Cairo, Sharm El-Sheikh most likely to grow in MENA tourist destinations: Colliers International

Abdel Razek Al-Shuwekhi
7 Min Read
Occupancy rates in the Red Sea and South Sinai stabilised at approximately 55%, but decreased to less than 25% in Cairo. (AFP Photo)
It expects that there would be growth in demand on Cairo hotels during the period from March to May by 58%, while demand on hotels in Sharm El-Sheikh would increase by 29%. (AFP Photo)
It expects that there would be growth in demand on Cairo hotels during the period from March to May by 58%, while demand on hotels in Sharm El-Sheikh would increase by 29%.
(AFP Photo)

After lifting the travel ban and the improvement in stability in Egypt, the country’s tourism is gradually returning, according to a report by Collier International for global real estate.

The report said that growth rates at Red Sea hotels in Sharm El-Sheikh are increasing, and demand on Cairo hotels in March is gradually going back to the pre-revolution period.

It expects that there would be growth in demand on Cairo hotels during the period from March to May by 58%, while demand on hotels in Sharm El-Sheikh would increase by 29%.

The report expects that occupancies in Cairo will reach 51% during the period from March to May, so that income from one room would reach $64, while occupancies in Sharm El-Sheikh will be at 69%, and the price of a room is $30.

According to the report, Cairo and Sharm El-Sheikh are the two most flourishing tourist destinations in the Middle East and North Africa region (MENA), while Sharjah and Dubai Marina in the UAE are the most stable.

As to Sharjah, it is expected that annual tourist flow from Russia will decrease. The opening of the new Premier Inn hotel in the first quarter (Q1) of the year, however, will help keep steady occupancies on a daily basis.

On the other hand, Dubai Marina has a low Russian tourist flow but high Asian and West European flow, while Marina Bay Suites by Jannah is in the pre-operation phase, as per the report.

Hotels in the Kuwaiti capital, and the UAE’s Fujairah will have a relatively higher rate during March to May, although there is strong demand from Saudis on entertainment in holidays. The latest decrease in oil prices will result in lower demand from businessmen in Kuwait by 20%, the report states.

The report added that Fujairah will have rate of demand on hotels lower by 10%, but stable demand on new hotels will maintain occupancy rates compared to last year.

Although there has been a relative improvement in tourist flow in the second half of 2014 and Q1 of 2015, numbers have not yet reached tourist flows of 2010. In that period Egypt attracted 14.7 million tourists, according to Ahmed Balbaa, Chairman of the Tourism Committee of the Businessmen’s Association.

It has been argued that the Ministry of Foreign Affairs’ decree demanding tourists gain individual visas from Egyptian Embassies, scheduled to start from 15 May, may limit tourist flows to Egypt this year.

Balbaa believes the decision will affect online booking as it will add more procedures and limit the number of last-minute travellers.

Despite Balbaa’s approval on increasing occupancies in Cairo and Sharm El-Sheikh, increasing prices for tourist services is not expected before the end of the current year. During the past four years, the price for the tourist product has been reduced several times, to attract tourists despite the obstacles. The process of increasing prices is difficult and it takes long time.

Balbaa justified the process of increasing prices by stating that signing contracts takes a lot of time, and it does not depend on monthly terms.

According to the report, the increasing percentage of occupancies between March and May will reach 67% in Hurghada, with the price of $32 for room; in Alexandria the percentage will be at 65%, with revenue of $43 per room; and in Luxor the percentage will be at 19%, with revenue of $8 for room.

The Ministry of Tourism stated that, last year, tourist income for Egypt was $7.5bn, a growth of $1.6bn compared to 2013. According to the Head of the Sub-Accounts Unit of the Ministry of Tourism, Adel Ragab, during the first half of last year, the average amount spent by tourists per night was $73.

The expected tourist flow for this year will raise the expectations of the sector workers regarding the increase of spending which will also exceed $85 per night, added Rajab.

In comparison to the tourist flow in 2010, tourism has not yet recovered, according to Elhamy El-Zayat, Chairman of the Egyptian Federation of Chambers of Tourism.

“Increasing the flow depends on security factors on which the tourist sector has no control,” said El-Zayat.

El-Zayat believes that indicators are moving strongly towards stability. However, the biggest tourist flow will go for the Red Sea shore and South Sinai at the expense of cultural tourism in Cairo, Luxor and Aswan. Occupancy is still weak, given the hotel capacity in both Luxor and Cairo, according to El-Zayat.

In March 2015, the occupancy in Cairo hotels has increased to 50% especially during the time when the Egypt Economic Development Conference was held, according to sources in the Ministry of Tourism.

The sources, who requested to remain anonymous, suggested that “Cairo is expected to regain its special position as the capital of Arab businessmen during the coming period, which will increase the occupancy in hotels especially those overlooking the Nile River.”

At the beginning of March, the Ministry of Tourism launched a promotional campaign “Egypt is close” to start marketing in the Arab countries, according to the sources. They said that the campaign will increase the tourist flow from Kuwait, Saudi Arabia and particularly the UAE.

Colliers International is a global leader in the field of commercial real estate services, with more than 15,800 professionals operating in more than 485 offices in 63 countries. It is a subsidiary of First Service Corporation. Colliers International delivers a full range of services for real estate users, owners and investors worldwide, including global solutions for companies, brokerage, real estate, asset management, hotel investment sales and consulting, valuation, consulting and evaluation services, mortgage banking as well as insightful researches.

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