Back to the golden age

Egypt pushes forward with new tourism projects, remaining one of the most popular Mena destinations.
Back to the golden age
By Gareth Rees
Tue 02 Oct 2007 11:07 AM

Egypt pushes forward with new tourism projects, remaining one of the most popular Mena destinations.

Egypt's hotel industry has suffered, like those in many other MENA countries, from negative global perceptions perpetuated by terrorist violence, like the bombings in the resort city of Sharm el-Sheikh on the southern tip of the Sinai Peninsula that left 88 people dead in July 2005, and the more recent attacks in Dahab in April 2006.

This situation leads IHG's director of operations for Egypt, Michel Tourniaire to the conclusion that, "the main challenge is stability in the region".

The main challenge is stability in the region.

But figures from both the Egyptian Tourism Authority and HVS International, suggest that the country's tourism industry is not only back on track, but flourishing. In 2006 GDP grew by 6.8%, boosted by considerable investment from the Gulf region, and tourist arrivals increased to 9.1 million, with UAE visitor numbers experiencing a 12% increase between January and June last year.

Senior director of marketing, Four Seasons Hotels Egypt, Cesare Rouchdy believes that the troubles have passed, and people are now comfortable visiting the country.

"The last trouble we experienced was a year and a half ago, but people tend to forget. We have enforced security measures, such as security gates [at our properties] with sniffer dogs and metal detectors all over the place, so people feel secure on holiday and aware that we have stepped up security. We also have security at our staff entrances," he says.

Further to that a marketing campaign - ‘You Light Up Egypt!' - aimed at luring Middle East tourists to the country, is expected to drive 30% growth in the number of yearly short break visits by Middle Eastern tourists.

Mahmoud Salem, secretary general of the Egyptian Hotel Association - an organisation that protects and promotes the interests of the Egyptian hotel industry - says that the hotel industry in Egypt is in a strong position.

"We issue a lot of decrees to help the hotels achieve higher levels of service and higher occupancy. We have companies for hygiene and mystery shoppers to check the hotels and find out what difficulties they are facing and what mistakes they are making," he explains.

"Then we find a way for them to solve these problems, so that they can build an excellent reputation all over the world."

Salem says that the number of tourists from the Middle East and the rest of the world is growing, and the number of new hotels reflects that growth.

"There are always new hotels going up and we have a target that by 2020 we will have doubled the number of hotels that we have now. In this period we are starting to build many hotels," he says.

He argues that hotel development is not necessary in all regions though.

"Hurghada is always popular and occupancy is always high all year round. So we are controlling the [development]. In Hurghada we don't need any hotels built now because it is full up and if you build more it will affect the rates," he says.

The Egyptian Tourist Authority could be doing more, especially on the financial side, according to Salem, and he sees it as his organisation's responsibility to, "solve all the problems that arise between hotels and the government".

Despite this, he says the industry doesn't face many problems, although the reactionary behaviour of some hotels is cause for concern. "Sometimes when hotels face a drop in the market the hotels try and put their prices down, which does not benefit them because they can't return to their normal rate after, because they've changed expectations," says Salem.
And expectations are high according to Salem, with old tourist hotspots like Cairo and newer attractions such as Alexandria experiencing high occupancy.

"There is a boom on the North Coast. In Luxor and Aswan it used to be seasonal, but now people are coming all year round, and occupancy in the hotels is rising," he says.

The capital city

There is a boom on the North Coast. In Luxor and Aswan it used to be seasonal, but now people are coming all year round.

Occupancy in Cairo City Centre properties dropped slightly from 79 to 78% in 2006, but HVS International believe that renovations at the Marriott Hotel and the Hilton Ramses benefited hoteliers, and average room rate increased by 12% to US $90, a 9% RevPAR growth to 70%.

Cairo expects a number of new properties to come online in the next two years, with Starwood's 158-room Sheraton Dreamland due to open at Cairo Pyramids, the 552-room Fairmont Nile City and a 245-room Park Hyatt to open in Cairo City Centre in 2008; then in 2009 the 350-room Le Meridien Cairo Airport is to open in Cairo Heliopolis and the 171-room Marriott Executive Apartments in Cairo City Centre.

IHG has two properties in Cairo, the Semiramis InterContinental Cairo and the InterContinental Heliopolis Cairo, and Michel Tourniaire says that the number of big hotel groups, such as Four Seasons and Hyatt, that have opened properties in the city have made things competitive - a positive sign for the industry.

