Colliers International expects hotel occupancy to rise across Egypt

Daily News Egypt
5 Min Read

Christopher Lind, assistant manager at the hosting department of Colliers International, said that the hotel sector will witness stability over the next five years, adding that inbound tourism accounted for 23% of total tourism spending in terms of hotels, aviation, and restaurants, and will likely witness a slow increase over the upcoming years.

During the session titled “A deeper look into the sector of hotels and tourism” during the second day of the Cityscape Egypt Conference, Lind said that spending from inbound tourism will reach 31% in 2022, and spending through local tourism will decline to 61%.

Lind noted that providing visas online will be active for 43 countries within two years. Additionally, in 2016, the EU provided visas for Chinese citizens upon their arrival, which increased Chinese tourism there by 41%. This shows how much legislative and procedural changes directly affect tourism.

He added that capital investments in the hotels sector, internationally, will witness major growth until 2027.

Regarding the sector of tourism and hotels in Egypt, Lind pointed out that 2010 witnessed the highest rate of inbound tourism, as the number of tourists reached 11.7m international tourists, however, the political events from 2011 to 2016 resulted in an unstable performance, especially with the downing of a Russian plane in October 2015, which left a negative impact on the tourism industry.

He explained that the expectations of tourist advisers show that there is an improvement this year, especially with the gradual comeback of Russian and Italian flights.

Lind pointed out that hotels in Cairo witnessed a growth in supply of 1.4%, or 326 new rooms. However, until 2020, Cairo is likely to have about 26,550 rooms added to it east and west of Cairo.

He stressed that the central Cairo area will not see a growth in tourism, especially with the need for maintenance in many hotels that are over 20 years old and have not been properly maintained over the past few years. He pointed out that a growth of 2.3% is likely to take place in new hotels until 2020 in east and west Cairo.

Regarding the volume of occupancy and daily price during the period from 2011 to 2017 compared to 2010, Lind said that Cairo saw a decline of 50% in 2011 compared to 2010, however, the rates were back to normal in 2017, reaching 67%.

He said that the rate of demand was back to normal in 2017, adding that in 2016, the increase in pricing reached 60% following the flotation. He added that hotels will reach a solution for the pricing issue and will adapt to the flotation throughout this year.

As for Hurghada, Lind explained that the occupancy rate declined by 43% in 2016, and slightly increased last year. However, it will be witnessing an improvement and a return to normal rates this year. The situation is similar in Sharm El-Sheikh. However, it is slightly different in Alexandria where local tourism increased and occupancy rates reached 71% in 2017, which is the highest rate among tourist destinations.

Regarding his expectations, Lind said that a 4% increase is expected in hotel revenues in Cairo as there will be an increase to 69% occupancy instead of 67% last year. A growth of 28% is expected in the revenues of Sharm El-Sheikh hotels, with occupancy increasing to 51%. Hotels in Hurghada will see a 27% increase to reach 61% instead of 51% last year, in addition to a 4% rise in the revenues of hotels in Alexandria, with occupancy reaching 71%.

He pointed out that hotels in central Cairo receive the lowest rating from tourists across the governorate, where the rating nears 68% and is subject to decline if no changes are made to these hotels. He pointed out that the rating of five-star hotels is the highest, recording 83%, while there is a scarcity of three-star hotels, which are either not popular enough with tourists or are managed by families or small companies.

Lind stressed that this will be a good field for investment in the hotel sector, especially with the need for them and the inability of many tourists to stay at expensive five-star hotels, pointing out that the assets of hotels in Cairo increased by up to 49%, depending on the type of hotel.

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