Asia leading the way in making haj affordable for its citizens

Photo: Muslims pray at the Grand mosque ahead of the annual Haj pilgrimage in Mecca, Saudi Arabia, in this August 26, 2017 mobile phone image. REUTERS/Suhaib Salem

With another haj season over, rising accommodation and flight costs continue to be blamed for increasingly expensive privately-run haj tours, with prices from markets such as Britain tripling this decade. Yet state subsidies in many Asian countries are helping make the pilgrimage cheaper for citizens.

Religious pilgrims were Saudi Arabia’s biggest source of income prior to the discovery of oil and the kingdom has spent some of its vast energy receipts on redeveloping and expanding the infrastructure surrounding its holy sites.

Mecca’s historic neighbourhoods have been razed, largely to make way for luxury accommodation, with Saudi targeting an increase in the number of haj visitors to 2.5 million by 2020.

That would represent a 6.3 percent increase on 2017’s approximate 2.35 million pilgrims, but still below 2012’s peak of 2.83 million that pre-dated a cut to visa numbers to allow for refurbishment work.

During this year’s haj, Maher Jamal, head of Mecca's Chamber of Commerce and Industry, told AFP that pilgrims would spend up to 25 billion riyals this year, up 70 percent year-on-year.

“The Saudi authorities are taking advantage of demand. Increasing the prices is having little effect - even lower-income families and individuals are willing to pay more even though they can barely afford it,” said Tarik Dogru, a professor of hospitality and tourism at Boston University. “Haj is meant to be only for people who can afford it, so there’s no religious obligation for the Saudis to make haj “affordable”.”

Some countries with large or Muslim-majority populations provide state-run tours, usually allocating most visas to these packages, with the remainder distributed among approved operators.

Private packages typically include return flights, hotel accommodation, ground transportation and a guide. Accommodation ranges from tents to three to five star hotels. Residential leasing is also an option.

PRIVATE TOURS PRICE HIKES

Using an internet archive to compare prices at leading travel agents in various important source markets for haj, Salaam Gateway found that the cost of private tours has broadly increased this decade – a trend operators blame on rising airfares and hotel prices, plus the relative strength of the Saudi riyal.

The cheapest package from Pakistan’s Travel & Culture Tours, for example, rose to 440,000 rupees ($4,174) this year versus 325,000 rupees in 2010. Likewise, the operator’s premium trip more than doubled to 970,000 rupees over the same period.

Malaysia’s Batuta Travel hiked basic packages to 27,652 Malaysian ringgit ($6,552.60) in 2017, from 19,950 ringgit in 2014, while luxury trips nearly doubled to 42,652 ringgit versus 24,950 ringgit three years previously.

Budget U.S. package prices remained static at around $6,500, but high-end tours rose by as much as $4,000. French package prices have remained unchanged since 2014 for both basic and luxury at 4,790 euros ($5,649.92) and 5,790 euros respectively.

Hamdy El Sawy, founder and owner of London’s El-Sawy Travel which has run haj tours every year since 1981, said his inaugural trip cost 325 British pounds including flights. This year, it is priced at 6,000 pounds ($8,065), up from 2,000 pounds in 2012. El Sawy used to rent apartments in Mecca close to masji al haram, but these were demolished and his clients now stay in hotels.

“Profit margins of tour operators vary tremendously between countries,” said Rayan Mazeh, an instructor at Lebanese International University specializing in tourism. “Operators in high affluent countries charge a high mark up since pilgrims are willing and able to pay, while in less affluent countries the low income of citizens force tour operators to keep their profit reasonable.”

Private tour operators’ requirements have fueled the construction of five-star hotels versus more modest accommodation, according to a 2017 Thomson Reuters report.

Investors prefer deluxe hotels because these provide higher margins and generate more profit, said Sean Hyett, an Associate Analyst at Britain’s Global Data.

“It’s a business, after all,” he said.

The emphasis on luxury also reflects changes in pilgrims’ expectations and personal circumstances – the era of being able to devote months to the haj is long gone; Dutch scholar Snouck Hurgronje in 1888 described how Mecca had no hotels, but during haj every Meccan became a hotel keeper.

“Pilgrims today are less tolerant of discomfort – they can’t stand the heat, the long travelling – and that’s partly why the price has increased,” said British tour operator El Sawy. “They need air conditioning, upgraded transport, facilities and tents. Demand is high. Many pilgrims want to be opposite the Haram (Grand Mosque) and prices there are the most expensive. Many people are weak, not like before.”

Yet prices are not necessarily moving in only one direction; Dnata, Emirates airline’s travel agent division, offers 10-day haj packages starting from 19,500 dirhams ($5,313) based on sharing a room in four-star hotels, while premium packages start from 110,000 dirhams.

The basic package is down from 29,000 dirhams in 2016 after the UAE government made substantial changes to its haj rules, banning expatriate residents from receiving haj visas allocated to the UAE. Greater regulation was also brought to bear, with tour operators required to submit their packages for government approval. The UAE does not operate state-run trips, but various government entities pay for some UAE citizens to perform haj on an ad hoc basis.

