IHG plans Tunisia debut and Egypt expansion amid recovery of tourism sector
The global hotel group is scheduled to add 48 properties to its Mena portfolio over the next three to five years
Intercontinental Hotels Group, the owner of Crowne Plaza and Holiday Inn chains, is weighing opportunities to enter Tunisia and further expand in Egypt as tourism in North African countries recovers.
Talks are under way to rebrand some of the local hotels in Tunisia to its Hotel Indigo, Holiday Inn and Intercontinental brands, though no timeline is set for the company’s debut, Matthew Tripolone, IHG vice president of development in Middle East and Africa, told The National. In Egypt, the group is considering adding properties in the new administrative capital, east of Cairo, and the Red Sea resorts of Sharm El Sheikh and Hurghada to its voco, Staybridge Suites and Crowne Plaza brands.
“We’re seeing heightened growth in Egypt, particularly in the Red Sea resorts, the market has stabilised quite significantly there and the hotel rates have increased in the last two years by 50 per cent, admittedly off a low base. We’re seeing a lot of demand for new projects,” Mr Tripolone said.
“We are excited about Egypt and we’re in discussion for a few projects there as well as new markets in North Africa, such as Tunisia,” he said.
Tourism is a key pillar of Egypt’s economy, accounting for about 15 per cent of its gross domestic product and is a major source of foreign currency for North Africa’s biggest economy. Egypt’s tourism sector, which employs about four million people, is on a rebound after political instability in the wake of the 2011 uprising and a series of attacks stoked security concerns.
With a stable government and the country’s economy on the mend, security situation has improved vastly, bringing back visitors. The UK in October lifted its travel restriction advisory against flying into the popular Red Sea resort town of Sharm El Sheikh.
New York-listed IHG operates 91 hotels in the Middle East and North Africa, with 48 more scheduled to open in the next three to five years, Mr Tripolone said.
That is an increase of 54 per cent to about 140 properties.
Saudi Arabia and the UAE continue to drive the company’s growth in the region. The kingdom’s introduction of tourist visas this year and Dubai hosting Expo 2020 is expected to further bolster IHG’s growth in the two markets, Mr Tripolone said.
Saudi Arabia, which is overhauling its economy to reduce its reliance on sale of hydrocarbons for revenues, introduced tourist visas in September and more than 24,000 people visited the country within 10 days of the launch of the new system.The kingdom is also heavily investing in mega tourism and entertainment projects to attract international holidaymakers.
“We’ve seen demand uptake already,” Mr Tripolone said. “Saudi will continue to be our largest growth market.”
IHG is in discussions on “numerous” projects in the kingdom that include the Red Sea project, King Abdullah Financial District, entertainment city Al Qiddiyah, according to the executive. It currently operates 33 hotels in Saudi Arabia.
In the UAE, where it has 22 properties, IHG expects a rise in bookings leading to the Expo 2020 in October.
“We’re starting to see some good uptick now. The interest starts now, the bookings will probably start coming through in the first quarter of next year because there is a lot of pre-work that goes on before this event starts,” he said. “We’re predicting quite good things to come out of this for the next 18 months.”
Dubai is set to retain its rank among the world's top-10 most popular cities with international visitors in 2019, according to the Top 100 City Destinations report by UK-based market research consultancy Euromonitor International. The UAE remains the seventh most-visited city in the world with 16.3 million international arrivals, beating Istanbul, Kuala Lumpur and New York.
IHG, however, has put a hold on plans for expansion in Lebanon, which is rocked by nationwide protests. Instability in Iraq has also forced the company to shelve its plans to pursue more opportunities in that market, he said.
“We are in discussions on numerous projects in Lebanon, which have all been put on hold because of the political situation,” he said. “There’s risk inherent in a lot of markets in this part of the world.”
Overall, IHG remains optimistic in its outlook for the Mena market, barring any escalation in geopolitical risk, Mr Tripolone said.
“We like to think we’re close to seeing the bottom of this market now,” he said. “We’re bullish on the fact that we’re on the up.”
Updated: December 29, 2019 05:26 PM