Good afternoon, everyone. This is Iyad Ghulam. On behalf of SNB Capital, I would like to welcome you to an earnings call with MCDC management regarding the full year 2025 earning results of the company. With us on the call today, Mr. Mohammed Al-Nafea, the CEO, and Mr. Ahmad Jaber, the CFO. We will first listen to the management feedback. Following this, we will open the floor to questions. MCDC management, please begin with your feedback.
Thank you, Iyad. Before we start, I would like to take you to our cautionary note. In this presentation, we're going to be highlighting some plans, presentations, forward-looking estimations going forward, and they might not materialize based on these elements that are stated on this slide. Now with that out of the way, we hand over to our CEO, Mr. Mohammed Al-Nafea.
Salam alaikum. Thank you, Ahmad. Ramadan Mubarak, and good afternoon, everyone. Thank you for joining us today. We are happy to share our results with you, and I must say, this has been a year we are very proud of. Let me explain what made this year a time of growth and execution. This year was really good for us. We reach over SAR 1 billion in total revenue for the first time in the company history. Our hotel operation grows slightly even while we are renovating, showing that we can adapt and do well. We expand our rental space by over 10%, more than 16,000 sq m, and we raised our average rent 7% to nearly SAR 16,900 per sq m, which shows strong demand. Our mall leasing helped us a lot, with 15% increase in profit, reaching SAR 474 million.
This is the highest profit in the company history. We kept strong financial position with a low gearing ratio of just 0.4%, which give us room to invest in the future. Our return on equity also improved by 2.3 points to 12.3%, showing we are providing good value to our shareholders. Now turning to our hospitality operation, let me give you a closer look at how the segment performed during the year. Looking at hospitality operations, the segment deliver a steady performance across the year. Overall occupancy for the hotel and tower held stable at 83%, while our combined average daily rate was 10% to SAR 913 per room, reflecting stronger pricing across both properties. That pricing strength translated into a 10% improvement at RevPAR reaching SAR 775 per available room. Now an important update on the assets enhancement side.
As many of you would recall, we have embarked on phased renovation program across our Makkah Hotel & Towers properties. I am pleased to report that the first phase covering four floors in the hotel, which commenced at the beginning of Q4, has been completed on schedule ahead of Ramadan season. This is significant because once the full program is rolled out, we expect to deliver incremental improvement to our RevPAR of around 10%. The gains you are seeing today are before the full benefits of the investment come through. Now, let me turn to what has truly been standout performer this year, our mall operation. Now to our mall operation, and this is where the assets enhancement strategy really come to life.
Occupancy remains nearly full capacity at 98.4%, and our available area has grown to over 17,500 sq m as we continue to create new leasable space within the assets. You will notice we still have around 1,400 sq m under development, which tell us that there are more to come in leasable area to reach over 16,100 sq m, up meaningfully from the prior year as completed projects come online. The headline here is the pricing power. Average lease rate reached nearly SAR 16,900 per sq m. That is 7% increase year-on-year. To put that in perspective, the rate has grown by over 56% in just two years from around SAR 10,800 in 2023. That trajectory is direct result of two things: our asset enhancement initiative and our ability to leverage the truly premium positioning our assets in the market.
The location advantage is something that combined over the time, and we are increasingly capturing that value in our lease rate. On the tenant mix, we made a deliberate strategic decision to reduce our anchor tenants from two to one, freeing up premium retail space overlooking Haram Plaza. We then repositioned that space by bringing a unique high-quality tenant that are enhancing the overall visitor experience and driving footfall. Speaking of footfall, we are really proud to share that we exceeded 40 million visitors in 2025, which validates the direction we are taking with the tenant mix and the overall positioning of the MCDC mall. These are not one-off gains. This is a pragmatic approach to unlocking values from our assets, and there are still more runway ahead of us in the development area completed and materialized.
With the foundation in place, let me now take you through how we plan to continue this journey of growth and value creation, starting with our hospitality segment. Starting with the hospitality, as I mentioned, we have successfully completed the first phase of our renovation covering four floors in the hotel. That experience has given us valuable insight into the execution process. I am pleased to share that based on this learning, we have made the decision to accelerate full renovation program. Our revised target is to complete the entire scope by 2026, and some of it will be actually executed in 2027, significantly ahead of the 2029 timeline we had previously communicated. Once complete, we expect the renovation to deliver an improvement of around 10% to our overall RevPAR, so accelerating the timeline means capturing the upside sooner.
