Egyptian hotels show signs of life

Two years after the Egyptian revolution started, tourists are starting to return to the country's stricken hotels, tempted by cut-price deals.

Two years after the Egyptian revolution started, tourists are starting to return to the country's stricken hotels, tempted by cut-price deals.

Chain hotels in Egypt recorded their best occupancy and profit figures for the past two years during November, according to TRI Hospitality Consulting's HotStats index.

Chain hotels surveyed by the company in the Egyptian capital Cairo posted a 74.4 per cent increase in gross operating profits per available room in November at US$71.75 (Dh263) compared with the previous month - their strongest performance since the start of the revolution in 2011.

Revenue per available room also grew 32.3 per cent to $64.27, boosted by an increase in occupancy to 55 per cent. At the same time average room rates fell 2 per cent to $116.81.

Hotels in the Sharm El Sheikh resort also recorded their highest occupancy figures in November since the start of the revolution at 79.7 per cent - a 7.7 per cent increase over the previous month. Average revenue per room rose to $41.66, while average room rates fell 4.7 per cent to an average of $52.25. Increased food and drink sales pushed average revenue per available room in the city up by 8.7 per cent to $75.51.

"The Cairo market has been resilient to continuous political upheaval with hotels in the city demonstrating they have recovered as performance indicators return to pre-revolution levels," said Peter Goddard, the managing director of TRI Hospitality Consulting in Dubai.

"However, hotels in Sharm El Sheikh appear to be struggling as market-wide rate reductions have introduced a price war affecting profit margins. Although occupancy in the region has increased, the slashing of rates has had a dramatic effect on their peak season's profit margins."

Meanwhile in the UAE, Dubai was the main destination for tourists flocking to the desert sun.

Occupancy across surveyed hotels in Dubai increased by 3.1 percentage points to 90.8 per cent while average room rates increased 1.6 per cent to $360.47. The improvement helped push gross operating profits per room at the chain hotels surveyed to $297.15 - their highest level in the past 36 months.

In Abu Dhabi, it was a different story. Although occupancy rates in the capital increased slightly to 83.5 per cent, average room rates fell 7 per cent to $202.72 as more hotels opened and competition increased.

The price cut pushed average revenues per room down by 6.8 per cent to $169.32. A decrease in food and drink revenues and a decline in conference revenues resulted in total revenues per room falling 5.9 per cent to $316.31. Gross operating profit per available room fell 8.2 per cent to $162.80.

"Hotels in Abu Dhabi continue to report strong occupancy levels.However, bottom-line performance continues to suffer due to the perpetual pressure on rates as a result of new competition," said Mr Goddard. "The capital city boasted the second-highest occupancy rates in the region during November. Conversely, revenue per room remained subdued as hotels continue to lower their rates despite a steady growth in demand."