The Economics of The Hajj

Commentary

It is easy to forget for many Americans, if they ever learned it, that the King of Saudi Arabia is formally known as the Custodian of the Two oly Mosques. That is not simply a name. Perhaps one of the most significant facts about Saudi Arabia is that it has many of the most important religious sites to followers of Islam within its borders. Therefore, the King has a responsibility to ensure that all followers of Islam have the chance to make the Hajj pilgrimage safely and to enjoy the spiritually enriching experience.

This is no easy task. As many as three million Muslims will be making the trip this year, and to manage that massive influx of people is a significant responsibility. So it is encouraging as an outside observer of Saudi Arabia to note that perhaps nowhere else in the Kingdom is the government’s reinvestment of its wealth into infrastructure more apparent than in Mecca, as millions experience the Hajj pilgrimage with new modern developments.

Several news outlets have reported that the Hajj, a religious pilgrimage to Mecca that Muslims believe all able-bodied individuals should make once in his or her lifetime, means big business for the city and the country that plays host to the annual event. Hosting the Hajj is sure to earn money for Saudi’s tourism industry, and it is clear that the government and private sector in Saudi Arabia have seized the opportunity to make the experience better for Hajj-goers.

“The biggest religious gathering in the world is getting bigger for business,” write Glen Carey and Mourad Haroutunian in Bloomberg. “The annual Hajj pilgrimage is spurring opportunities for companies like the Saudi Binladin Group and Hilton Worldwide Inc. as the government in Saudi Arabia invests in new rail lines and airport expansions needed to meet the rising number of Muslim pilgrims to Islam’s two holiest cities.”

Two major developments come to mind as examples of Saudi reinvestment. The first, currently under construction, is the creation of a massive clock tower in Mecca, also known as the Abraj Al-Bait Towers. Upon completion, the tallest tower in the complex will be the tallest in Saudi Arabia – taller than the Kingdom Tower in Riyadh, and the second tallest building in the world. At a cost of $3 billion, it is sure to redefine the landscape in Mecca.

“The clocktower is part of a project that buckles under the weight of its own statistics,” Reuters writes. “Abraj al-Bait, a complex of luxury hotels, malls and apartments, has an estimated value of $3bn, a built-up area of 1.4m sq meters, 15,000 housing units and 70,000sq meters of retail space.”

The second is the recently completed train connecting several holy sites in Saudi Arabia. Known as the Mecca Metro or Mashair Railway, it is a $1.7 billion reinvestment to solve many of the existing transportation problems surrounding the Hajj. First reports say that the train handled 66,000 passengers in its first day of operation.

Taken together, these two mega-projects highlight Saudi Arabia’s continuing reinvestment in infrastructure and domestic growth, an ongoing theme in the Kingdom that is happening in all cities and throughout the year. It is a strategy that will provide for a greater standing of living for Saudis in coming decades, while inviting ripe investment opportunities for Saudi and International companies alike.