STATE HELP

Help is available for Muslims struggling to afford the haj. For domestic pilgrims, Saudi’s government offers a haj tour from 3,447 riyals ($919).

This year, Jeddah’s Siddiqui Hajj Group charged 7,700 riyals for a private five-day tour including accommodation in a tent in Mina, close to Mount Arafat and where some haj rituals are conducted, while other operators charged up to 15,000 riyals for trips of the same duration, a company executive said.

Unlike pilgrims from abroad, Saudi residents spend less time performing haj, so domestic packages are only for the peak period of haj itself. Basic government tours accommodate pilgrims far from Mina and pilgrims must make their own way to the various sites, the executive said.

The cost of state-run haj tours for pilgrims from many Asian countries has declined or held steady this decade.

Malaysia has frozen its packages at 9,980 ringgit since at least 2009. It estimates the true price is 19,550 ringgit, with the state paying nearly half the cost as it raised haj subsidies to about 230 million ringgit this year, from 180 million ringgit in 2016, The Malay Mail reported.

The government finances this through state-linked Lembaga Tabung Haji. Established in 1962, it provides Shariah-compliant savings accounts for would-be pilgrims, using profits to subsidise haj packages. In 2016, it held 67.7 billion ringgit in depositors’ savings and is cited as an example of best practice for other countries to follow.

Indonesia, which wants to emulate Tabung Haji through its fledgling Hajj Fund Management Agency (BPKH), reduced the cost of its state-run packages to $2,617  in 2017 from $3,219 in 2014 as the government upped subsidies.

India raised its prices from an average of 111,592 Indian rupees ($1704.87) in 2011 to an average of 218,678 rupees in 2016. The average price for packages across the country’s departure points rose to 236,933 rupees ($3,619.78) this year.

In Pakistan, which allocates 60 percent of its haj visas to state tours, the cheapest government-run trip was 285,070 rupees ($2,704) in 2013, while in 2017 the same package was priced at 270,000 rupees.

State packages are more basic, providing accommodation about 10 kilometres from the Grand Mosque, with pilgrims taking public buses to reach religious sites, said Mohammed Waheed Iqbal Butt, chairman of the Hajj Organizers Association of Pakistan (HOAP).

Private tours stay in three to five star hotels close to the Grand Mosque, use private transport and include three different meals daily, while state packages offer the same simple, staple food at each mealtime. Other perks include private, air-conditioned tents during the main five days of haj and rooms that are shared with fewer people.

“The big difference is the quality and location of hotel,” said Butt.

Pilgrims staying for more than 40 days for haj are charged 115,000 rupees for a return flight from Pakistan to Saudi Arabia, but shorter durations pay 160,000 rupees, said Butt.

“It’s up to you,” he added. “In the market, every type of package is available if you want. There’s more choice now than ever before.”

IS HAJ AFFORDABLE?

Taking nominal GDP per capita figures from the World Bank or the International Monetary Fund, Salaam Gateway calculated the length of time it would take to earn enough money to pay for the cheapest state-run haj package, or cheapest private tours in countries where such trips are unavailable. For India, the price we use is an average of government-subsidised packages that charge different airfares depending on the departure point.

These figures do not account for disposable income, but are a useful indicator to gauge relative affordability. In Indonesia, people pay the equivalent of 245 days’ income for a haj trip, while in neighbouring Malaysia it was 90 days. India and Pakistan came in at 714 and 661 days respectively, France at 57, UK at 54, and the United States 40.

Privately-run financial institutions in many countries offer similar saving schemes to those provided by government institutions in Indonesia and Malaysia, including Pakistan’s UBL Fund Managers, Singapore’s Maybank and UK’s Al Rayan Bank.

In the Gulf, banks offer haj loans; the Saudi Council of Senior Scholars approved borrowing to perform haj, Arab News reported in 2014. The UAE’s Ajman Bank, for example, offers haj financing up to 300,000 dirhams ($81,743).

ROOM RATES

The popular belief that Mecca hotel rates have jumped this decade is not borne out by industry data.

The average daily room rate (ADR) for haj in 2016 – September 10-15 – was $544, down from $568 in 2011 when the haj coincided with November 4-9 that year, according to data and analytics specialists STR. The decline could be explained by haj falling earlier in the year – temperatures and humidity in September are among the harshest annually, while November is peak tourist season.

Prices may have plateaued, but accommodation still represent a huge outlay. A 14-night stay at last year’s average haj room rate would cost $7,620, or more than the average annual income in Nigeria, Pakistan or Yemen. Hotel rooms during haj also command a huge premium – year-end ADRs in Mecca were $217 in $2016, STR data shows.

Prices have held steady despite a big jump in the number of available rooms, from 18,531 in 2011 to 28,136 for the haj in 2016, indicating pent-up demand even as pilgrim quotas fell.

“Going upmarket doesn’t change the meaning of haj,” added Boston University’s Dogru. “Also, some wealthier Muslims are repeat visitors, performing haj and umrah just like other people choose to go to their favourite holiday destinations again and again.”

© SalaamGateway.com 2017 All Rights Reserved