Bright future for Egyptian hotel market: Colliers International report

Hisham Salah
3 Min Read
Hotels have been suffering from the drop in tourism since 2011. (Photo from the Marriott Hotel website)

In its full year review in 2016 about Egypt, Colliers International, the commercial real-estate leader, said that the hotels’ supply has increased by 3% because of a number of high-profile properties that streamed the market in 2016, which includes the Steigenberger Hotel El Tahrir, Westin Golf Resort, Westin Katameya Dunes, and Nile Ritz-Carlton.

The report said that despite the currency flotation during the end of 2016, hotel average rates declined on the US dollar value when compared to 2015.

“Nonetheless, a slight increase is expected in 2017 as the devaluation marks its impact on the hotel market,” the report read. It added that revenue per available room has been on an accelerated growth in occupancy. Although this trend is expected to continue in 2017, the pace is expected to slow down slightly, according to the report.

Colliers stated that the eastern and western fringes will continue to see an increase in hospitality supply, adding that the planned airport of 6th October City will see a number of businessmen migrate to western Cairo.

Regarding Sharm El Sheikh, the report stated that “the 610-bedroom 5-Star Steigenberger Alcazar opened in 2016, leading to a 3% increase in supply over the previous year. Supply growth is expected to continue at the same rate until 2019, growing at a cumulative annual growth rate of 3.3%.”

At present, only a 250-bedroom expansion of Hilton’s Sharks Bay hotel is planned to launch in 2017, the report read.

About the market performance, the report said that 2016 proved to be a challenging year for Sharm El Sheikh resorts, as demand levels and average rates recorded a further double digit decline when compared to 2015.

“Despite this, 2017 is expected to see demand levels increase as travel bans are lifted and the destination is more affordable to foreign markets due to the flotation,” the report added.

“Deutsche Hospitality Group, which owns the Steigenberger, Intercity, and Jaz hotels has the largest market presence in Hurghada, with over 5,000 keys,” according to the report.

As far as the market performance, the occupancy levels have constantly slipped over the last two years, reaching levels of 35%. “This trend, however, is expected to shift as travel bans are lifted,” Colliers stated.

The report stated that Alexandria has seen growth in both occupancy and average daily rates over the last three years with the exception of occupancy levels in 2016, which remained constant. “This suggests that demand levels have stabilised at just over 70% and the 2017 forecast is expected to see a marginal increase in demand,” the report read.

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