It’s a huge difference. I just got back from Umra a few days ago. In Medina we had a 5-star hotel that would probably be classified as 4-star elsewhere in the world, but it was still very nice.
The hotel we had in Mecca however, which calls itself a 4-star was absolutely pathetic. I would have rated it as 0-star. The rate per night was the same as for the 5-star in Medina, even though both of them had a similar distance to the Haram, ie approx. 50 meters.
Generally hotels in Medina are cheaper than comparable ones in Mecca. It didn’t really matter that much, because we spent most of our time in the Masjid and only went to the hotel to relax and sleep. But it was still annoying to spend so much money on such a crappy hotel.