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Occupancy growth at hotels in Egypt increases to seven-year high

Moscow, February 9, 2018 – Hotel occupancy growth in in all major resorts in Egypt increased in 2017 and reached 2010 levels. The highest growth was in Hurghada (up 51%) and Sharm El Sheikh (up 33%). It is remarkable that such growth is due to the “low base” effect, given the negative trend of previous years. According to CAPAS, the number of tourists visiting the country in 2016 fell by 44% year over year to 5.4 million tourists, and the share of Russian tourists fell from a stable 32%-35% to almost zero values.

After a significant drop in tourist flow in 2016, Egyptian hotels were forced to reduce room rates to stimulate demand throughout 2017. Accordingly, ADR (average daily room rate) declined in double-digits in Sharm El Sheikh (down 25%) and in Hurghada (down 23%). According to Colliers International forecasts, operational figures of hotels will resume growth in 2018.  Demand for Egyptian resorts will continue to increase, but not rapidly – occupancy growth is forecasted at 20% in Hurghada and 13% in Sharm El Sheikh. ADR in Hurghada is expected grow by 5% to $43, and Sharm El Sheikh's growth is estimated at 12%, to $38. The increase in tourist flow is due to the gradual lifting of various countries' prohibitions of flights to Egypt – in particular, the expected resumption of service between Russia and the main Red Sea resorts.

Flights between Moscow and Cairo resumed on February 1, 2018 after a hiatus, with the resumption of charter flights scheduled to be discussed in April. Turkish resorts remain Egypt's main competitors. The success of the tourist season of Egypt will directly depend on how aggressive the pricing policy will be for package tours, which depend primarily on the cost of air transportation.