Revenues of the Holding Company for Tourism, Hotels and Cinema (HOTAC) have declined by EGP 30m since November as a result of the decision by the UK and Russia to halt flights to Egypt following the downing of a Russian commercial flight in October.
HOTAC Chairman Mervat Hataba said occupancy rates declined to 11% in November, and to 9% in December.
According to Hataba, a further decline in occupancy rates in January will affect the revenues of the current year, especially in light of the low bookings during the Christmas and New Year season.
A Russian civilian aircraft was downed south of Al-Arish, in the Sinai Peninsula, in October, killing all 224 passengers and crew members on board.
The company nonetheless aims to complete its investment plan by developing Shepherd Hotel by investing EGP 250m, and the Mena House Palace by investing EGP 320m.
The company also plans to develop Dahab Resort Hotel, owned by Misr Hotels, at an estimated cost of about EGP 42m, and the Elephantine Hotel at a cost of EGP 194m, according to Hataba.
“We will inject EGP 15m to develop the Sofitel Winter Palace in Luxor, and EGP 45m to develop Cecil Hotel in Alexandria, and we will complete the second phase of development of the Cleopatra Hotel,” she said.
Hataba noted that the decline in tourist flow to Egypt could force the company to postpone the development of Cosmopolitan Hotel in Downtown Cairo until the end of the third quarter of this year.
According to Hataba, the investment cost of the hotel stands at EGP 45m, and will be developed through partnership with the private sector for a period of 15 years.
She noted that the initiatives launched by the Ministry of Tourism to increase occupancy in Sharm El-Sheikh and Hurghada will not achieve the desired revenue, as a result of rising employee wages and other operational costs.
HOTAC aims to attract new tourists from countries that have not issued travel warning to their national citizen for travelling to Egypt, including Ukraine and Germany, to increase occupancy in the company’s hotels.
“The unclear vision of the sector after the crash of the Russian jet in October prevents the company from achieving its targeted revenues,” Hataba said.
HOTAC aimed to record revenues of EGP 366m by the end of the current fiscal year, compared to EGP 90m in the previous fiscal year.
About 3.1m Russian tourists visited Egypt last year, accounting for $2.5bn out of the total of $7.3bn in revenues. Russia has been the main source of tourism to Egypt over the last five years, whereby Russians account for about 35% of the total inbound tourists to Egypt every year.
During the first three quarters of the current fiscal year, about two million Russian tourists visited Egypt, a decline of 10% compared to the same period last year.