GLOBAL HOTELIERS SAY SIGNIFICANT OPPORTUNITIES FOR THE HOSPITALITY MARKET IN CAIRO, SHARM AL SHEIKH AND HURGHADA ARE ON THE RISE
– Popularity of Sharm Al Sheikh and Hurghada with European visitors and socio-political stability in Cairo cited as key drivers of growth
– Demand for hotel rooms across Egypt in the second half of 2014 increased by 58% resulting in an additional 6 million rooms being sold
– AHIC organisers held first Egypt Briefing event in Cairo last week
ATP- arab tourism portal- UAE, – The organisers of AHIC have visited Cairo last week, as part of the Regional Briefing Series they are hosting in several countries across the region, to discuss the current status of the Egyptian hospitality market as well as to look at the upcoming opportunities and the needs of the market.
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The AHIC Regional Briefings are an initiative launched by the organisers to expand the reach of the AHIC community. The Briefings are invitation only, high level events, designed to be small exclusive forums that bring together the local investment, development and finance communities. The Briefings provide an intelligence update on the local hotel market, and ensure the AHIC 2015 programme is fresh and relevant to the Middle East market place.
The Egypt Briefing was held in the Four Season Hotel in Cairo last week, and was attended by, Dr. Sherif Oteifa Advisor to the Minister of Investment of Egypt, Ben Martin Principal, Head of Economics, AECOM, Hesham Shoukri CEO and Executive President, Rooya Group, Mohamed Kamel Chief Executive Officer of Egyptian Resorts Company, Alex Mavridis Chief Investment Officer of Al Dau Development, Hala El Khatib Secretary General of Egyptian Hotel Association, Islam Mahdy Chairman, Credence Holding, and Philip Wooller, Middle East and Africa Area Director of STR Global.
Philip Wooller shared substantial insights on the hospitality market in Egypt with the attendees during the event. He said: “The dark days of the Egyptian Tourism Industry look to be finally over after 4 years in the wilderness,” adding “In the early to mid-stages of 2014, following the formation of the new Government, travel restrictions for certain countries were lifted and the much needed tourists started to return. If the political stability continues, 2015 should be a good year for Egypt."
“Demand for hotel rooms across Egypt in the second half of 2014 (July to December) increased by 58% resulting in an additional 6 million rooms being sold.” Wooller said. “In Cairo, demand for rooms increased by 91% in the same period resulting in an additional 1 million rooms sold. In Sharm El Sheikh demand increased by 45% resulting in an additional 372,000 rooms sold.”
2014 year-end reported a 34.6% increase in RevPAR, when comparing to the previous total year of 2013. After the RevPAR declines for 2013’s third and fourth quarters (-50.4% and -32.5%), 2014 managed to grow this measure in both quarters by 151.6% and 86.6% respectively. The highest ever ADR for the sub market was reported for year-end 2014 (EGP757.72).
Wooller added: "The average daily rate growth has also been interesting and although not to the levels of the occupancy, growth has risen steadily since 2001. However this measurement is still low on the ‘Global Average Room Rate Index’ and this remains the challenge for Egypt but if the trend continues, which all things considered it is likely to, then the future looks bright for Egypt.”
On the macroeconomic level, GDP in Egypt is on track to grow at a clip north of 4% in the fiscal year ending June 2015. Expectation for the next fiscal year is similar: Growth in the 4.5% range. This should accelerate to 5% or more the year after that. The Egyptian Government is forecasting at least 6 billion US dollars in FDI in 2015. That’s the forecast heading into the Sharm El-Sheikh conference next month, with that figure expected to grow based on the investments that will be announced there.
His Excellency Ashraf Salman, our minister of investment says: "Political stability, the Sharm conference and many initiatives our government has taken to promote Egypt as a destination for both investment and tourism, are key drivers for growth. Moreover, The investment in infrastructure is national in scale, from 3,600 kilometres of new roads to be constructed at a cost of EGP 36 billion to a program to build 1 million new affordable housing units, and sweeping new investment in the power generation sector.
HE Ashraf Salman added: "Egypt is investing in high-speed rail links between Alexandria on the Mediterranean Coast and Upper Egypt in our nation’s far south. We are committed to expanding ports, developing renewable energy sector, and to deregulating industries ranging from transportation to the generation and distribution of electricity. At the same time, the Central Bank of Egypt has allocated 10 billion Egyptian pounds to lend banks funds at preferred rates and at maturities that will allow them to make mortgage finance accessible to the middle class. In parallel, the CBE has taken steps that have brought the parallel market for currency to a near-complete standstill."
Al Dau Development is one of the upcoming key projects in Egypt, that have launched new residential Al Dau Heights in the heart of Hurghada less than three months ago. The project is planned as a 1,200 apartment new residential neighbourhood lined with boutique shops cafes and restaurants. It links red sea views with the gardens and pool elements to create a sensual harmony of indoor/outdoor living and has been well received by the investment community with over 75% of phase 1 already sold.
Alex Mavridis, Chief Investment Officer of Al Dau Development who attended the Egypt Briefing last week said: “we have been very pleased with the acceptance of Al Dau Heights by the residential market. Our vision was many years in the making and attention to detail and high end design has paid off. The project was carefully crafted with international design consultants Arcadia Design Architects (residential), Scape design associates (landscaping), and Global Retail Strategies (retail). Our investors have voted with their cheque books and we are pleased to repay their support by ensuring we are on track with construction work. We look forward to delivering this exciting development to them.”
AHIC Regional Briefings have so far visited Oman, Jeddah and Cairo. The 2015 Series will also go to Riyadh and Qatar, ahead of the main Conference in Dubai. AHIC 2015 Conference will take place this year from 5-7 May 2015 at Madinat Jumeirah in Dubai.
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