In terms of investment, overall CapEx is expected to remain with the SAR 400 million envelope we had originally planned. The actual figure will be confirmed and announced once the contracts are awarded. In the execution, we are taking a disciplined approach. Work will be phased during the low season. That is a window after Hajj through Ramadan to minimize any disruption to our peak revenue period. I want to be clear, in the event of any slippage on the timeline, we have a contingency plan in place to ensure both hotel and towers are fully operational for the 2027 Ramadan and Hajj season, which with any remaining of the scope to be completed during 2027 low season. We will share more details of the execution plan during our Q1 earnings call. Let me turn to our plans on the MCDC mall side, where we see equally exciting opportunity ahead.
Turning to our MCDC mall plan, this is a story about creating significant value from within the existing footprint. First, we will continue to optimize the current MCDC mall layout with the target of reaching 18,000 sq m of leasable area within the existing structure. The bigger development there is the redevelopment project we have already initiated. We are relocating the prayer hall from the fourth floor to the newly constructed fifth floor, which will allow us to convert the entire fourth floor into a food court. This alone will add approximately 4,700 sq m of additional leasable space on the top of the 18,000 targets. Importantly, this work will be carried out without disruption to the ongoing MCDC mall operation. The estimated capital is around SAR 60 million, with targeted completion by the end of 2026, and the space to be fully operational in Ramadan 2027.
Let me put the economics of this project into perspective. We estimate the additional rental revenue from this space at between SAR 40 million to SAR 45 million annually. That gives us a payback period less than two years on the investment, which is an exceptional return. Considering this income we have generated from SAR 60 million investment is equivalent to what you would expect from an asset that values over SAR 1 billion. That is the power of optimizing premium well-located assets. Speaking of the new opportunities, let me share with you our plans for the recently acquired land on Ajyad. Now, to a truly transformative opportunity for the company, our Ajyad development. As you may recall, we won the auction for this land in December 2025, and I am pleased to confirm that we completed the purchase on January of this year.
We moved swiftly to the design scope and it has already been awarded, and we expect to award the main construction contract by Q1 2027, with the asset targeted to be fully operational by 2030. In terms of what we are building, this will be a mixed-use development featuring a four-star hotel with 2,000 keys and 16,000 sq m of commercial MCDC mall. To put that in context, the MCDC mall part alone will essentially replicate the scale of our current MCDC mall operation, and 2,000 key hotels will be a significant addition to our hospitality portfolio. The project represents the next chapter of our growth story, a natural extension of the expertise that we have built in operating premium assets in this market. That meaningful expansion will have a positive reflection in our revenue and earning profile.
So with all of these initiatives in motion, from the hospitality renovation to the mall redevelopment to Ajyad, let me now show you how this all will come together and what it means for the company profitability going forward. So let's bring this all together and look what this means for the company profitability. We closed 2025 with a gross profit of SAR 517 million. Each of these initiatives we just discussed will add meaningful layers on the top of that base. Our ongoing mall optimization expected to contribute an additional SAR 40 million-SAR 50 million. The fourth floor redevelopment, another SAR 40 million-SAR 50 million. The hotel and tower renovation was completed again in the range of SAR 40 million-SAR 50 million.
Ajyad, which you can see is the single largest contributor, is expected to add approximately SAR 250 million to our gross profit once we reach the stable operation. When you add all of it, we see a clear path to gross profitability of around SAR 900 million. That is nearly double where we stand today, and all driven by projects that are already underway or have been committed to. I want to leave you with one final thought before I hand over. Our balance sheet remains very strong, and we have the capacity to invest further beyond what we see on this slide. However, we remain disciplined. Any future investments will need to meet our thresholds and the right projects with the right returns. With that, let me hand over to Ahmad Jaber, who will take you through the financial results in more details.
Thank you, Mohammed. Good afternoon, everyone, and thank you for joining us today. I am pleased to walk you through our 2025 financial performance in more detail and share our outlook for the year ahead. Let me take you through the numbers in detail. Starting with the top line, total revenue grew 28% to SAR 1.072 billion. I want to unpack where that growth came from across our three segments. Makkah Hotel & Towers revenue came in at SAR 462 million, up 4% year-on-year. This was supported by the improvement in RevPAR that Mohammed highlighted earlier. Though partially offset by softer food and beverage performance during the year. Our MCDC mall delivered revenue of SAR 272 million, up nearly 20%, driven by the combination of expanded leasable area and the strong lease rate growth we have been achieving through our asset enhancement initiatives.
