Published by BNC for The Big 5 Construct EgyptPublication Date: March, 2017

EGYPT TOURISM ANDHOSPITALITY MARKET

SNAPSHOT 2017

www.bncnetwork.net

© 2004-2017 Industry Networks (FZC). All rights reserved.

Table of ContentsIntroduction 3

Tourism 3

Hospitality 3

Conclusion 5

The Egyptian hospitality and tourism market is showing signsof recovery in 2017 after experiencing a slowdown 2016. Theconstruction market in Egypt is also making strong advancesfollowing a heightened period of geopolitical unrest. As perBNC Project Intelligence, there are over USD 335 billion worth

Introductionof active construction projects in Egypt, of whichapproximately 5% belong to the hospitality sector. Despitesome growth challenges, the Egyptian government isinvesting in tourism and hospitality to diversify economicactivities and create new employment opportunities.

Tourism

3

Tourism in Egypt is expected to pick up in 2017. Egypt’sMinister of Tourism, Yehia Rashed, reported that the inflow oftourists decreased by 40% to 5.3 million visitors in 2016.¹ Thedecline is primarily due to the regional instability and downingof a Russian aircraft in October 2015, which resulted in Russia,along with other European countries, suspending flights toEgypt.² Tourism income in Egypt witnessed a 44.3% dropbetween 2015 and 2016.³ State led initiatives and commercialfactors that are driving growth in the tourism sector includes:

▪ The Egyptian Tourism Authority, through a coordinated effort with Egyptian Embassies abroad, aims to target between 700,000 and 800,000 tourists in South and East Asian, Central European and North African countries.⁴

▪ Russia, along with Finland, Norway, Sweden, and Denmark, has lifted the travel ban on the Sinai Peninsula, which is expected to gradually draw in more travelers (Russian tourists alone made up approximately 68% of Egypt’s tourists in 2015).⁵

▪ Major construction activities are currently underway to attract tourists including the Ritz-Carlton Resort in Sharm El Sheikh and the Jumeirah Gamsha Bay Resort (Palm Gamsha) in Hurghada (Hurghada is expecting 1,000 additional rooms by 2017).⁶

The Egyptian hospitality sector supports tourism by offeringan uncommon luxury experience at affordable prices. There isa healthy pipeline of new hospitality projects that are expectedto come on stream in the next few years. As per the BNCProject Intelligence, there are approximately USD 5.3 billionworth of hospitality projects in Egypt, of which nearly 70% arein the initial stages of construction (i.e. concept and design). Itis also noteworthy to mention that only 14% of hospitalityproject values are on hold indicating a strong flow-through ofproject investments that are still advancing in the country.

The hospitality projects spread across different cities in Egypt,with Cairo having the highest percentage of constructionactivities. According to a study published by ColliersInternational, as of 2016, Greater Cairo had 28,000 roomsover six districts (6th of October, Pyramids/Giza, DowntownCairo, Heliopolis, Maadi, and New Cairo).⁷ The developmentof new urban areas in Cairo has helped fuel the demand forhotels and resorts in the city to attract local tourists.⁸

1-8 Media

Source: BNC Project Intelligence

Chart 2: Percentage of Active Hospitality Projects perCity in Egypt

2%

8%

29%

10%17%

12%

17%

6%

Chart 1: Value of Hospitality Projects (USD Billions)at Different Stages of Construction

Hospitality

0

0.5

1.0

1.5

2.0

2.5

3.0

Concept Design On Hold UnderConstruction

Source: BNC Project Intelligence

Proj

ect

Valu

e in

USD

Billi

ons

There is a growing market for branded hotels offering aworld-class service.⁹ Major cities such as Cairo is expected tooffer 15,652 branded hotel rooms in 2016, including theRitz-Carlton (245 rooms) and the Royal Maxim Kempinski (331rooms).¹⁰ The forecasted 2016 supply of branded hotels inother major areas include Sharm El Sheikh (18,920 rooms),Hurghada (13,511 rooms), and Alexandria (2,161).¹¹ Thehospitality sector has under performed in the past year withan average occupancy rate of 48% in these four major cities(Cairo, Sharm El Sheikh, Hurghada, and Alexandria).¹² Amongthe four cities, Alexandria has the highest occupancy rate of71%, whereas Cairo recorded the highest revenue peravailable room (RevPAR) of USD 154.¹³ Tourism is expectedto pick up in 2017 and is likely to create new demand for thenew hotels and resorts scheduled for completion in the nearfuture.

9-13 Media 4

Table 1: World Bank Ease of Doing Business Report 2017

Project NameEstimated Value in

USD MillionsCity Stage

Estimated CompletionDate

Hayat Alex Park (Phase 1) 124 Million Alexandria Under Construction Dec-19

The Address Hotel 300 Million Cairo Design Oct-19

SECON Hotel 50 Million Damietta Design Dec-18

Tropicana Splash Resort 100 Million Hurghada Concept Dec-19

The Address Resort Marassi 150 Million Matrouh Concept Dec-18

Four Seasons Hotel 100 Million New Cairo Concept Dec-19

Fairmont Citystars 120 Million Sharm Al Sheikh Concept Dec-19

DoubleTree by Hilton 85 Million Suez Concept Sep-20

Table 1: Select High-Value Projects in Egypt

Source: BNC Project Intelligence

Chart 3: 2016 Occupancy and RevPAR (in USD) forFour Major Cities in Egypt

Source: BNC Project Intelligence

$15 $19

$154

$6030% 31%

61%

71%

0%

10%

20%

30%

40%

50%

60%

70%

80%

020406080

100120140160180

Sharm ElSheikh

Hurghada Cairo Alexandria

Owing to state led initiatives and political stability in thecountry, the Egyptian hospitality and tourism market isshowing signs of growth in 2017. The Egyptian governmenthas been working to improve bilateral relations, which couldpresent opportunities in different sectors including hospitalityand tourism. There are also several major hospitality projectsthat are expected to come on stream in the near future tohelp boost tourism.

Conclusion

For more construction intelligence contactTel: (+971) 4 4055333contactus@bncnetwork.netor visit www.bncnetwork.net