Egypt has always managed to attract giant hotel chains, coming with the best of global standards in the hospitality management field, which will most probably further boom after the finance ministry unveiled logging record-breaking tourism revenues of EGP 12.57 bn in FY 2018/19. Local hotel owners and developers constantly seek to provide a remarkable lodging experience, however, some factors are standing in the way of hotel management growth in the North African country.

Opening a window onto the hospitality management scene, Invest-Gate showcases the various international operating brands and delves deep into the industry’s potential growth opportunities, while clarifying the obstacles and ways out. We also explore the world of smart hospitality management solutions, which can considerably revolutionize our traditional understanding of hospitality standards.

Pitfalls Impeding Progress

Experts attribute the mild performance of local companies and the inability to compete as international brands to the lack of well-trained labor force, insufficient hospitality management education programs, absence of reliable awareness on the new digital hospitality management systems, and expensive costs of deploying high-standard hotel management.

The vast majority of hotel management and operation deals, signed in conformity with the Egyptian legislative framework, contain a clause that stipulates the application of the ideal management practices and provision of adequate expertise and capacities, along with the management consulting services needed to figure out radical solutions for any possible inconveniences.

Some owners decided to terminate agreements with some Egypt-based hotel management firms, attributing this to the lack of professional practices among hotel operators and the owners’ belief that the profit shares acquired by the former parties are unmerited, Sameh Abdel Moneim, member of the Egyptian Hotel Association (EHA), underlined in an online opinion piece in late 2018. 

On a broader scale, the Egyptian political and economic woes can be another threatening factor for the healthy business of foreign hotel operators in the country. In June 2015, works on 73 hotels were halted in several Red Sea areas due to the absence of liquidity and the existing financing schemes, Atef Abdel Latif, member of Marsa Alam and South Sinai Investors Association, stated in a previous press release. Last year, giant hotel operators such as Sonesta International Hotels Corporation and Pegas Touristik reportedly exited Sharm El Sheikh due to the stagnant tourist inflows and the markedly declining profits.

Promising Course Correction 

A stiff tailwind blew in the air of the Egyptian hospitality management sphere last September, when Minister of Tourism Rania Al-Mashat announced upgrading the hotel classification criteria, setting high-level standards in the industry.

The new benchmark – developed in collaboration with the ministry and the World Tourism Organization (WTO) – will not only evaluate hotels based on their infrastructure and fixed assets, but will also take into account the quality of services as well as the environ- mental, health, and hygiene duties, accroding to Al-Mashat. 

In addition, the government, represented in the General Authority for Investment and Free Zones (GAFI), introduced the license guide for hotels and tourism developments to provide eased regulations for establishing a hotel management company.

The EHA plays a major role in coordinating and monitoring, including settling disputes between owners and managing companies, not to mention joining forces with the Egyptian Tourism Federation and Ministry of Tourism, all to implement beneficial training programs for the domestic hotel management workforce.

Smart Switchover

One other undeniable attribute is how the current digital transformation moves, especially across the managerial levels, have altered the global hospitality scene and overthrown the passé understanding of hotel management activities.

The new world of cloud-based software platforms seems to have a lot to do with the hospitality industry. In fact, many service providers are now introducing smart hospitality management systems, better known as property management systems (PMS), to assist hoteliers in optimizing their services and creating unforgettable guest experiences.

When in Egypt, similar tech models have started to see light, with more optimistic prospects showing up. More enterprise resource planning (ERP) solutions are now getting into the local business of hospitality management, offering aspirant hotel operators a chance to automate their managerial and operational functions, while garnering better results, Ayman Sharaf, a senior marketing consultant and lecturer, notes.

He confirms that some state-owned hotels are using advanced ERP systems to enhance their management capabilities, and this bodes well.

After all, the secret recipe for the hospitality management concepts in Egypt lies in devoting strong attention to details, leveraging leadership and teamwork skills, alongside integrating smart solutions. For now, the vast scope of opportunities in the hospitality management sector gives a positive sign, especially as the government bids to clear the atmosphere and facilitate local market growth, side to side with the expansion of international hotel chains across the country through additional franchises, management, and operation signings.

Dig deeper into the hotel management sphere by reading pages 32-35 at Invest-Gate’s November issue.