The Hajj segment saw the most significant top-line movement. Revenue more than doubled to SAR 338 million, up 113%. This was driven by a substantial increase in pilgrim volumes, with growth exceeding 600%. However, and this is an important distinction, the pilgrim mix shifted heavily toward B2B customers and away from the higher margin B2C segment. As a result, while the revenue contribution was significant, it did not translate meaningfully into profitability. That becomes clear when you look at gross profit. Total gross profit grew 9% to SAR 515 million. The mall was the standout, with gross profit up 21% to SAR 216 million. Hotel & Towers contributed SAR 284 million, up 3.3%. The Hajj segment, despite the revenue surge, saw gross profit decline to SAR 15 million, reflecting that margin compression from the B2B heavy mix.
Moving further down, EBITDA grew 14% to SAR 531 million, and net income reached SAR 474 million, up 15%. Earnings per share improved in line at SAR 2.37. On cash flow, we generated operating cash flow of SAR 413 million, up 24%, while CapEx increased to SAR 95 million as we began executing on our renovation and redevelopment projects.
Free cash flow came in at SAR 318 million, up 10%, demonstrating that even as we invest in growth, we continue to generate healthy surplus cash. Finally, the balance sheet remains very strong, with a gearing ratio of just 0.4%, while return on equity improved significantly to 12% compared to 10% last year, reflecting the improving quality of our earnings. Overall, the company continues to demonstrate strong profitability, healthy cash generation, and a very disciplined balance sheet. Let me walk you through the key drivers behind our income growth in more detail.
This slide breaks down the journey from last year's net income to this year. We started at SAR 411 million in 2024. Makkah Hotel & Towers contributed an incremental SAR 4 million, a modest increase reflecting the RevPAR improvement, offset by the softer food and beverage performance we discussed. The real driver was the MCDC mall, adding SAR 37 million to the bottom line. That is the direct result of expanded leasable area, stronger lease rates, and a tenant mix optimization. Investment income contributed a further SAR 22 million, bringing us to SAR 474 million in net income for 2025, a 15% increase or SAR 63 million in absolute terms. The message here is simple. Our commercial mall operations are the engine of our profitability growth. With the initiatives we have outlined, that engine has significantly more room to scale. Let me take you through our cash position analysis.
Let's look at how cash moved through the business during 2025. We entered the year with a cash position of SAR 223 million. Our operations generated SAR 413 million in operating cash flow against CapEx of SAR 95 million, giving us free cash flow of SAR 318 million. During the year, we realized SAR 793 million from the partial sale of our Jabal Omar shares, along with other investment proceeds. We returned SAR 295 million to our shareholders through dividends, reflecting our commitment to consistent and meaningful distributions. We also deployed SAR 927 million into Zakat-exempt government Sukuk. This was a deliberate decision to optimize our Zakat profile and minimize the Zakat impact arising from the Jabal Omar share sale proceeds. It's a move that serves dual purpose, keeping our capital in low risk Sharia compliant instruments while preserving liquidity for our development pipeline.
This brings our closing cash position to SAR 95 million at year-end. While the headline cash balance is lower, it's important to understand the context. The reduction is largely a result of the strategic redevelopment of capital into development Sukuk, into government Sukuk, which remain highly liquid and accessible. When you factor those in alongside our minimal gearing, our financial position remains robust and well-placed to fund the growth plans we have outlined. With that picture of where we stand today, let me now share our guidance for 2026. Let me share our outlook for 2026 across each of our segments. Starting with hospitality, as you can see from the chart, we have laid out our quarterly RevPAR performance over the past two years. The pattern is clear. There is a distinct seasonal profile with the low season running from Muharram through to Sha'ban in the Hijri calendar.
For 2026, we expect RevPAR to broadly follow these historical seasonal trends, with some incremental growth building on the momentum we have seen in recent quarters. This is precisely the window we have chosen to execute our renovation program by taking floors offline during these lower demand periods. We protect our peak season revenue while accelerating the transformation of the asset. The number of available rooms will decrease during Q3 and Q4 as work progresses, but this is by design. We will formally share the detailed execution plan and its expected financial impact during our Q1 2026 earnings call. Turning to the MCDC mall, we expect continued momentum. Leased area is projected to reach approximately 17,650 sq m, with the average lease rate climbing to around SAR 17,700 per sq m.
