Quarterly Report Egypt Hotels Egypt Quarterly Review & Forecast 4 Key Cities 1 Hot Spot City
Contents Cairo... 3 Sharm El Sheikh... 4 Hurghada... 5 Alexandria... 6 Hotspot: Ain El Sokhna... 7 2
Cairo Performance & Demand Growth in corporate demand has fueled Cairo s hotel market performance increase in. KPIs YOY % change Q2 2013 Q2 2014 OCC -14% +6% +43% Forecast FY 2015 +26% Occ 50% Cairo s demand is mainly generated by Egyptian and GCC nationals, accounting for 78% of total demand. ADR RevPAR +29% +1% +8% 0% EGP 920 Supply Source: STR Global, Colliers International Projected Hotel Supply No. of Keys Supply remained stable between Q2 2014 and. 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. 13,826 13,826 14,321 15,295 16,174 Internationally branded supply currently represents 64% of Cairo s hotel market, of which 86% are 5-star rated. Q2 2014 FY 2015(f) FY 2016(f) FY 2017(f) Note: Includes 3,4 and 5-star quality supply Market Opportunities Development Tips of the Quarter Due to the large number of currently outdated, and new forthcoming 5-star supply, opportunity lies in developing economy and midscale hotels targeting leisure tourists visiting the pyramids.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. Midscale & Economy Hotels Upscale Hotels Serviced Apartments In locations near the pyramids catered to the leisure segment In 6 th October and 5 th Settlement districts to cater to the Upscale business parks Within Ma adi district to cater to relocating employees 3
Sharm El Sheikh Performance & Demand The Sharm El Sheikh hotel market has seen growth in both occupancy and average rates in. This is attributed to the overall stability of the nation as travel agencies have relaunched travel packages to their respective clients. KPIs YOY % change Q2 2013 Q2 2014 OCC +17% -13% ADR +16% -10% +11% +19% Forecast FY 2015 +1% Occ 66% +8% EGP 185 The Arab summit in Q1 2015 helped in reassuring travelers of the safety and security in the area. Supply 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%. RevPAR Source: STR Global, Colliers International Projected Hotel Supply No. of Keys 15,095 15,440 15,897 16,735 17,712 Q2 2014 FY 2015(f) FY 2016(f) FY 2017(f) Note: Includes 3,4 and 5-star quality supply Market Opportunities Development Tips of the Quarter Nabq has witnessed strong demand growth in, 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. All-inclusive Upscale All-inclusive Midmarket Luxury 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 Qesm area where the Four Season s located, provides good beaches 4
Hurghada Performance & Demand Although Hurghada s hotel market has seen a slight drop in occupancy, ADR has been the major driver for growth during. KPIs YOY % change Q2 2013 Q2 2014 OCC +8% +1% -5% Forecast FY 2015-3% Occ 67% As a leisure tourist destination, demand peaks between the months of April and November. ADR +32% -8% +11% +5% EGP 193 Furthermore, demand is primarily generated by the Russian, German, and UK markets, representing 70% of demand. RevPAR Source: STR Global, Colliers International Supply Projected Hotel Supply No. of Keys 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. 11,921 10,998 11,217 10,631 10,631 Q2 2014 FY 2015(f) FY 2016(f) FY 2017(f) Note: Includes 3,4 and 5-star quality supply Market Opportunities Development Tips of the Quarter 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. Conversion of previously built developments Branded Midscale Resorts Waterpark Will require less time to enter the market and avoid engaging in price wars Primarily catered to price sensitive European leisure travelers. In primary areas, catered to local and international family tourists 5
Alexandria Performance & Demand Alexandria is a coastal destination benefiting from strong domestic leisure demand and corporate events. KPIs YOY % change Q2 2013 Q2 2014 OCC -6% +1% +10% Forecast FY 2015 +3% Occ 67% 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. Supply 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. ADR RevPAR +13% -1% -1% +3% Source: STR Global, Colliers International Projected Hotel Supply No. of Keys EGP 273 1,426 1,492 1,328 1,079 1,164 Q2 2014 FY 2015(f) FY 2016(f) FY 2017(f) Note: Includes 3,4 and 5-star quality supply Market Opportunities Development Tips of the Quarter Alexandria Port is subject to a redevelopment 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 inhouse guests and local residents, as F&B has proven to be increasingly important in Alexandria s hotels in the past years. F&B driven Lifestyle Hotels Midmarket Hotels Leisure Hotels Providing a wide range of F&B facilities Within and around the Montazah area Within the Alexandria Port area 6
W N S E Hotspot: Ain El Sokhna 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 Ain El Sokhna Market - Opportunities Sector 1 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 Sector 2 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. Ain El Sokhna Supply 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. Number of Hospitality Keys 520 keys accounting for 38% of supply Note: Supply includes internationally branded supply only Ain El Sokhna Demand Segments 75% 5% 20% Corporate Leisure MICE/Groups 804 keys accounting for 59% of supply 3-Star 4-Star 5-Star 0% 20% 40% 60% 80% 100% 7
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 8,880 billion keys Hotel keys investment value of valued under asset management projects advised 8
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