Sinai resorts pin hopes on Russia’s return

Egypt’s tourism earnings have slumped since a bomb attack halted Russian flights to Sharm El-Sheikh airport in 2015. Now the carrier Aeroflot is set to resume services. (Getty Images)
Updated 06 April 2018
0

Sinai resorts pin hopes on Russia’s return

  • Hotels in Egypt, particularly those along the Red Sea, are gearing up for the return of Russian tourists.
  • Aeroflot said last month that it would resume services to Cairo from Moscow with three flights a week from April 11.
Dubai: Flights from Russia are about to resume for the first time since Oct. 31, 2015, when an Airbus A321, operated by the Russian airline Kogalymavia, crashed after taking off from Sharm El-Sheikh airport. All 224 passengers and crew were killed in what Egyptian authorities said was a Daesh bomb attack.
The Sinai tourism trade, which relied heavily on Russian tourists seeking winter sun, was decimated by the attack.
Now hotels in Egypt, particularly those along the Red Sea, are gearing up for the return of Russian tourists with the resumption of flights — even as analysts warn that it could take months to regain visitor numbers.
Aeroflot said last month that it would resume services to Cairo from Moscow with three flights a week from April 11, while EgyptAir flights will restart the following day. The Russian carrier also plans to fly daily from June 12 to July 2 during the FIFA World Cup in Russia. It is yet to resume flights to Hurghada and Sharm El-Sheikh.
Hotels in Egypt, especially Red Sea resorts popular with Russians seeking sun holidays, expect a pick-up in bookings this summer from Russia, which was among the top five source markets for Egypt before the incident.
“Red Sea resort destinations are expected to see strong growth in performance from returning flight routes and tour operator and travel agent bookings this year,” said Christopher Lund, a Dubai-based associate director at Colliers International.
Hotel room rates in Hurghada and Sharm El-Sheikh are expected to increase by 6 percent and 13 percent, respectively, compared with last year, he said.
The average occupancy rate in Hurghada is expected to reach
61 percent this year, up 19 percent from last year.
In Sharm El-Sheikh, hotels are expected to have 51 percent occupancy, up 13 percent from 2017. Cairo’s average hotel occupancy rate returned to a 2010 level of 67 percent last year, and this year is expected to climb to 69 percent.
“This is expected to further improve in 2019 and 2020 once more airline routes open and demand returns,” Lund said.
The Soho Square entertainment center in Sharm El-Sheikh is one of many tourism businessess in the resort that stand to benefit from the return of Russian visitors.
“We have heard news of flights resuming and we hope we will have more tourists from Russia now,” said a spokesperson for the center.
Before the Arab Spring unrest in Egypt in 2011, hotels in Red Sea resorts enjoyed about 83 percent average occupancy. But the sector has since struggled to recover, with successive attacks by militants thwarting every sign of recovery.
Still, it could be months before Red Sea destinations and the rest of Egypt enjoy any benefits from the resumed flights of Aeroflot and EgyptAir this month.
“Even with the summer season approaching, many tourists from Russia for the past several years have instead been heading to Dubai and the wider UAE — notably because of the tranquility and security there,” said Saj Ahmad, chief analyst at London-based consultancy StrategicAero Research. “It will be a hard sell in the interim for both airlines.”
In the UAE, tourism agencies in Dubai and Ras Al-Khaimah have been aggressively courting Russian tourists through roadshows in Russia and are putting on more charter flights to fill their seafront hotels and hotel apartments as visitors avoid Egypt and Turkey — another country where tourist spots have been targeted by bomb attacks.
To increase demand, Aeroflot and EgyptAir are expected to keep ticket prices at competitive levels.
“Profitability will be almost
nonexistent because both Aeroflot and EgyptAir will have to depress pricing to entice travelers back,” Ahmad said. “Once they get robust forward bookings, perhaps then there could be a price hike that would bolster yields, but this will take a good few months.”
About 8.3 million tourists visited Egypt last year, a 54 percent jump compared with 2016, earning
$7.6 billion in revenue, up
123 percent from the previous year. The country received a record
14.7 million tourists in 2010, a year before the Arab Spring broke out.
Hotel owners are banking on the long-term recovery of the tourism market in Egypt with five-star properties in the pipeline.
Africa’s first Waldorf Astoria, with 247 rooms, is expected to open in Cairo’s Heliopolis this year. It will be part of a complex that also houses a 593-room Hilton.
The British travel operator Thomas Cook reported “a strong recovery in demand for Egypt” during the winter season that pushed overall bookings up. Summer bookings to Egypt also showed growth, it said in February.


Banks boost Saudi stock market, Qatar hit by sell-off

Updated 59 sec ago
0

Banks boost Saudi stock market, Qatar hit by sell-off

BENGALURU: Saudi Arabia’s stock market rose sharply on Tuesday, leading gains in most major Gulf bourses amid a global rally after Washington temporarily eased trade restrictions imposed last week on China’s Huawei. Qatar dropped due to a wide sell-off.
The Saudi index increased 1.66 percent, with Al Rajhi Bank adding 2.2 percent and Saudi Basic Industries up 3.3 percent.
The “Middle East today is following the positive lead from global markets. Local sentiment is also better as evidenced by the strong moves in small cap stocks,” said Vrajesh Bhandari, senior portfolio manager at Al Mal Capital.
“We expect Saudi Arabia to continue its upward trend until at least the MSCI effective date May 28,” added Vrajesh. “Thereafter, investors need to be selective and follow a bottom up-approach. Overall, we find better value in UAE and Egypt.”
MSCI last week said it would include MSCI Saudi Arabia in its emerging-markets index, effective May 28, a move that could draw billions of dollars into the market.
Saudi International Petrochemical closed 3.4 percent higher. The firm completed the merger of equals with Sahara Petrochemical, which delisted on May 20.
Qatar’s index was down 2 percent, with 17 of its 20 stocks sliding.
The Middle East’s largest lender, Qatar National Bank, dropped 2.4 percent, while Mesaieed Petrochemical Holding plunged 10 percent, snapping a six-day winning streak triggered by the stock inclusion in MSCI’s index.
Egypt’s blue-chip index gained 1.7 percent as most of its stocks rose, with Market heavyweight Commercial International Bank gaining 0.9 percent.
El Sewedy Electric jumped 5.9 percent after it partnered with General Authority For Suez Canal Economic Zone to establish a new company with issued capital of 1 billion Egyptian pounds ($58.82 million), in which the firm will own 49 percent.
Abu Dhabi’s index closed 1.1 percent higher, led by a 1.3 percent increase in the country’s largest lender, First Abu Dhabi Bank.
Dana Gas jumped 4.1 percent after the energy firm said it had started drilling operations at Merak-1 well, offshore Egypt.
National Marine Dredging soared 13.9 percent after last week reporting a higher first-quarter earnings.
The Dubai index rose 1 percent as all but one of its real estate stocks rose.
Emaar Properties, Dubai’s largest listed-developer, increased 2.9 percent while its units Emaar Malls and Emaar Development were up 2.3 percent and 3 percent respectively.
The UAE said on Tuesday that it will grant 6,800 foreign investors permanent residency under a new “Golden Card” system after they invested a combined 100 billion dirhams ($27.23 billion) in the Gulf state.
National Cement Company was up 1.7 percent after news it had bought ARM Cement’s Kenyan assets for $50 million.
Arabtec Holding rebounded 2.1 percent, snapping four straight sessions of losses on weak first-quarter earnings.