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The first international hotel group to pull out of Sharm-El-Sheikh, Le Meridien claims a major readjustment in thinking is necessary before the Red Sea resort can justify its ambition to become a global 'hot spot'.
With tourism traffic to Egypt down 15 per cent in 2001 over the previous year, the fall-out from the September 11 terrorist attacks in the US had an obvious role to play in the disappointing performance.
The country's revival in recent years as a sea 'n' sun destination had been pushing visitor figures to giddy heights, reaching more than five million in 2000, and many involved in the sprawling expansion of hotels in resorts such as Sharm-El-Sheikh and Hurghada saw the trend as a licence to print money.
Even before September, the writing was on the wall for expectations that such resorts could achieve both long-term popularity and reasonable returns for investors.
The raw product with its acres of deserted beach, mild winters and unspoilt dive sites was undeniably attractive, to both tourism chiefs and sun-starved holidaymakers from northern climes.
But a solution of flooding virgin sites with mile after mile of hotel rooms - without attention to the requisite infrastructure needed to support an influx of visitors - had created a situation where hoteliers saw rates for what was a superior tourism product drop through the floor.
"The situation was bad enough in Hurghada, but even with this example and a superior product, the situation in Sharm-El-Sheikh has deteriorated to the extent that what was once a US$150 a night market has flopped to a $17 nightmare," claimed Russel Sharpe, senior vice-president, sales & marketing, Le
Meridien.
The upscale hotel group has long been committed to the Egyptian market, operating three hotels in the capital Cairo, and had drawn up an expansion
programme to plant its flag in a wealth of Red Sea resorts.
Its experience has soured that Egyptian dream, and Sharpe called for a reappraisal of government policies and marketing strategy to prevent the implosion of Red Sea tourism.
"Unless the government wakes up and realises that the five-star hotels in Sharm are being beaten up with regard to rates, the whole product will become downgraded," he said. "At a recent travel exhibition in Moscow, they were actually advertising it was cheaper to stay in Sharm than it is to stay at home - yet despite the over-capacity and low rates, hotels and apartments are still going up."
The solution, according to Sharpe, is a more liberal open skies policy to permit access for scheduled carriers in to Sharm El Sheikh's airport, as well as regulation to stamp out the aggressive pricing policies of the local tour operators.
"The cut-throat policies of these ground handlers means any business coming in has been put out to tender for the lowest rate, making a killing for them but pushing the hotels nearer bankruptcy," he said.
"We have a new hotel due to open in Luxor, but operators there are demanding a $15 rate which is just financially unviable."
Plans for more Red Sea resorts have been put on hold by Le Meridien, but Sharpe confirmed his faith in the destination, at a price.
"Yes, we would like to go back to Sharm - but only if we could make a profit for the owners as well as ourselves.
"Unless there is improved access, the resort is set to become a cheaper and cheaper destination for sea and sun, and with this will come a deterioration in product and service that goes with this market." |
