Quarterly Report Egypt Hotels Full-Year Egypt Full-Year 2015 Review 4 Key Cities

Transcription

1 Quarterly Report Egypt Hotels Full-Year 2015 Egypt Full-Year 2015 Review 4 Key Cities

2 Contents Cairo... 3 Sharm El Sheikh... 4 Hurghada... 5 Alexandria

3 Cairo SUPPLY A number of high profile properties entered the market in 2015, including the Ritz Carlton (245 keys) and the Royal Maxim Kempinski (331 keys). In addition, the 410 key Tulip Inn on Haram Street brought the total branded hotel supply of Cairo up to 15,157 hotel rooms, a 7% increase over the previous year. PROJECTED HOTEL SUPPLY NO. OF KEYS 14,171 15,157 15,652 16,031 16,858 FY 2014 FY 2015 FY 2016(f) FY 2017(f) FY 2018(f) Source: Colliers International above graph covers only Branded Hotel supply, and takes into account potential cancellations and delays. KPIs YOY % CHANGE MARKET PERFORMANCE In this same publication last year we highlighted submarkets such as eastern and western Cairo benefitting from demand usually captured by hotels within downtown Cairo, which had been reverted due to security reasons Tahrir Square. A year later, downtown Cairo hotels achieved the highest growth in occupancy rates across the nation, increasing by 28% when compared with the This highlights -34% +61% +28% OCC +17% +5% +10% ADR FY 2013 FY 2014 FY 2015 RevPAR Source: STR Global, Colliers International WHAT TO EXPECT? +6% Occ 56% -2% US$ 135 Forecast FY 2016 OUTLOOK The market still maintains development opportunities within standard midmarket hotels to lifestyle 5-star hotels and serviced apartments. The latter asset class is currently limited in Cairo, thus offering international operators an opportunity to penetrate the market. Serviced Opportunities lie within New Cairo, Apartments where expatriate relocation is common. Increase in corporate demand Midscale Hotels Corporate demand expected to further grow, feeding sub markets. Downtown area will continue to show high growth rates. Along the Nile and in Giza, targeting price-conscious corporate and leisure guests. 3

4 Sharm El Sheikh PROJECTED HOTEL SUPPLY NO. OF KEYS SUPPLY More than 75% of internationally branded properties are 5- stars, indicating the demand for quality products by inbound and domestic guests. Following the plane crash witnessed in Sinai in October 2015, several hotel operators announced delays within their forthcoming pipeline. MARKET PERFORMANCE The Sharm El Sheikh market has seen some volatility over the previous years. In 2015, occupancy dropped due to neighbouring events taking place in Sinai which triggered governments to issue travel restrictions. Secondary hotels which used to capture overflow demand are now struggling and are on the brinks of asset conversion. This highlights the strengths in associating a hotel asset with an international brand in weakening markets. 17,489 RevPAR 17,834-7% +17% FY 2013 FY 2014 FY 2015 Forecast FY 2016 Source: STR Global, Colliers International 18,290 18, % - 8% +5% +10% 18,870 FY 2014 FY 2015 FY 2016(f) FY 2017(f) FY 2018(f) Source: Colliers International above graph covers only Branded Hotel supply, and takes into account potential cancellations and delays. OCC ADR KPIs YOY % CHANGE -14% Occ 51% -16% US$ 43 OUTLOOK Hotel performance is expected to witness a drop in 2016 following the plane crash incident in Q4 last year. Planned hotels have been delayed or cancelled due to a decrease in inbound demand. However, domestic guests will continue to seek travel deals within Sharm el Sheikh, specifically families and large groups. WHAT TO EXPECT? Weak performance Decrease in Supply Visitation by Large Groups Guests branching out to other coastal destinations such as El Gouna and Ain Sokhna. Unbranded hotels currently exploring other alternative use of their asset as they step out of the hospitality sector. Demand from families / large groups, taking advantage of low hotel rates. 4

