The Hype of “El Sahel” Egypt’s North Coast
Why Egypt’s North Coast “El Sahel” is becoming one of the region’s hottest spots for real estate developers, Hotel investors, operators and travelers?
The North Coast of Egypt on the Mediterranean Sea spans over 1000 Km, the western part of that strip (a few Kilometers to the west of Alexandria, and at the beginning of Matrouh Governorate) is referred to locally as “El Sahel”.
It’s been “THE” summer escape for many Egyptians for decades now, whether those who own a second home at one of the strip’s coastal resorts or those who rent out a vacation home/apartment during the summer season.
Since it was a seasonal destination, it never really had a sustainable infrastructure to operate all year round, and the focus on inbound international tourism over domestic tourism was almost non-existent, even though this strip has some of the best beaches in the world…with no exaggeration.
The past decade had seen a development craze with a focus on not only building another coastal resort, but creating a “Destination”. From fancy architecture, family outings and activities, to chic F&B concepts, nightlife & beach clubs.
The response and acceptance of the new direction was a sign that “El Sahel” was craving for something new, something that highlights the destination and put it on the region’s map as a “Summer Hot Destination”.
With these developments, prices have upsurged to some unprecedented levels, whether on real estate & accommodation or F&B, concerts and nightlife; to a level where it would cost locals less to spend a week abroad (i.e. Turkey, Georgia, Albania for instance) than to rent and stay for a week in “El Sahel”.
“The New El Alamein City”
2018 was the inaugural year for “The New El Alamein City”, which will be the center of that costal strip. A fully fledged city with sustainable infrastructure aiming to house 3 Million residents over more than 50,000 acres. With Educational, Health, Entertainment and Business hubs; residents can move there full time and revive the destination full year round.
El Alamein airport will also ease the access to the city from other Egyptian cities as well as from European source markets with an average flight time of 2-3 hours.
Unfortunately, in the past, there seemed to be no interest to build and invest in hotels, and on the first 60-70 KM of that strip, you would find only a handful of hotels with below average quality.
Starting from Marina El Alamein and all the way to the west, hotel investments have been on the rise, and the plan to open over 10,000 hotel rooms only in The New El Alamein City is a clear example of that new direction.
Local hotel operators currently dominate the scene; with very few regional and international brands on the ground. Despite that, and because of the massive gap in supply vs. demand, you would be lucky to find a room at a decent hotel during the peak summer season below 200$ a night and can easily go up to 10-15K$ a night for a breathtaking beach villa.
Renting an apartment/chalet/villa is not cheap either. If you want to stay at one of the resorts where you see and be seen, you’re looking at a daily rate of 250$ which can go up to 3-5K$ with no services included.
Over the past 2 years, more and more international hotel chains and operators started signing deals to manage and operate new hotels that are currently under construction. With a strong outlook and promising market forecasting, they’re looking at one of the highest ADRs in peak season across the entire region.
That all sounds good, but what’s next to ensure the destination’s sustainability, profitability, and affordability?
The Risk
Hotels development must be regulated, steered and aligned with clear & future proof guidelines that structures the number of hotels, number of rooms, classification & minimum standards.
Oversupply of hotels will directly impact RevPAR, which is now what attract new investors to inject billions of Dollars into hotels development.
Oversized hotels are of no lower risk. A 1000 room hotel that drives lower occupancy vs. competition will eventually drop their rates which also have a long-term impact on the destination’s investment attractiveness.
Operating all Luxury and high-end hotels will limit the destination’s affordability, hence, losing an important base of clients that can create a healthy business balance all year round leading to business sustainability.
The peak summer season is a currently a gold mine for hotel owners, but that’s only 3-4 months a year at most. What happens off peak season?
The opportunity
The New El Alamein City will be one of the biggest demand generators for those hotels by transforming the destination from seasonal to an all-year-round liveable city. Through providing the essential needs for everyday life, from work place in its business hub to schools, universities, healthcare and entertainment centres.
Regulating hotels supply will ensure the right balance of 3,4 and 5 star accommodation that serves every need. Luxury travelers will be satisfied, as well as budget travelers, business travelers & students. Managing the supply and demand is very critical to the destination’s success and growth on the global travel map and to ensure a healthy profitable environment for business investors.
Also, an independent destination travel board is crucially needed to lead the marketing and global representation campaigns, events and entertainment calendar as well as sourcing international congresses and corporate conferences throughout the year.
There is a great opportunity to create a truly unique regional destination with the right tools, business enablement and sustainability supported and outlined by relevant authorities and hospitality investors.