egypt quarterly review & forecastdocuments.colliersemea.com/documents/egypt - hospitality - q2...

Egypt Quarterly Review & Forecast4 Key Cities | 1 Hot Spot City

Quarterly Report

Egypt | Hotels

Q2 2015

Egypt Q2 2015 Review | August 2015 | Hotels | Colliers International

ContentsCairo ......................................................... 3

Sharm El Sheikh ...................................... 4

Hurghada ................................................. 5

Alexandria ............................................... 6

Hotspot: Ain El Sokhna ............................ 7

2

Egypt Q2 2015 Review | August 2015 | Hotels | Colliers International3

Cairo

KPIs | YOY % change

Source: STR Global, Colliers International

Source: Colliers International

Due to the large number of currently

outdated, and new forthcoming 5-star supply,

opportunity lies in developing economy and

midscale hotels targeting leisure tourists

visiting the pyramids.

Lack of quality serviced apartments appealing

to domestic leisure tourists represents an

opportunity for international operators to

penetrate the market.

Growth in corporate demand has fueled

Cairo’s hotel market performance increase

in Q2 2015.

Cairo’s demand is mainly generated by

Egyptian and GCC nationals, accounting for

78% of total demand.

Forecast

FY 2015

0%

OCC

ADR

Q2 2013

+29%

-14%

Q2 2015

+43%

+8%

Q2 2014

+6%

+1%

RevPAR

Note: Includes 3,4 and 5-star quality supply

EGP 920

+26% Occ 50%

Performance & Demand

Market Opportunities Development Tips of the Quarter

Midscale &

Economy Hotels

Upscale Hotels

In locations near the pyramids

catered to the leisure segment

In 6th October and 5th Settlement

districts to cater to the Upscale

business parks

Serviced

Apartments

Within Ma’adi district to cater to

relocating employees

Supply remained stable between Q2 2014 and

Q2 2015. However six hotels are expected to

enter the market by year end 2015, operated by

Marriott International, Starwood Hotels, Time

Hotels, Kempinski, and Hilton Worldwide.

Internationally branded supply currently

represents 64% of Cairo’s hotel market, of

which 86% are 5-star rated.

13,826 13,82614,321

15,295

16,174

Q2 2014 Q2 2015 FY 2015(f) FY 2016(f) FY 2017(f)

Supply Projected Hotel Supply | No. of Keys


Sharm El Sheikh

KPIs | YOY % change

Nabq has witnessed strong demand growth in

Q2 2015, this is due to reduced prices and

the nature of relatively new hotel facilities

when compared with the Neama bay and old

town.

Despite being a relatively developed market,

there exists an opportunity to develop hotels

along the coast of Sharm El Sheikh extending

from Neama bay to Nabq bay.

The Sharm El Sheikh hotel market has

seen growth in both occupancy and

average rates in Q2 2015. This is attributed

to the overall stability of the nation as travel

agencies have relaunched travel packages

to their respective clients.

The Arab summit in Q1 2015 helped in re-

assuring travelers of the safety and

security in the area.

Forecast

FY 2015

+8%

OCC

ADR

Q2 2013

+16%

+17%

Q2 2015

+11%

+19%

Q2 2014

-13%

-10%

RevPAR

Internationally branded supply accounts for

only 53% of the total supply within Sharm

El Sheikh.

4-star properties account for 46% of the

branded supply, closely followed by the 5-

star segment, accounting for 42%.

EGP 185

+1% Occ 66%


Supply

All-inclusive

Upscale

All-inclusive

Midmarket

Within Nabq Bay complementing

the upscale nature of the area

Shark’s bay benefits from

proximity to the main markets i.e.

Neama Bay and Nabq

Luxury

Qesm area where the Four

Season’s located, provides good

beaches

Projected Hotel Supply | No. of Keys

15,09515,440

15,897

16,735

17,712

Q2 2014 Q2 2015 FY 2015(f) FY 2016(f) FY 2017(f)



Source: Colliers InternationalNote: Includes 3,4 and 5-star quality supply


Hurghada

KPIs | YOY % change



There are currently several hotels in Hurghada

which are constructed, and close to opening;

however, these are on hold for various reasons,

but would only require minimal investment and

time to make them fully operational. This

highlights an opportunity to enter Hurghada’s

market by approaching owners of already

constructed developments.