5 Hurghada PROJECTED HOTEL SUPPLY NO. OF KEYS SUPPLY branded hotel supply is well balanced across the 5-Star, 4-Star and 3-Star segments, each accounting for approximately 33%. 12,961 12,961 13,511 14,065 14,420 Hilton accounts for all additional keys expected to stream the market in 2017 with two hotels accounting for over 1,000 keys. FY 2014 FY 2015 FY 2016(f) FY 2017(f) FY 2018(f) Source: Colliers International above graph covers only Branded Hotel supply, and takes into account potential cancellations and delays. KPIs YOY % CHANGE MARKET PERFORMANCE Much like the Sharm El Sheikh market, Hurghada has been affected by the multiple travel bans and restrictions carried forward by EU States. The location remains a popular destination amongst Egyptian travelers which now, contribute with the majority of hotel bookings. OCC ADR -12% +18% - 13% +11% +7% +13% -2% Occ 58% -13% US$ 47 FY 2013 FY 2014 FY 2015 Forecast FY 2016 Occupancy dropped in 2015 due to travel bans. Despite this, ADR increased by 13% in an unsuccessful attempt to salvage RevPAR which saw a modest 1% decline. OUTLOOK Travel warnings will be upheld throughout the first few months of the year. As such, a decline in European tourists will trigger a drop in ADR levels which will ultimately attract more domestic visitors. RevPAR Source: STR Global, Colliers International WHAT TO EXPECT? Large-scale branded properties Stronger performance in Sahl Hasheesh Forthcoming supply includes large hotels, which would cater to MICE demand. Luxury properties not to be as severely affected as properties in city centre. Hotels are likely to divert sales and marketing campaigns to other markets such as the GCC. Domestic Guests Weekend demand, especially during public holidays and school vacations. 5

6 Alexandria PROJECTED HOTEL SUPPLY NO. OF KEYS SUPPLY 1,962 2,161 2,161 2,262 2,323 Although supply is expected to increase at CAGR of 4% until 2018, quality branded hotel supply is expected to remain constant in There were a number of schemes planned for opening in 2015 and However, delays and cancellations have been witnessed in the forthcoming pipeline. FY 2014 FY 2015 FY 2016(f) FY 2017(f) FY 2018(f) Source: Colliers International above graph covers only Branded Hotel supply, and takes into account potential cancellations and delays. KPIs YOY % CHANGE MARKET PERFORMANCE With the exception of a decline in occupancy rates in 2013, Alexandria enjoyed growth in demand and rates over the last three years saw occupancy rates increase by 11% while ADR levels grew by 3%. Inland corporate hotels tend to benefit from stronger performance than beach hotels which focus primarily on leisure visitors. This is due to a less seasonal trend for corporate demand. OUTLOOK Fly Dubai increased its flight frequency to Alexandria in late in 2015, this is likely to increase the number of GCC guests travelling for business and leisure. OCC ADR RevPAR -12% +1% FY 2013 FY 2014 FY 2015 Forecast FY 2016 Source: STR Global, Colliers International WHAT TO EXPECT? Branded Serviced Apartments +17% +11% +11% +3% Would uplift the undeveloped serviced apartment market -4% Occ 68% +3% US$ 77 Serviced apartments appeal to leisure GCC travellers opting for family vacations. While corporate travellers occupy rooms on single occupancy, they tend to prefer quality accommodation within high profile brands. Economy Midscale Hotels MICE demand Primarily catering to pricesensitive corporate demand seeking inland accommodation. MICE demand to increase given the growth in corporate travellers 6

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 7

8 502 offices in 67 countries on 6 continents United States: 151 Canada: 46 Latin America: 26 Asia Pacific: 190 EMEA: 89 $2.3 billion in annual revenue 1.7 billion square feet under management For further information, please contact: Filippo Sona Director Head of Hotels MENA Region Main Mobile [email protected] Selim El Zein Associate Director Hotels MENA Region Main Mobile [email protected] Ian Albert Regional Director MENA Region Main Mobile [email protected] Colliers International MENA Region Dubai United Arab Emirates ,300 professionals and staff 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 Colliers International currently has four corporate offices in the region located in Dubai, Abu Dhabi, Riyadh and Jeddah. colliers.com Colliers International, 2015 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.