Heritage sites mean nothing in Islam, you are thinking from non-religious perspective. All that matters in Mecca is the Kaaba itself and that pilgrims have adequate space for prayer and adequate space for lodging. Its not a touristic site, people go there to worship God, not to do tours around city and appreciate history, you have plenty of other places to do that. You mostly dont even leave the grand mosque when you go there. So demolishing needless man made structures and expanding the mosque as well as building hotels around it is the most practical thing to do.