Cairo hotel performance is suffering substantially

Grand Nile Tower Cairo hotel performance continues to suffer substantially due to the political turmoil surrounding the ousting of Mohamed Mursi, according to the latest data from TRI Hospitality Consulting Middle East. Occupancy plummeted 23.5 percentage points to 21.3% for the month of July and induced a corresponding drop in RevPAR of 46% to US$25.31. Simultaneously, ARR increased 13.4% from the previous year and reached $118.68, due to high inflation coupled with hoteliers holding rates.
Following a 42.6% decrease in TrevPAR, the 19.9% decline in payroll costs did little to relieve the impact on profitability which plunged 88.1%, the consulting company said.
“Tourism is a critical element of Egypt’s economy, accounting for 13% of GDP at its peak in 2010, when the country drew 14.7 million visitors,” asserted Peter Goddard, managing director of TRI Hospitality Consulting Middle East in Dubai.
“Although hotels in Cairo and Sharm El Sheikh shared signs of recovery in the first two quarters of the year, progress has regressed yet again,” he continued.
“During the first half of July Egypt saw 387,000 tourist arrivals, which is a 25% decline when compared to the same period of the previous year.
“Tourists are highly reactive to political unrest, as reflected in the fluctuations in hotel performance levels that corresponded to periods of upheaval across the past two years. This was reinforced yet again, as events surrounding Mursi’s ousting directly impacted hotel occupancy levels, as illustrated in Cairo and to a lower extent, in Sharm El Sheikh.”
Sharm El Sheikh was not severely affected by the demonstrations in Cairo, as travel to the Red Sea resort areas were deemed safe and booked well in advance.
Nonetheless, the disorder interrupted four months of consecutive recovery in RevPAR, which declined 10.4% to $23.41.
This was largely driven by the 7.5% fall in occupancy to 58.2%, while ARR increased 1.2% to $40.24. Coupled with a 7.5% decline in TrevPAR, Gross Operating Profit Per Available Room declined (GOPPAR) 20.6% to $13.27.
Source: Travel Daily