a TBY interview. PPMDC currently manages the Hajj/Ummah terminal in the Jeddah airport, where the vast majority of the pilgrims arrive before continuing on to pilgrimage sites.

The Egyptian pound and the Turkish lira ranked among the worst performing currencies in 2016, after the former lost over 45% and the latter about 20% against the US dollar. The Egyptian pound crashed after its central bank allowed its currency to float freely after November, while the Turkish lira experienced a steady depreciation following the failed military coup in July and a proliferation of terrorist attacks that have scared the bulk of tourists away from the country.

This has resulted in a loss of purchasing power in dollars for the citizens of these two Muslim majority nations, both of which have substantial populations of over 70 million. Although nationals of the two states represent just 7% of the roughly 1.8 million annual pilgrims, Othman insisted that this noticeably affected figures in late 2016 and January 2017.

“However, as of February, we have seen an increase in flights booked for Umrah. Maybe the rest of the year will be better,” added the CEO, whose interview will be featured in The Business Year: Saudi Arabia 2017.

The number of foreigners arriving to Saudi Arabia for Hajj and Umrah is an interesting barometer of economic health across the Muslim World. When economies are on the rise, the quantity of pilgrims to Mecca and Medina increases, and vice versa. Attaining political stability and economic growth in the region is fundamental for this important tourism segment in Saudi Arabia, which accounts for over 50% of the income generated by the industry each year.

Hajj and Umrah visitors contribute USD12 billion to Saudi Arabia’s GDP, while the contribution of the overall tourism sector stands at USD22 billion. And if that were not enough, revenues generated by Umrah and Hajj pilgrims are forecasted to hit over USD50 billion by 2020, with 5 million people performing this religious trip each year.

As a result, developing this industry is a central pillar of the Saudi Vision 2030, a roadmap that seeks to release the kingdom’s economy from its dependence on the oil industry within the next decade. Experts believe that religious tourism will create more than 30,000 new jobs for Saudis working in accommodation, while also developing new infrastructure to provide visitors with stronger transport services to the holy sites.

Among other construction projects, the Haramain High Speed Rail Project, which will link the holy places of Mecca and Medina with other cities, is expected to open in December this year. The expansion works at King Abdulaziz International Airport, specifically aimed at improving services for pilgrims, are scheduled for completion in 2018.

The 2016 Umrah season (November 2015 to July 2016) was declared a success by Prince Khaled Al-Faisal, chairman of the Central Hajj Committee, given an overall increase in pilgrim figures of 16%. The 2017 season already began on the November 20.