Red Sea Making Waves in Egypt

Just when you thought Egypt was close to the saturation point for attracting overseas tourists, fresh developments on the southern Red Sea coast are gearing up to draw even greater numbers. Port Ghalib, an integrated port and resort community being built on 18 kilometers of pristine Red Sea coastline some 220 kilometers south of Hurghada, is moving from blueprint to reality as marketing efforts begin in earnest on the first batch of prime residential units later this month.

Developed by Kuwait’s M.A. Kharafi group, the project is well into the $1.2 billion first phase of the master plan. The plan envisions a multi-purpose resort community - served by air and sea - comprised of nine uniquely themed villages that include luxury residential units, resort hotels, retail and entertainment space, a golf course, a yacht club and conference center - all served by privately owned and operated utility services company providing potable desalinated water, power, fiber-optic based broadband, sewage treatment and district cooling (state of the art community air-conditioning).

Whereas other resorts accommodate Egypt’s mainstream or already existing hotel brands, Port Ghalib will launch its massive core project with Sun International - the creators of the famed Sun City in South Africa. The Sahara Sun Resort at Port Ghalib will include 950 keys between its Desert Village and its Budour's Palace resort hotels; an international spa; a 1,500 person capacity conference and exhibition center; and 450 Sun Residences at Port Ghalib condos. This Sun resort will sit alongside Port Ghalib's Corniche and Khan area in the heart of the Port Ghalib International Marina where one will find15,000 M2 of shops, boutiques, galleries, restaurants, clubs, pubs and bistros; and a variety of entertainment and edutainment venues for children and families Already in operation is the 200-room Port Ghalib Coral Beach Diving Hotel, a dedicated diving resort that opened in September 2005. This hotel with its quay-side location in the Port Ghalib marina is already becoming a favorite destination of European and regional divers. With three of the top ten dive sites in the world within easy reach from Port Ghalib – the Brothers Islands, Daedalus Reef, and Rocky Island – and some of best dolphin observing waters on earth, Port Ghalib is becoming the diving capital of the south Red Sea.

The proximity of the Kharafi Group's Marsa Alam International Airport, just five minutes’ drive from Port Ghalib, has had an undeniable impact on the region’s rooms inventory. James Pringle, Senior Counselor of the M.A.
Kharafi Group noted that in 1998, when they were awarded the BOT (build, operate, transfer) contract to design, construct, finance and operate the airport under a 40 year concession, there were about 800 rooms in the area.
"By 2001, when we opened the airport, there were nearly 2,000 rooms in the area. At the end of 2005, this had grown to 7,500 rooms. The airport has been a major driver of tourism investments in the area, creating 25,000 new jobs and establishing the new Egyptian destination of Marsa Alam clearly on the international market,” said he.

Operated by Aeroport De Paris, one of the global leaders in airport management and operation, the Group's Marsa Alam International Airport is intended to feed the Port Ghalib resort community and the wider south Red Sea areas. Pringle said, "The airport's growth has been stronger than we had originally envisioned. In 2002 we handled 145,000 European passengers and in 2005 this had grown to 435,000. This growth has led us to the decision to double the size of the terminal and add runway length and taxi way/aircraft parking areas now rather than as scheduled in our business plan in 2010/2011 in order to maintain the high standards of safety, comfort, service quality and efficiency that have become the hallmarks of the Marsa Alam International Airport".
When questioned about the delayed opening of the Sun International resort areas of Port Ghalib, Pringle says the delay was due to unforeseen circumstances. “Contractors have had a difficult time getting security clearances for workers since the Sharm al Sheikh incident in July 2005, which in turn affected execution productivity by about 60 percent,” he explained. “Today, we are working closely with security authorities and have been able to improve the labor flow to the site from around the country. We anticipate opening it next year.”

When queried about the delay that the construction has had on getting Port Ghalib's condo residential units into the market, Pringle related that "M.A.
Kharafi Group Director General Mr. Nasser Kharafi has felt from day one of this project that unlike Dubai, where units are often sold off-plan before anything is actually built, it was important that Port Ghalib's Core Project with Sun International be close to completion before any condo-residential marketing and sales be undertaken. "Due to the challenges of Egypt with international investors and property buyers, and to build long-term credibility for the Group and the Port Ghalib brand, Mr. Kharafi felt Port Ghalib had to be very well under construction before we even start marketing properties” he said adding, “This way, people could come see, feel and touch the infrastructure, the marina, the hotels, the properties, and have confidence in the development and company.”

