Egypt builds despite terror fears

View of Cairo from roof of Amir al-Maridani mosque.(Leonid Andronov//Getty Images)

Despite recent terror attacks, Egypt continues to outpace the rest of Africa in the amount of new hotel projects, as developers look past violence and security concerns to a future buoyed by huge intrinsic demand and upcoming moves like the country simplifying its visa process in June.

The number of tourists coming to Egypt in March reached 654,900, compared to 440,700 in the same month last year, according to the Central Agency for Public Mobilisation and Statistics. In comparison, the country’s peak year for visitors was 2010, when it saw more than 14 million visitors.

Germany topped the list of visiting tourists followed by Ukraine, Saudi Arabia, China and the UK. According to HotStats, hotels in Cairo reported a 130-percent year-on-year increase in profit per room in January.

Tourism had been attempting to recover after the downing of a Russian passenger plane in Sinai in October 2015, killing all on board. A ban on flights from Russia to Egypt remains.

In May 2015, the government announced plans to generate USD20 billion in revenue from tourism by 2020 by attracting 20 million visitors. The WTTC has offered the lower forecast of 5,447,000 international tourist arrivals this year, rising to 12,487,000 by 2027.

To help facilitate the growth, the government is implementing a new electronic visa system on June 1 in addition to announcing a list of countries whose citizens can enter Egypt by obtaining a visa at the airport.

Development Momentum

Despite its issues, the country’s capital has seen supply continue to increase. According to Colliers International, 2016 saw a 3-percent increase in supply in Cairo, including the Steigenberger El Tahrir, Westin Golf Resort, Katameya Dunes and the Nile Ritz-Carlton. This year is expected to see the opening of the St. Regis Cairo, adding to the luxury stock in the country.

The St. Regis Cairo is slated to open on August 1, 2017.

Despite a currency flotation toward the end of 2016, hotel average rates declined on a U.S. dollar value, but a slight increase is expected in 2017 as the devaluation marks its impact on the hotel market. RevPAR is expected to rise on ongoing occupancy increases.

David Harper, head of property services for Hotel Partners Africa, said: “On the face of it, we have a country afflicted by huge security issues and a lack of tourists, so we decide to build more and more hotels—it doesn’t seem to make great sense.

“That said, it is a hugely established market, and very popular, with some of the very best tourist sites—with the Pyramids, temples and diving. Tie into that its importance as a regional business powerhouse, and there is huge intrinsic demand, as and when the political and security situation improves.”

The Arabian Travel Market in Dubai saw Swiss-Belhotel International sign with Marseilia Group to manage the Swiss-Belresort Marseilia Beach 4 on the country's north coast, with Gavin M. Faull, chairman & president, Swiss-Belhotel International, commenting: “Egypt is a remarkable destination and these new projects are not only driven by a solid increase in demand for high-quality hotels in the country, but also reaffirm the owners' confidence in our strong and distinctive brands.”

The company has a pipeline of more than 2,296 rooms in development across four hotels in Egypt.

Emaar too has backed Egypt, announcing a new project in Egypt, under Vida Hotels and Resorts. The Vida Marassi Marina and Vida Residences Marassi Marina will include 120 hotel rooms with access to a range of amenities including yacht club, restaurants, outdoor pools and decks.

Katherine Doggrell is an editor at Hotel Analyst, the U.K.-based news analysis service for hotel investors.