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Tourism boosts Cairo hospitality market

Cairo, November 28, 2010

Nearly 13 million tourist nights were spent in Egypt in 2009, representing a 55 per cent increase from levels recorded just five years ago, said a report.

Despite the marked slowdown in global tourism activity in 2009, tourism numbers in Egypt held their ground falling only 2.3 per cent on the previous year’s figures, added the report published by DTZ, a global real estate services firm, on the Cairo hospitality market.

“Overall, Cairo’s hospitality sector remains relatively unaffected by the slowdown in global tourism,” said Martin Cooper, DTZ’s head of consulting Mena and author of the report.

“Its fundamentals can be characterised by diverse tourism assets; a large and growing domestic market; strong levels of regional and international demand and growing levels of business tourism demand.”

The European continent is expected to continue to account for the largest share of Egyptian tourism, making up some 78 per cent of the market as of Q1 2010. This was followed by Middle East nationals (10 per cent) and Asian nationals (5 per cent).

Tourist numbers from Eastern Europe had experienced the strongest growth in recent years, on the back of improved economic wealth and their relative proximity to Egypt. However, given the sharp market correction seen in most of these economies, visitor growth from this segment is likely to slow in 2010.

Looking ahead, the Egyptian tourism market will continue to strengthen its contribution to the Egyptian economy. The report forecasted a return to growth in 2010, albeit at a slower pace than witnessed in the recent past.

East vs west

The new districts of New Cairo and Sixth October District have been rapidly increasing their hospitality capacity, according to the report.

According to estimates by DTZ, there are nearly 24,400 quality hotel rooms in the Cairo area, spread across more than 100 hotels. The central Cairo market accounts for 48 per cent (11,600 rooms) of the sector.

An assessment of 4-star and 5-star equivalent hotels in the new cities in east and west Cairo show that average occupancy rates within east Cairo have remained relatively unchanged over the last six years at 70 per cent, as new supply has continued to meet demand.

However, occupancy rates within west Cairo have been gradually increasing over the same period to 83 per cent for the first three months of 2010, according to the report.

Despite the lower occupancy rates, hotels in east Cairo commanded a 61 per cent premium on average daily room rates (ADRs) compared with hotels in west Cairo. ADR rates stood at EGP665 ($115) and EGP412 per night in east and west Cairo respectively for the first three months of 2010.

Although growing strongly between 2004 and 2008 (at c.10 per cent per annum), ADR’s within the east Cairo hospitality market appear to have stabilised since January 2009. ADR growth in west Cairo has continued to be strong in 2010, albeit from a lower base. Average annual ADR rates have grown by nearly 50 per cent in west Cairo since 2004.

The hospitality pipeline for both east and west Cairo remains strong, despite the large number of hotels that have been completed in recent years in both locations, the report said.

Much of the proposed pipeline is associated with large mixed-use master planned schemes such as SODIC’s Eastown development, Damac’s Park Avenue and Emaar Misr’s New Cairo City all in east Cairo. In the west of Cairo, schemes such as Bahgat’s Dreamland and Sodic’s Westown and Allegria developments all include hospitality components, the report added.

According to market estimates, there are more than 4,000 new hotel rooms planned to be delivered in the Cairo market over the next few years.

“Looking ahead, prospects for the hospitality market across Cairo are broadly positive. International tourism demand is robust, despite the recent downturn, with key feeder markets starting to recover. Travel and tourism is expected to generate an additional $27 billion of GDP in Egypt in 2010,” Cooper concluded. – TradeArabia News Service




Tags: hospitality | tourism | hotels | Cairo | DTZ report |

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