According to Randy Shimabuku, general manager of the 269-room Four Seasons Cairo at The First Residence, occupancy is on the rise.

"We opened in 2000 and 2006 was our strongest year in our brief history. Year to date 2007 has even exceeded 2006," he says.

"The North American market continues to grow, two thirds of which is leisure, as Americans feel more and more comfortable about visiting Egypt and those who have visited help spread the word with their positive impressions."

It is the cultural attractions of Cairo that are attracting so many tourists, according to Four Seasons' Cesare Rouchdy.

"You can play golf, sail on the Nile, and eat exceptional food," he says.

Four Seasons has two properties in the city, the First Residence and Nile Plaza, and Rouchdy says the mix at both properties is quite similar, with most guests coming from within the MENA region.

"It reflects the mix within Cairo, up to 50% of our business comes from within the region. Saudi Arabia is a major feeder market, followed by Kuwait, Qatar, Jordan and Lebanon," he says.

"Between 25% and 30% of guests at both properties come from Europe, particularly from the UK. The other 25% comes from North America, both leisure and business travellers."

Shimabuku says that the GCC market has grown recently, partly due to the current situation in Lebanon, with 28% of guests coming from the GCC.

The UAE, Morocco, Tunisia and Lebanon would have been Egypt's main competition until recently, according to Rouchdy.

"There is the same situation with Beirut as last year, so we predict an influx of visitors originally intending to visit Lebanon, as well as the Lebanese themselves. Last year many of them came here to take refuge for a few months," he says.
And it's not just leisure travellers. According to Tourniarire, "business travel in Egypt is mainly in Cairo." HVS International backs up this argument, attributing a 14% increase in average room-rate in Heliopolis in 2006 to an increase in business travellers.

Beyond Cairo

Alexandria, Egypt's second largest city, located along the coast of the Mediterranean Sea in north-central Egypt, has been neglected for a very long time, according to director of public relations, Four Seasons Hotel Alexandria at San Stefano, Sara Ibrahim.

Now the 118-room Four Seasons Hotel Alexandria at San Stefano is set to change that, she says.

The property offers a Greek restaurant, an Italian restaurant, a Lebanese fine dining restaurant, a spa café, pool grill restaurant, and a number of lounges providing sheesha.

"Those concepts will be crucial to our target markets: local guests and tourists from across the Middle East," says Ibrahim.

Alexandria boasts archaeological treasures such as Pompey's Pillar, the Roman Amphitheatre and underwater ruins, and Bibliotheca Alexandria was reborn five years ago, with a museum, exhibition and research complex, she adds.

"San Stefano has re-emerged as the city's most exciting district, with the addition of shopping, cinemas and residences."

Ibrahim's only recently joined the newly opened Four Seasons Hotel Alexandria at San Stefano, Egypt, having previously worked at Four Seasons Resort Sharm El Sheikh, another area popular with Middle East travellers.

"The number one source market is the UK, followed by the Middle East, predominantly from Saudi Arabia," she explains.

Luca Allegri, general manager, Four Seasons Resort Sharm El Sheikh, Egypt says that the property has been exceeding expectations.

"Since the last quarter of 2006, we have been beating our budget every month, and this year has been incredible. There are great signs of recovery for Sharm El Sheikh, and we have broken all records in terms of occupancy," he says. We have changed the strategy slightly, and we are now very much active with corporate accounts in the region. We are holding a lot of conferences for companies with regional headquarters in Sharm El Sheikh. Right now we are covering all of the segments - 98% of our guests are leisure, and 2% is groups, but for certain seasons that increases."

He adds that he has seen positive developments all across Egypt driven by the Egyptian Tourist Authority, and according to Ibrahim Four Season's is planning on adding to its four current Egyptian properties. "There might be plans for openings in other parts of Egypt, such as Luxor and Aswan," she says.

IHG is also looking to expand, according to Michel Tourniaire, with plans for a Holiday Inn on the Alex West development and two potential properties in Cairo, as well as looking at properties on both sides of the Red Sea.

"[As far as development goes in Egypt] there is a new destination being built on the Northern Coast, a lot of work is being done there because it's a different landscape and a unique area," says Tourniaire.

UAE real estate firm Emaar and the Artoc Group for Investment and Development have signed an agreement with Egypt's Bibliotheca Alexandria for a waterfront development project in the city. West of Alexandria, Porto Marina is to include hotels, leisure amenities and residential developments.

"Something we have seen in the last couple of years is the big developers come into Egypt, like Emaar, and there are some very impressive developments here," says Tourniaire.

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