Both represent further progress from where we closed 2025 and reflect the ongoing benefits of our optimization and tenant mix strategy. On our Hajj segment, we are planning for approximately 65,000 pilgrims, broadly in line with 2025 volumes. However, we are targeting an improvement in margins to the 5%-6% range, driven by a combination of rebalancing the pilgrim mix and enhanced cost management efforts across the operation. Taken together, 2026 will be a year of investment and positioning. There will be some near-term impact from the renovation, but every action we are taking this year is designed to unlock the significant earnings potential we showed you on the value creation roadmap. Before we open the floor, I'd like to leave you with this.
2025 was a year of strong financial delivery, and 2026 will be the year we lay the groundwork for the next step change in our earnings. The investments are funded, the plans are in motion, and we remain committed to creating long-term value for our shareholders. With that, we are happy to take your questions. Thank you.
Okay, yeah. We can start the Q&A session.
It seems Iyad has some problems. Maybe I will quickly introduce the question and answer section. Thank you very much for the presentation. We are moving to the Q&A session. If you are joining us through the phone, please press star two on your phone and wait for your name to be prompted. If you are connected via the web, you may also ask a voice question or send your question as a text. We will just give a moment or two for the questions to come in. We have our first voice question coming from Sultan from Hassana. Sultan, please go ahead. Your line is now open.
[Foreign language] .
[Foreign language] .
First, congratulations on the results. Mohammed, just a couple of questions from my side. One, which is related to the ADR post-renovation or the RevPAR post-renovation. The guidance is 10%. Do you see upside beyond the 10% from either stronger demand or because new build-outs are coming at higher costs, so they require higher ADR to justify investment? [Foreign language] we might see repricing in the market?
Well, I think good question. What we shared with you is what we call the minimum improvement. We think it will be higher than 10%. So 10% is more of a conservative, I would say, assumption. Talking about supply, I always try to look at Makkah market and different segments.
We have a segment that surrounding Haram, which have a different pricing, different seasonality profile, different customer mix. When you talk about Haram, I am not aware of significant supply will come in the coming three, four years.
For Haram?
Ruwa is basically, you will be able to construct after two, three years in the area close to Shi'b, Mahatta Shi'b Amir. The main plot, which is the King Salman Gate, you have to wait three to years, I think, to start construction on that side. And most of the supply will be residential. There are two developments in Masha'er, beginning of Masha'er. But I do see the main supply coming on the market is mainly from S4 and Jabal Omar. We saw Rotana coming online with around 600 keys in Q4, December, to be precise. And there are, I think, another properties under Sofitel, it is around 1,000 key or so, will come later on this year. But we observe, market observe around 2,400 key, and we saw growth in revenue and ADR last year and the year before, with Address coming online and Jumeirah.
I think with the Umrah, there are a few targets. Number of visitors expanding, duration is targeted to expand, I think, from six, five days to seven and a half days. All of those factors will help to drive ADR, RevPAR in the central area. And renovation for sure will position ourselves to get higher ADR, higher RevPAR, because I would say our location is one of the best locations in the world, and it is one of the closest hotels or complex to Haram.
Okay. Just to follow up on this point. Is it fair to assume ADR will increase by an average 8%-10% for the next five years, giving the tightness in supply will increase with targets that we have for number of visitors in Makkah?
For this segment, yes. I think it will grow. We do not usually give specific number on growth targets, but it is-
I see.
Yes. What we saw is a strong growth despite the additions of strong supply in the same segment, as mentioned, Jumeirah and Address, around 2,400 keys. The market is very strong, and expectation is to see strong demand also. Now, you will see some events like what is happening now as a result of conflict between Iran and U.S. and Israel. That will have some impact, but this is a more, if not fundamental, I would say, issue. For example, this year you may end up not having as strong as the growth that you see last year, but it's driven by this event because it impacted high season like Ramadan. Overall, I'm optimistic about the demand growth. I don't see significant supply coming on stream in the coming four or five years, especially in our segment.
I'm optimistic about strong ADR growth and optimistic about strong RevPAR growth as a result of our renovation.
[Foreign language] . Just one last question [Foreign language] expansions. Should we expect another expansion beyond Ajyad, or at the moment nothing's on the table?
There are multiple opportunities that we're looking at, but they did not yet reach advanced stage where we can communicate to you. Given our strong balance sheet, given the market fundamentals, given the expertise that we have, I think there will be more to come. What we outline is the confirmed committed project with the clear financial and capital costs.
