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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outdated, and new forthcoming 5-star supply,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
Egypt Q2 2015 Review | August 2015 | Hotels | Colliers International4
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%
Performance & Demand
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)
Market Opportunities Development Tips of the Quarter
Source: STR Global, Colliers International
Source: Colliers InternationalNote: Includes 3,4 and 5-star quality supply
Egypt Q2 2015 Review | August 2015 | Hotels | Colliers International5
Hurghada
KPIs | YOY % change
Source: STR Global, Colliers International
Source: Colliers International
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
Note: Includes 3,4 and 5-star quality supply
EGP 193
-3% Occ 67%
Performance & Demand
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.
Market Opportunities Development Tips of the Quarter
SupplyProjected Hotel Supply | No. of Keys
Egypt Q2 2015 Review | August 2015 | Hotels | Colliers International6
KPIs | YOY % change
Source: STR Global, Colliers International
Source: Colliers International
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
Note: Includes 3,4 and 5-star quality supply
EGP 273
+3% Occ 67%
Performance & Demand
Market Opportunities Development Tips of the Quarter
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
Source: Colliers International
Note: Supply includes internationally branded supply only
Ain El Sokhna Demand Segments
Source: Colliers International
Ain El Sokhna Market - Opportunities
Source: Colliers International
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
Egypt Q2 2015 Review | August 2015 | Hotels | Colliers International8
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.
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For further information,
please contact:
Filippo Sona
Director | Head of Hotels | MENA Region
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Mobile +971 55 899 6103
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Regional Director | MENA Region
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Mobile +971 55 899 6070
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