The opportunity lies in the development of

midscale resorts attracting price sensitive tourists.

Although Hurghada’s hotel market has seen a

slight drop in occupancy, ADR has been the

major driver for growth during Q2 2015.

As a leisure tourist destination, demand peaks

between the months of April and November.

Furthermore, demand is primarily generated

by the Russian, German, and UK markets,

representing 70% of demand.

Forecast

FY 2015

+5%

OCC

ADR

Q2 2013

+32%

+8%

Q2 2015

-5%

+11%

Q2 2014

+1%

-8%

RevPAR


EGP 193

-3% Occ 67%


Conversion of

previously built

developments

Branded

Midscale Resorts

Will require less time to enter the

market and avoid engaging in

price wars

Primarily catered to price

sensitive European leisure

travelers.

WaterparkIn primary areas, catered to local

and international family tourists

10,631 10,631

10,99811,217

11,921

Q2 2014 Q2 2015 FY 2015(f) FY 2016(f) FY 2017(f)

Current branded supply accounts for 19% of

the market’s total hotel supply, of which 24%

and 76% are rated 4 and 5-star, respectively.

Two branded hotels (TIME Renero Resort &

Suites and The Westin Soma Bay) are

expected to enter the market by year end

2015.


SupplyProjected Hotel Supply | No. of Keys


KPIs | YOY % change



Alexandria Port is subject to a re-

development making it the largest port in

Middle East. The $15 billion project will

include commercial and leisure facilities.

There exists an opportunity to develop a hotel

with extensive F&B facilities catering to in-

house guests and local residents, as F&B has

proven to be increasingly important in

Alexandria’s hotels in the past years.

Alexandria is a coastal destination benefiting

from strong domestic leisure demand and

corporate events.

Upscale hotels target local residents for

restaurants and events in order to compensate

for a declining room demand. Food &

beverage revenues exceed 50% of total hotel

revenues in some upscale properties.

Forecast

FY 2015

+3%

OCC

ADR

Q2 2013

+13%

-6%

Q2 2015

+10%

-1%

Q2 2014

+1%

-1%

RevPAR


EGP 273

+3% Occ 67%



F&B driven

Lifestyle Hotels

Midmarket Hotels

Providing a wide range of F&B

facilities

Within and around the Montazah

area

Leisure Hotels Within the Alexandria Port area

Supply has remained fairly stable when

compared with the same period a year

ago. There were a number of schemes in

the pipeline planned for opening in Q1 and

Q2 of 2015. However, delays have pushed

back these opening dates until end of

2015.

Alexandria

SupplyProjected Hotel Supply | No. of Keys

1,0791,164

1,3281,426 1,492

Q2 2014 Q2 2015 FY 2015(f) FY 2016(f) FY 2017(f)

Egypt Q2 2015 Review | August 2015 | Hotels | Colliers International

20%

75%

5%

Corporate Leisure MICE/Groups

7

Ain El Sokhna absorbed a substantial

proportion of local tourism previously

captured by other red sea areas such as

Sharm El Sheikh and Hurghada due to its

proximity to the capital. It is regarded as a

quick weekend getaway to residents of

Cairo. The area’s proximity to the city and

good beaches (predominately within Sector

1) is a strong formula for leisure demand.

The Tida industrial park is a strong source

for corporate demand while the area’s

coastal nature provides it with a strong

events profile predominately for corporate

and some social purposes.

Future Developments

Cairo’s new capital is expected to take

place within proximity to Ain El Sokhna. The

development is expected to provide

substantial residential, commercial,

healthcare and recreational facilities.

Tatweer Misr have put forward plans to

develop a major touristic destination

covering 2.5 million sqm of land just north of

Porto Sokhna. The development will

comprise of multiple hotels as well as

outdoor activities with facilities catering to

all age groups.

