Orascom blames financial loss on Egyptian tourism collapse

Orascom Development Holding blamed the collapse of tourism in Egypt’s Sinai Peninsula on a loss-making final quarter of last year.

The Cairo-based developer that lists its shares in Zurich reported net losses of 19 million Swiss francs (Dh72.2m), as travel bans introduced by some countries following the aircraft crash over Sinai Peninsula last year took their toll.

The developer, which has one hotel in the UAE, attributed the losses, among other factors, to a slowdown in the hotels segment in Egypt in the final quarter of last year. Revenues from hotels increased by 4.5 per cent to reach 124.2 million francs.


“We are studying the implementation of strict cost-cutting measures across our hotels in Egypt, from centralisation of services to suspension of operations at some hotels,” it said.

Its shares were trading at 8.95 francs, down by 0.11 per cent on yesterday’s close. That is down from 15.7 francs a year ago.

The Russian plane crash over the Sinai Peninsula in October led to travel bans from the UK and Russia, two of Egyptian tourism’s largest source markets.

The total number of tourists to Egypt during the first quarter is down by 40 per cent compared with last year. Egypt’s new tourism minister, Yehia Rashed, told Reuters this week that it is working to increase the network of national carrier EgyptAir besides working with low-cost airlines. Egypt expects to draw 12 million tourists by the end of next year.

To counter the losses from its hotels in the Red Sea resort destination of Taba in the Sinai Peninsula, Orascom Development Holding shut down fiveof its six hotels there, keeping only the 442-room Sofitel hotel open.

The net losses generated from the Taba hotels alone amounted to 10.7 million francs.

Located near Hurghada, its Makadi properties operated at 30 per cent of capacity following the closure of two of its three hotels there. Also near Hurghada, its developments in El Gouna fared better. The average year-round occupancy level at El Gouna last year was 68 per cent, up from 60 per cent in the previous year.

Orascom is pressing ahead with the construction of Ancient Sands hotel in El Gouna and the Byoum hotel in the oasis town of Fayoum near Cairo. They are expected to open in the second and third quarter, respectively.

In the UAE, Orascom Development Holding owns the Cove Rotana in Ras Al Khaimah with 346 rooms. It is finalising the construction of an extension to add 145 rooms this year.

In Egypt, it has 16 hotels in El Gouna with 2,627 rooms, six ­hotels in Taba Heights with 2,365 rooms, four hotels in Makadi with 1,627 rooms, and one floating hotel with 27 rooms.

In Oman, it has four hotels accounting for 767 rooms, or 10 per cent of Orascom’s inventory. Occupancy grew to 51 per cent from 33 per cent. Last year, it opened the 218-room, four star Al Fanar Hotel and Residence in Salalah.

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