Are the projects you are reviewing in Makkah or other cities?
We are focused now in Makkah, but we are also looking at Medina.
Okay.
Medina market is also seeing. It is following the same trend that Makkah followed. Medina also does have a stronger supply shortage than Makkah. We are looking at Medina trying to assess. It is one journey. People mostly come to Makkah, and they try to, especially in the Umrah season, go and visit Al-Medina. So we have good expertise. We are looking at Medina, but most of our focus in Makkah because we think Makkah is a really good market, and we want to be focused in Makkah.
[Foreign language]
[Foreign language] .
Thank you so much. We have a question here from [Raghad Al-Dhahebi from SNB Capital]. She is asking, is the expected improvement to SAR 900 million on a gross profit or rental income? I think she was referring to the slide that you have mentioned before.
The gross profit.
The gross profit. Until we wait for other questions, I have a question from my end regarding the current situation. How does it look like? Does it impact your ADRs, utilization, occupancy rates? As far as I know, a lot of flights are canceled and some Umrah pilgrims are staying still in Makkah. I do not know how does it look like, especially that Ramadan is the most important season for you.
Absolutely. Ramadan is the most important season. We did a quick calculation on the potential impact for what is happening. Still, it is not clear because we do see cancellations happening as we go. Before we talk about the events, let me talk at the beginning of the year. January, we started with very strong numbers. February was also strong. The first 10 nights of Ramadan was one of the best since Corona. It was really impressive. We start looking at rates that are really significant, and it was packed. A lot of people in the commercial center, and it was really great. This is first telling you the fundamental of Makkah market, Umrah market, it is very strong. Then we had this event and a lot of cancellations. Even non-refundable, we had to refund because this is a force majeure.
Utilization dropped to the 50, 70s in the middle 10 nights and especially in the Makkah Hotel & Towers, we have more of a contract, so we managed to sustain. Then we saw good recovery the last 10 nights. We did a quick calculation. I think there will be impact if you compare quarter-over-quarter, around 5% lower owner return from the Makkah Hotel & Towers. We managed to get higher income in January, February, first 10 nights, and we had some drop in the middle and slight in the last 10 nights. It is really sad, but it is not a significant impact, especially when we know that we have strong growth in the commercial center. We have very good other incomes as a result of the [Souq] that we have. I think it will be positive.
The Q1 will be positive, and hopefully this situation will be resolved soon. After Ramadan, we will have visitors typically from Asia, from Turkey, so hopefully this will not be impacted. Hopefully in the coming few weeks, the situation to be solved, Inshallah.
For those, because as I am reading, some people, especially from the GCC, who could not go back, the government said that they will pay for the extension of the stay. Do you have a lot of these kinds of clients?
Well, the majority of them, they actually book less expensive hotel in the area in Makkah and Jeddah. We heard that some of the embassies, they book standalone hotel close to Ajyad Mosque in Makkah and I think in Jeddah. They actually checked out. Nobody stayed with us. It's a very expensive rate and emergency, so the government is asking them to move. But there are some customers who elect to stay longer and pay from their own pocket.
Okay, clear. Thank you so much. The next question comes from the line of Maan from NBK Wealth. Maan, please go ahead.
Yes. Hi. [Foreign language] . Am I audible?
Yes, you are. [Foreign language] .
First of all, I would like to thank you for the presentation and the good results. My question regarding the food and beverage segment within the hotel segment. How much does it represent in 2025 versus 2024? What is the impact on margin from the decline of this segment? Thank you.
Well, in 2025, it came at about 14% of the hotel itself. The prior year, it was a couple of percentage points higher. It is not that much of a bit of an impact. You are talking about a drop of around SAR 10 million in that. Well, we do not have the exact figure, but you will be able to see it in the annual report once it is released.
What is the reason for this decline? Why there is a decline in the food and beverage within the hotel?
It's mostly because of contracts related to Hajj. During Hajj, you have multiple groups, and the groups, basically, some of them require that you supply them food. Some of them, they arrange with different caterings, and we had to have different groups in the Hajj. It's mostly because of Hajj. Makkah food is the by-product of accommodation. I would say it's part of the accommodation from reservation. Hajj is exception because some groups they have come, and they demand certain services to them. This is the main driver. Now we are putting more focus this year in food, and hopefully we'll have a higher margin, better profitability, Inshallah.
