Sinai resorts pin hopes on Russia’s return

07 Apr 2018

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.

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.


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