Cairo set to gain from Red Sea’s tourism loss

A man walks past a bazaar in Old Cairo. The capital could benefit as tourists stay away from Red Sea resorts. Asmaa Waguih / Reuters

Cairo is expected to lift the Egyptian hotel market this year as international tourists stay away from leisure spots along the Red Sea.

Egypt’s capital city is likely to increase its room count to 17,114 in 2018, up by 9 per cent on this year’s 15,702, according to Colliers International.

Demand from people preferring to take holidays at home and from corporate business makes it the only bright spot in the country.

The full-year average occupancy rate for Cairo is forecast at 56 per cent, up by 6 percentage points compared with last year, while the average daily rate is expected to go up by 12 per cent, to US$154.

The four-star, 295-room Steigenberger Hotel El Tahrir is going ahead with its opening on Monday next week despite the bleak outlook for international tourist numbers.

In April, Egypt received 425,000 tourists, a 54 per cent reduction from the year-earlier period, according to the latest Egyptian Central Bank data. Egypt’s tourism industry has been severely affected following the disappearance of the aircraft in May over the Mediterranean and last year’s Russian air crash.

“Primarily catering to corporate demand, Cairo has not been deeply affected by political and security issues in the Red Sea,” said Filippo Sona, the head of hotels for the Middle East and North Africa region at Colliers. “The growth in Arabian Gulf and domestic leisure and corporate travellers in the last year is contributing [significantly].”

International operators seem to be cautiously optimistic that the tourism industry will steadily pick up, he said.

The Red Sea resort areas are expected to experience a downwards trend in hotel performance with Western European countries maintaining their travel ban.

Spain’s Melia Hotels International disaffiliated three hotels in the Red Sea resort areas during the first half – the Melia Sharm, the Sol Taba and the Sol Dahab – “due to the social and political instability in the country”, it said last week.

“Investors should have a long-term view in mind and build assets which are able to target the domestic and regional leisure markets, as existing properties in the city are mainly focused on international travellers,” according to the Colliers report.

In Sharm El Sheikh, the full-year occupancy rate is expected to decrease by 46 percentage points to 32 per cent and the room rates to $47, down by 8 per cent, compared with last year, according to Colliers.

While the UK Foreign Office has not banned travel to Red Sea resort areas, its website says that Egypt is facing a high terrorism threat. About 900,000 British people visit Egypt each year, according to the UK government. Canada, meanwhile, advises against all non-essential travel to the country.

A hotel complex in Sharm El Sheikh with properties branded under Fairmont, Swissotel and Raffles is expected to come on stream with 1,000 rooms by 2019, according to the Colliers report.

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