Okay. Thank you.
Thank you, Maan. The next question is from the Q&A box from Mohammed Al-Angari from Al Rajhi Capital. He's asking, "Since renovation has already been completed on 4 floors, how many floors are still remaining? When do you expect the renovation to be fully completed, and what is the estimated CapEx that will be spent?
We are still working in the plan, and we will communicate for detail in Q1. We have 2 options. Either we do what we have done in the hotel, full renovation, since we haven't done renovations since long time, or we do facelifts, which change furniture and some wallpaper and other materials. We're thinking of doing that approach, which is the facelifts approach with the towers. Doing full renovation for the hotel. What is remaining in the hotel, 18 floors to be executed, but we will have four or five groups instead of having one group to handle the four towers. We will have, instead of one window, we'll have two to three windows, because we started late for the fourth floor execution process. Towers, if it's only furniture, it will be quick, basically, and easy.
Cost we saw in the hotel more than $200,000 per room. Furniture may cost $80,000- $70,000 if you do furniture only. If you do hybrid, you will be in the middle. We are talking about, we have around 1,300 room left. If you use $150 average, what would be the And now we communicated around SAR 400 million.
Yes.
The budget is SAR 400 million, but we are trying to optimize the scope. This is the objective. If you want exact, precise number, you will get it in Q1, hopefully. But it will be around SAR 400 million or less. This is the objective.
Okay. Clear. Thank you. We have a follow-up question from Sultan Alhudaif from Hassana. The follow-up is, "Just to clarify, given the tight supply in ADR and the five" Sorry. "Just to clarify, given the tight in supply ADR in five star around the Haram, should we see high single-digit growth annually through 2030?
I think we answered this question. We were saying, we are optimistic. The supply is limited. This is the expectation.
Okay. Clear. Thank you. Ladies and gentlemen, just a reminder, if you have any follow-up questions, please raise your hand or type in the Q&A box. We have one more question in the Q&A box from Ambreen Jawani from Aljazira Capital. She has a question. "If B2B margins are so low, why did you choose to go that way?" I think she's referring to Hajj
Yes
Hajj segment.
Yes. Clear. First of all, B2C segment is. Let's begin from there. Hajj is very regulated business, and there are quota between companies. You cannot do all B2C. They assign dedicated quota for you, and you deliver, and they increase as you go. It will take you time to grow B2C and B2G segment. This is honestly speaking the focus, B2C, B2G, and certain service we provide to certain group. This is the objective, but it's a full offering. You have to do B2B. When you start the B2B business, to acquire market share, you have to lower your margin. The objective now is just to do more B2C. As we grow this year, we're trying our best. We are also looking at other group and trying to improve the B2B margin. Because to distinguish yourself, you have to do something extra.
If the minimum standard by the package for Hajj is X, you have to do X plus to acquire market share. That's why it's a little bit challenging. To grow the overall business, you have to grow overall mix
Because we are just starting Hajj, I think the B2B margin is low, but it is the volume in B2B, and we have to be in the B2B. The focus now is to optimize the margin B2B.
Okay, thank you. Another follow-up from Sultan. What was the reason for lower occupancy rate in 2025 versus 2024? What was the occupancy rate in Q4?
Renovation.
Renovation.
The main reason of the drop in occupancy is the renovation that the rooms were taken off for renovation. That was the reason. For Q4, I think we have.
We do not have single quarter occupancy.
We don't have single.
Yeah, not yet.
We don't prepare yet the data for Q4 occupancy. Maybe we can share it later.
As we are, Makkah market evolving now around three seasons. It used to be two season, which is Ramadan and Hajj. Now it's Ramadan and Hajj and the New Year, because the weather is really good. A lot of highly paid individual or high spender, they come and basically from Western country and Asian country come and spend. So season is really three basically season. The lowest season we have the summer usually. The lowest period is basically the time of Hajj.
Okay. We have a few questions from Mohammed Fan from [Aljazira Capital]. His questions are why the cost of revenue increased significantly for hospitality business, and what is the outlook for future for cost of revenue for hospitality? I will give you the other questions because he listed five questions.
I think there are some growth, but it is not significant. We have some charges related to electricity, but we solved the issues, so no significant cost overrun, and we do not expect there will be a significant cost increase. Second question?
The second question, what is the outlook for future of cost? Sorry. I think I am not-
I think there is a question about dividend.
Dividend.