Al Galala is planned new city expected to

span across 85km along the Zaafarana

Road near new Bani Swaif.

Performance

Hotels providing direct beach access

achieved occupancy rates within the range

of 70% to 75%. This is attributed to strong

demand and limited hotel stock.

Opportunities

Sector 1 provides highly rated beaches

when compared with Sector 2 of Ain El

Sokhna, providing an upscale development

opportunity.

The Tida park is currently expanding further

increasing demand for a midmarket hotel

product.

Hotspot: Ain El Sokhna

Ain El Sokhna Supply


Note: Supply includes internationally branded supply only

Ain El Sokhna Demand Segments


Ain El Sokhna Market - Opportunities


N

E

S

W

Sector 1

Sector 2

Higher rated beaches providing a good opportunity to

upscale beach hotels

Opportunity to develop alternative

resorts i.e. mountain top resorts with scenic views of the Red Sea

0% 20% 40% 60% 80% 100%

Number ofHospitality Keys

3-Star 4-Star 5-Star

520 keys accounting for 38% of supply

804 keys accounting for 59% of supply


Colliers International Hotels

Colliers International Hotels division is a global network of specialist consultants in hotel, resort,

marina, golf, leisure an spa sectors, dedicated to providing strategic advisory services to owners,

developers and government institutions to extract best values from projects and assets. The

foundation of our service is the hands-on experience of our team combined with the intelligence and

resources of global practice. Through effective management of the hospitality process, Colliers

delivers tangible financial benefits to clients. With offices in Dubai, Abu Dhabi, Jeddah, Riyadh and

Cairo, Colliers International Hotels combines global expertise with local market knowledge.

SERVICES AT A GLANCE

The team can advise throughout the key phases and lifecycle of projects

• Destination / Tourism / Resort / Brand Strategy

• Market and Financial Feasibility Study

• Development Consultancy & Highest and Best Use Analysis

• Operator Search, Selection and Contract Negotiation

• Pre-Opening Budget Analysis and Operational Business Plan

• Owner Representative / Asset Management / Lenders Asset Monitoring

• Site and Asset Investment Sale and Acquisition/Due Diligence

• RICS Valuations for Finance Purposes and IPOs

Our hotels team in the MENA region:

$9 39,200 8,880billion keys Hotel keys

investment value of valued under asset management

projects advised

About Colliers International

Colliers International is a global leader in commercial real estate services, with over 15,800

professionals operating out of more than 502 offices in 67 countries. Colliers International delivers a

full range of services to real estate users, owners and investors worldwide, including global corporate

solutions, brokerage, property and asset management, hotel investment sales and consulting, valuation,

consulting and appraisal services and insightful research. The latest annual survey by the Lipsey

Company ranked Colliers International as the second-most recognized commercial real estate firm in the

world. In MENA Colliers International has provided leading advisory services through its regional

offices since 1996. Colliers International currently has four corporate offices in the region located in

Dubai, Abu Dhabi, Riyadh and Jeddah.

colliers.com

Copyright © 2013 Colliers International.

The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been

made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are

encouraged to consult their professional advisors prior to acting on any of the material contained in this report.

$2.3billion in

annual revenue

1.7billion square feet

under management

16,300professionals

and staff

502 offices in

67 countries on

6 continentsUnited States: 151

Canada: 46

Latin America: 26

Asia Pacific: 190

EMEA: 89

For further information,

please contact:

Filippo Sona

Director | Head of Hotels | MENA Region

Main +971 4 453 7400

Mobile +971 55 899 6102

[email protected]

Selim El Zein

Associate Director | Hotels | MENA Region

Main +971 4 453 7400

Mobile +971 55 899 6103

[email protected]

Ian Albert

Regional Director | MENA Region

Main +971 4 453 7400

Mobile +971 55 899 6070

[email protected]

Colliers International | MENA Region

Dubai | United Arab Emirates

+971 4 453 7400

egypt quarterly review & forecastdocuments.colliersemea.com/documents/egypt - hospitality - q2...

Documents