Yeap , one of my best friend performed umrah in 2013. He have relative in Saudia. my friend relative had a discussion with agent in Lahore after that agent agree to hand over Passport to them for hotel booking. Against that agent pledge the "Aqama" of my friend relative. Hope it make sense.
Also for Visa you can used the reservation done by agent , But for your own comfort after performing umrah or reached Makkah, you can get hotel as per your pocket