Dividend payouts, why it dropped.
Yeah. There is another question about the Jabal Omar shares.
Right. Dividend payouts, why it dropped. It is because now we have a very good pipeline of projects. We like to keep it similar to the previous year. With those projects coming on stream, you expect the dividend to see hopefully increasing. We are looking now an exercise. We want to come up with a guidance for dividend, either with payout ratio or free cash flow ratio. We are doing this exercise internally, and this will be communicated, will be part of the guidance for future years. The last question, is there are?
Are there any plans to divest remaining shares in Jabal Omar?
Well, there are no plan now. We sold what we sold, and the logic behind what we have done is very simple. We have a very good market today. We want to really grow our business, and we had a really good liquidity event to divest some of our shares in Jabal Omar, and we managed to exit. Now we will be utilizing this capital to grow the company and create value to our shareholders. There are no plan or decision to divest more.
Okay. Thank you. Ladies and gentlemen, just a final reminder, if you have any more questions, please raise your hand or type in the Q&A box. Okay, we have one more question from the line. Please identify yourself and your company, and please go ahead.
Hi, am I audible?
Yes, you are.
This is Haya from NBK Wealth. Congratulations on a good set of results. [Foreign language] . But given the recent regional tensions, we already talked about this, but if you could just elaborate more. Currently, are you guys taking any precautionary, operational or financial measures? [Foreign language] , if Hajj demands were to be affected, what actions would management do to support the occupancy, and would this affect your guidance and outlook?
Right. I tried to provide guidance regarding Q1. The impact is very minimum, it is about 5%-6% quarter-over-quarter, so this is Q1. Now it is a conflict, so we do not really can predict what will happen and what is the level of escalation. But for example, to reach 5%, we had to do some cost optimization. We have to launch campaign to bring more local to the hotels. We have to take proactive measure and, for example, sign few contracts with the certain providers. We do have a, I would say, crisis management team who work and try to sustain, and the outcome is clearly by only potential reduction of 5% in the hotel segment year-over-year. But we will see growth, inshallah, in other segments, and that will offset and increase the overall result. This is talking about what we saw Ramadan.
After Ramadan, the feeder market is not the GCC market. You will see people coming from Indonesia, from Turkey, and hopefully those markets will not be impacted. Makkah is a little bit far from GCC, so you do not see issues, inshallah, in Jeddah Airport and Makkah as we speak. Also Hajj is when you talk about Hajj in term of volume, its exposure to GCC countries is limited because the volume is mostly coming from other countries. Hopefully there will be no significant impact. The only things, yeah, and it make things difficult, especially in the Ramadan, you know, there are heavy reliance on GCC market and Ramadan seasons. They are very expensive. Most of you will come to either they come from Saudi, from Kuwait, from Qatar, from UAE, but they have purchased power. They can afford paying for very expensive now.
That is what make Ramadan impact little bit difficult. But as I mentioned, we, alhamdulillah, will manage it well and hopefully things will improve and we will see, inshallah, good recovery.
Okay. Thank you and good luck.
One last question from Ambreen Jawani. Are you seeing interest from foreigners to buy land or hotels in Makkah?
Wallahi, we do see, yeah, this is one of the things that got one question regarding opportunities. Looking at some lands to be able to participate when consortium master development program to some of the lands. We do see appetite. I think you saw, I think Indonesia Investment Authority sign agreement, I think MoU with the Masar and the Kidana. They also signed similar agreement with us, non-binding MoU. So there are interests from foreigners. I think also people from Turkey. I had talked to multiple investors. Now, we are still waiting for the zoning to be clear and clarify the regulation. After that, you will see how basically market really react to lands purchase or purchase of finished products like apartment or so on.
Okay. Thank you so much. I think that was the last question. Do you have any final remarks?
Well, I would just highlight it was a really great year. We focused from day one in improving the existing assets, and it clearly have a positive impact on financial. We are bringing the right projects, right location, right return. Alhamdulillah, we have a really impressive balance sheet, good track record, good operational capability. We are looking at lot of opportunities where we can deliver significant value beyond the SAR 900 million that was demonstrated in this presentation. Objective is to maximize shareholder and meet demand of visitors to the holy city, Makkah and Medina. Thank you very much, and Ramadan Mubarak, Eid Mubarak.
Thank you so much. SNB Capital would like to thank MCDC management for taking the time to conduct this call. We would like also to thank all participants for attending. Thank you so much.