Egypt prepares for brighter 2019

Thomas Cook has partnered with Switzerland-based Orascom Development Holding to open two proprietary hotels in El Gouna, Egypt next year. Photo credit: Thomas Cook

After nearly a decade of challenges, Egypt's tourism and hotel sectors are firmly on the rebound, with more investors from around the world trusting in the country's potential. And some observers feel the new private equity fund for improvements to the country's travel-related infrastructure is probably helping.

On the Rebound

In its latest Cairo hotel market performance report, Colliers International indicated Cairo's hospitality market is poised to achieve 7 percent occupancy growth by year's end. The report also predicted Cairo will see a 34-percent increase in average daily rate (ADR) this year, thanks to a more stable socio-economic climate in the country. The overall performance of the Cairo hotel market is significantly up compared to previous years and 2018's ADR is likely to stabilize at $115 per night, the report said.

Greater Cairo’s current hotel supply includes 18,836 guestrooms in internationally and locally branded three- to five-star hotels. The report noted 4,303 of these guestrooms are in Marriott International-branded hotels, while 2,722 guestrooms are in Hilton properties. (The 593-room Hilton Heliopolis rebranded from a Fairmont property this year.) Luxury hotels reportedly dominate the market at approximately 64 percent of the supply. 

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New hotel developments for Cairo include the Novotel Cairo Nasr City with 150 guestrooms and 100 serviced apartments, and the introduction of a new Waldorf Astoria hotel with 247 guestrooms. 

An estimated 8 million tourists visited Egypt in 2017, and the number jumped 40 percent in the first nine months of 2018, Minister of Tourism Rania al Mashat said in a recent interview with Bloomberg. While 2018 will probably not reach 2010's levels, al Mashat said the rebound is “quite steep and we’re trying to put the industry on a competitive base compared to our peers.”

Attracting Investment

Such numbers are appealing to investors and representatives of various businesses and nations are paying attention. In January, French President Emmanuel Macron is set to visit Cairo, and French Ambassador to Egypt Stephane Romatet said the event could serve as an opportunity to boost French investments in Egypt. Currently, French businesses have spent about €4 billion on Egyptian projects, including hotels under the Sofitel and Club Accor Hotels brands. 

According to Romatet, the decline in inflation, the growth of reserves and the overall good economic environment has improved Egypt's appeal for investments. As a sign of the country's attractiveness, charter flights between Lyon, France and Hurghada, Egypt will launch in 2019. 

Beyond Macron's visit, a mission to France will be held in mid-March to promote further tourism in Egypt.

Colliers also noted Egypt’s Ministry of Finance and Ministry of Tourism signed a protocol this year to impose real estate taxes on operating hotels across the country. The tax value was set from EGP50,000 for a single-star establishment and EGP250,000 for a five-star hotel, taking into account the average occupancy rate throughout the fiscal year and the property’s inventory. While the taxation level may not be considered a very high amount, it will still directly impact the bottom line of the country’s properties and may divert spending away from renovations and refurbishments, according to the report. 

Thomas Cook Gains Ground

In October, Thomas Cook Hotel Investments, a joint venture between Thomas Cook and Swiss hotel-development group LMEY Investments raised €40 million to invest in hotels around the Mediterranean through a debt agreement with Piraeus Bank, an Athens-based financial-services company. At the time, the company did not say where and when it would deploy those funds.

Now it's known. Thomas Cook announced a partnership with Switzerland-based Orascom Development Holding to open two proprietary hotels in El Gouna, Egypt next year. The company will open a 100-room waterfront Casa Cook hotel as well as a Cook’s Club hotel in the Red Sea resort town.

Orascom Development Holding operates a total of 33 hotels with 7,113 rooms and controls approximately 104 million square meters of land. 

“With the opening of these two hotels Thomas Cook will offer year-round holidays in our Casa Cook and Cook’s Club brands,” said Enric Noguer, chief of Thomas Cook Hotels & Resorts, in a statement. “El Gouna is a popular destination and our two new hotels will offer alternative holidays to people looking for high-quality contemporary design and laid-back service.”

“We are excited about the partnership with Thomas Cook and we welcome the fact that El Gouna will be the first home to Thomas Cook's newest hotel brands in the Middle East,” said Khaled Bichara, CEO of Orascom Development. 

Thomas Cook already operates several properties in Egypt. 

 

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