Makkah Construction & Development Renovates Hotel Rooms, Temporarily Taking One-Third of Capacity Out of Service in Q3

Hospitality revenue rises over the first nine months of 2026 despite renovation works, as higher average daily room rates support segment profitability

Makkah Construction & Development Company has reported ongoing hotel asset upgrades and room renovations that temporarily took approximately one-third of its rooms out of service during the third quarter of 2026, as part of a programme to modernise its hospitality facilities in Makkah.

In a financial disclosure published on the Saudi Exchange (Tadawul) on 9 November 2026, the company said the renovation works affected the availability of hotel rooms between July and September, alongside seasonal fluctuations associated with the Hajj and Umrah markets.

The company did not disclose the total number of rooms covered by the programme, the investment cost of the renovations, or the expected date for returning all rooms to service.

The company's financial results showed that hospitality segment revenue increased by approximately SAR 6 million during the first nine months of 2026 compared with the corresponding period of 2025, supported by an improvement in the average daily room rate (ADR).

Hospitality segment profit also rose by around SAR 10 million over the same period, despite approximately 13% of hotel rooms being temporarily unavailable due to ongoing asset upgrades and renovations.

These results indicate that improved room rates helped the hospitality business achieve revenue and profit growth over the nine-month period, despite the temporary reduction in available capacity.

During the third quarter alone, hospitality revenue declined by approximately SAR 18 million year-on-year, while segment profit fell by around SAR 9 million.

The company attributed the decline to the temporary closure of approximately one-third of its hotel rooms as part of the renovation programme.

The period also reflected seasonal variations in revenue, with most Hajj-related activity in 2026 concentrated in the second quarter.

The company did not specify whether the renovations cover its entire hotel portfolio or selected properties. It also provided no detailed breakdown of the planned improvements to rooms and facilities.

The results highlight the seasonal nature of hospitality and pilgrimage-related operations in Makkah, where revenue is influenced by religious travel patterns and the timing of revenue recognition.

The company reported an increase of approximately SAR 142 million in Hajj segment revenue during the first nine months of 2026, reflecting an expansion in its activities during the pilgrimage season.

However, third-quarter Hajj revenue declined by around SAR 133 million year-on-year, primarily because of differences in when Hajj revenue was recognised in 2025 and 2026.

This divergence underlines the importance of assessing the performance of pilgrimage-related hospitality companies over longer reporting periods rather than relying on a single quarter.

About Makkah Construction & Development Company

Makkah Construction & Development Company is a Saudi-listed company trading on the Saudi Exchange under ticker symbol 4100. Its activities include real estate investment, hospitality and retail operations in Makkah.

The company's financial performance is supported by several business segments, including Hajj-related services, hotel operations and commercial property leasing.

For the first nine months of 2026, the company reported total revenue of SAR 1.104 billion and net profit attributable to shareholders of SAR 415.6 million, representing a year-on-year increase of 9.45%.

These figures reflect the company's consolidated performance across all business segments and should not be interpreted as results attributable solely to hospitality operations.

Balancing Temporary Capacity Loss with Long-Term Returns

Taking hotel rooms temporarily out of service for renovation directly reduces the inventory available for sale and can put pressure on short-term revenue, particularly in destinations with pronounced seasonal demand.

However, upgrading rooms and facilities can strengthen a property's competitiveness, maintain service standards and potentially support higher average daily rates once renovated rooms return to operation. Such improvements do not, however, guarantee stronger financial returns.

Makkah Construction & Development Company's experience illustrates the importance of balancing renovation schedules with operational capacity, particularly in Makkah, where accommodation demand fluctuates with Hajj and Umrah travel.

The key indicators to monitor will be the number of rooms returned to service and any subsequent improvement in occupancy rates, average daily rates and revenue per available room (RevPAR).