The Suez Canal expansion last year created widespread demand
Cairo’s tourism and hospitality sector has been resilient over the last year, recording high inflows of international visitors despite socio-political uncertainty, according to real estate advisory firm Colliers International.
The Egyptian capital’s hotel market saw widespread corporate demand last year given the Suez Canal expansion, Colliers said. Hotels located in Downtown Cairo, a primary corporate market, achieved the highest growth in occupancy levels, increasing at an annual rate of 44% between 2013 and 2015.
Serviced apartments in Cairo also performed strongly, with occupancy levels above 75% in 2015. This was mainly attributed to the city’s limited supply and growing economy.
“We have seen a distinct shift in both the source market and segmentation that is driving demand in Cairo,” said Filippo Sona, head of hotels at Colliers International MENA.
Historically, international visitors – mostly European – travelling to Cairo for leisure purposes have been a key driver of the market, he said, noting that GCC nationals visiting either for leisure or business are now a key component. “This represents a number of opportunities for hotel operators and investors who would benefit from aligning their services to cater to the evolving demand traits.”
According to Colliers, there is much scope for mid-scale hotels and serviced apartments in an increasingly price-sensitive market. While the upcoming pipeline is dominated by luxury hotel developments such as The St. Regis (292 keys), The Address Uptown Cairo (300 keys) and JW Marriott Hotel Cairo (90 keys), there remains an undersupply of three- or four-star branded hotels targeting regional or domestic tourists.
“Although the corporate segment is a key driver at present, our research indicates that the leisure segment will grow in prominence in 2016, albeit from the GCC, sub-continent and domestic market,” Sona said. “The development of hotels to cater to their needs is a segment on which hoteliers are currently focusing as they work to regrow their base of demand.”