This incursion of mega hotels have pushed reasonable accommodations further and further away from the Haram.

Therein lies the crux of the matter.

These luxurious hotels also added to the overall struggles of the average Muslim. Imagine if they were zoned outside the central area and had shuttle service moving the few thousands who can afford them. The rich would've still opted to stay in them and we wouldn't have had this much congestion and air pollution trying to move hundreds of thousands of people to and from the central area.

They also increased the average rent prices in all areas surrounding AlHaram. Local business owners can't afford to set up shop there anymore, hence why all you see now are chain stores and restaurants. Which takes me to my last point:

These hotels ruined the local economy of Makkah. The majority of them are owned by royals and businessmen connected to them, you know, the usual suspects who often win goverment tenders. So the huge profits these hotels make aren't being circulated back into the local economy. That's why despite the insane wealth this city is generating, its inhabitants are amongst the poorest in the country, and private social programs are almost non existent. There's nothing to serve the local Makkawis so they all left. Both of us are examples of that.

Now, if they classified all the for profit buildings in the central area as waqfs, controlled the prices, and added a city tax specific to Makkah along side commercial property tax, then I would have no issue with them.