Egypt posts best quarter for its hotel industry in eight years

Sharm el-Sheikh is an Egyptian resort town known for its sandy beaches, clear waters and coral reefs. Photo credit: Enjoylife2//Getty Images

Bolstered by increases in rate and occupancy, Egypt, which has suffered severely from a dip in tourism as a result of terrorism, reported its best first quarter since 2010—a watershed year for Egyptian hospitality when some 15 million foreign visitors visited the country—according to STR

STR reported that both the Sharm el-Sheikh and Cairo/Giza markets, whose revenue-per-available-room levels grew 84.9 percent and 14.7 percent, respectively, supported the country's overall 35.5-percent year-on-year RevPAR increase to EGP775.69 ($USD43.80). Egypt’s 11.8-percent increase in ADR to EGP1,291.72 bolstered the rise in RevPAR in the country.

STR analysts expected this growth to continue as Russia recently resumed flights to Egypt following a two-year suspension. Russia suspended flights to Egypt in November 2015 after one of its passenger planes exploded after takeoff from Sharm el-Sheikh killing all 224 passengers and crew. The halt on flights battered Egyptian tourism and cost many workers in the sector their jobs. In the aftermath, hotels in Egypt slashed rates in an attempt to recapture occupancy.

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According to JLL, hotels and tourism was the only segment of the real estate market to see countercyclical growth in 2017, as a result of the devaluation of the Egyptian pound, which drove occupancy rates. On the investment side, JLL said it expected this year to be positive.

The group added: “With continuous efforts being made to improve safety and security in response to the demands of international travel partners, the remaining flight bans that have not already been lifted are expected to be removed in 2018. This should result in a further growth in demand and hotel occupancies.”

Hotel supply reached 24,000 rooms during 2017, according to JLL, and since the start of the year a number of announcements have been made by global hotel operators. InterContinental Hotels Group signed two new hotels in Giza: Holiday Inn Giza Sun Capital and Staybridge Suites Giza Sun Capital, in partnership with Arabia Hotels, a subsidiary of Arabia Holding. 

Both hotels will be part of Sun Capital, a mixed-use project that will include the largest commercial area in Egypt, a luxury commercial mall, the first outlet mall in Africa, an Egyptian Cultural themed park, an international university and an international school.
 
"Egypt is an important market for us and we have a strong presence in the country with over 2,000 rooms, and robust pipeline across our brands," said Pascal Gauvin, MD, India, Middle East & Africa, IHG.

The top end of the market was also expressing enthusiasm, with Rotana Hotels and Resorts signing a management agreement for a new 200-room luxury hotel in Cairo. "The announcement of our second five-star hotel in Egypt rightly reflects the rising market demand in the country and the wider region," said Omer Kaddouri, president and CEO of Rotana. "With our robust pipeline, we are aiming to address the supply gap to support the development of the economies in our home markets.”

At Emaar Hospitality Group, one of the country’s historic hotels is due to be relaunched, with the renovation and redesign of the Alamein resort in Egypt, built in 1960 next to the Sidi Abdelrahman Bay of the Mediterranean Sea. The resort has hosted leaders including Gamal Abdel Nasser Hussein, the second President of Egypt.

Located centrally in Marassi, the lifestyle and tourism destination by Emaar Misr, the all-new Al Alamein Hotel, managed by Vida Hotel and Resorts, will open its doors to visitors this year and is the fourth hotel project by Emaar Hospitality Group in Egypt.

Olivier Harnisch, CEO, Emaar Hospitality Group, said: "It is an exceptional honour for us to undertake the modern reinterpretation of the Alamein resort. The people of Egypt have fond memories of the resort, and we are committed to restoring it to its true glory. With its central location in Marassi by the beach, it will offer visitors an inspiring and culturally enriching lifestyle experience.”

Egypt has, in recent years, become synonymous with all-inclusive resorts. The country now looks to be making a nod to the days when Agatha Christie wrote "Death on the Nile" and leaning on its cultural, rather than value, offering.

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

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