AccorHotels is to open four new hotels in Egypt, taking in to 31 hotels in the country across its brand stable.
Deutsche Hospitality has also signed on another hotel in Egypt, its tenth, with the announcements coming as the country suffered a terrorist attack shortly after being declared safe by the US department of state.
AccorHotels has signed four new hotel management agreements in Egypt with mixed-use real estate and community developer ARCO, sdue to open in Egypt’s North Coast by 2022.
The properties include the Fairmont Fuka Bay, Swissôtel Fuka Bay, Novotel Al Alamein City, and Ibis Styles Al Alamein City. The addition of these hotel projects increases AccorHotels’ operational and development pipeline to 31 hotels in Egypt.
Francois Baudin, SVP development, luxury hotels, Europe, Middle East, and Africa, AccorHotels, said: “Following the recent union of AccorHotels and FRHI, we are excited to announce four new hotel projects in Egypt, ranging from economy and midscale options to luxury and upper upscale brands.
“This announcement further underscores the group’s commitment to the destination and its envisioned potential, evident since opening the first Accor hotel over 35 years ago to today with 17 hotels in operation and a robust pipeline of 14 new hotels coming online within the next five years.”
Deutsche Hospitality has signed to open a Steigenberger branded hotel in Damietta, Egypt. The 158-room property will run under a management agreement with owner HOTAC and is due to launch in 2018.
Puneet Chhatwal, CEO, Deutsche Hospitality, said: “This is another step to grow internationally with our hotel brands. With our tenth property in Egypt, we strengthen our position in this country of rich history.”
The US Department of State left Egypt off an alert to its citizens on the heightened risk of terrorist attacks during the holiday season, a decision welcomed by Egypt’s tourism minister Yahia Rashed, who described it as “a message of reassurance on the safety of our touristic destinations”.
The end of last month saw the World Travel & Tourism Council and the World Tourism Organisation call on the UK government to lift the current ban on UK-based airlines flying to Sharm el Sheikh.
In a letter to prime minister Theresa May, David Scowsill, president & CEO, WTTC, and Taleb Rifai, Secretary-General, UNWTO, stressed the importance of resuming operations to the Egyptian coastal resort as the current travel advisory is having devastating effects on the country’s economy and social stability. The ban has been in place since a Metrojet airline flying from Sharm el Sheikh to St Petersburg crashed in the Sinai Desert in October 2015.
It read: “Travel & Tourism is vital to Egypt’s economy and social peace, contributing 11% of the country’s GDP and 2.6 million in jobs in 2015. The reduction of visitors has created huge employment losses. The country’s biggest concern is how the lack of employment opportunities, especially for young men and women, has instilled a desperate disposition and thus vulnerability to radicalisation or to fleeing on a refugee boat.”
The letter added that the Egyptian authorities had taken significant measures to improve the level of security not only in the airport but in the surrounding area as well and that these improvements now met the safety standards as indicated by the UK Department for Transport.
It concluded: “It is devastating to see the impact the current UK travel advisory has on Egypt and on the young workforce in particular. We call on the UK government to review the advisory and allow commercial aircraft to fly to Sharm el Sheikh and thereby help restore the country’s Travel & Tourism sector’s GDP and employment provision.”
All other countries, including Germany and Russia, have allowed their airlines to start flying to Sharm el Sheikh again. The UK government responded that the ban was constantly under review.
Outside Sharm el Sheikh, Egypt’s hotel performance has seen a recovery. According to STR, in October Cairo experienced growth in occupancy – up 4.6% to 57.9% – and revpar, which rose 4.5% to EGP478.29 (GBP21.08) while ADR was nearly flat.
The company said that demand was up 11.1% year-to-date in the market, with “strong weekend business indicating a recovery in leisure demand. That recovery in hotel demand has come even with a 41.8% drop in tourist arrivals to Egypt through September, as reported by the Central Agency for Public Reserves and Statistics”. On 6 October, Armed Forces Day, Cairo’s occupancy jumped to 67.0%, which was more than 9% higher than the average for the month.
This recovery was expected to see a drop after 25 people were killed in a bombing at Egypt’s largest Coptic Christian cathedral, in Cairo.
HA Perspective [by Katherine Doggrell]: Terrorism has become the new reality in Europe and its environs and, while hardly a new phenomenon, combined with an ongoing rise in global travel and the ever-growing global aspirations of the branded operators, it is not slowing down development.
On average, European hotel markets experience stabilised performance results within approximately three months following a terror attack, according to data and analysis from STR earlier this year. The exception to this rule is Paris, where repeated attacks have seen the market for some travel, notably leisure, depressed. There is an ongoing argument as to whether some of this has moved to Airbnb, which is perceived by some as safer than staying in a large, branded box.
In Sharm el Sheikh, the loss of UK visitors is more pressing than most – British and Russian visitors favour the resort for essential winter sunshine. The fall of the pound following the EU Referendum deterred some of the leisure market from venturing overseas, however, the devaluation of the Egyptian pound at the end of November has made the destination more affordable and explains the increasing calls on the UK government to lift the flight ban.