Pringle is bullish on the prospects. He predicts that when the marketing campaign for the first 450 residential units began this June, Gulf and European buyers will snap them up. “We are expecting a very high sales velocity at Port Ghalib given the uniqueness of the product, the location and the combined Port Ghalib and Sun International brands.”

He is equally confident about the project’s future. “Port Ghalib is a long-term project, which started when Egypt was receiving just 2 million visitors a year. We are forecasting that Egypt will get 15 to 20 million visitors annually by the time Port Ghalib’s final, longer-term phase is up and running,” he said. Right now on the planning board are projects for 4,000 residential units and 12 more resort hotels.

But will the destination resort be able to compete with already established El Gouna, Soma Bay, Safaga resorts or the nascent Marsa Matrouh?
Pringle insists he doesn’t see them as competitors. “These are quality developments for which we have respect - they reflect proper master-planning, land-use and environmental sensitivity. Any development along those lines is good for Egypt.”

Amr Badr, Abercrombie & Kent Egypt’s Managing Director, says Port Ghalib offers tourism a fresh, new product. “Now the industry is moving to the more exclusive destination of Marsa Alam. It’s serene. Its development fits well with the model of the off-the-beaten track beach adventure or exclusive spot with a unique proposition.” He said the Port Ghalib project is helping draw visitors to the deep south, which fits in line with the tourism ministry’s strategy to diversify the tourism product, catering to a range of demands of clients, new and existing.

Badr said that since Egypt has overdeveloped Hurghada to an extent, his exclusive market demands remote beach adventures further south. “It carries a lot of future for our market.”

And the prospect of moneyed clientele? Pringle explains that $22-a-day Hurghada-style beach resorts attract one type of tourist, but quality resort destinations geared towards golf and spa-type customers allow Egypt to capture higher-end, upscale market segments. Well-planned spa resorts also help Egypt compete in the international marketplace with Dubai and other Mediterranean destinations, for instance.

But that’s not to say all resorts are alike. “A holiday in our resort will be different from others,” he insists. “We welcome differentiation, variety and diversity, as this will eventually work for all of us.”

New York-based Ayden Nour, the Egyptian Tourism Authority’s Chairman for North America, believes the deep south appeals most to the European market, which updates its destination choices constantly. “Sharm El Sheikh has become very crowded and populated. Tour operators in Europe now request something new. Marsa Alam is a piece of cake to sell to their market as new and unheard of destinations usually get a good response from operator target audiences.”

More challenging, however, is selling the resort destination to North American travelers. They won’t travel 10 hours to go for sun, sand and sea - preferring instead classic historical packages. “Recently, however, we have included a night or two in Marsa Alam, instead of Hurghada and Sharm, in some programs,” Nour said, adding that travel agents are still experimenting.

While the deep south Red Sea operators are focusing their efforts on attracting European tourists, unfortunate events have reminded them of the fragile nature of the business. Ahmed Balbaa, Chairman and CEO of Balbaa Group, whose Kahramana Village Hotel lies 30 minutes south from Port Ghalib in Marsa Alam City, said business slowed down after Italians stopped coming
- following the Sharm bombing and a recession in Italy. “We felt the crunch when the Italian market, now ranked fourth in Egypt, produced very low demand. Marsa Alam is promoted heavily in Italy, so when the market slows down , it hits our business.”

So too does news of environmental degradation. Environmentalists stress that the delicate ecosystems of the deep south’s coral reefs could be at risk unless adequate measures are taken to protect them from the onslaught of tourism. The Egyptian Environmental Affairs agency (EEAA) has responded by installing Shamandouras, buoys that act as fixed mooring points, on coral reefs in the spectacular Samaday Reefs region near Marsa Alam to protect the reefs from anchor damage.

“The environmental awareness unit of Red Sea National Parks gave all diving centers and tourist villages based in Hurghada and Safaga, [specific instructions] in connection with responsible diving in the area of the Samaday reefs, to protect marine life,” says Hesham Kamel, General Manager of Red Sea Diving Safari. He added that an $11.4 million program financed by an Italian grant and under the supervision of the EEAA and the UNDP was supporting work to protect sensitive marine ecosystems in the area.

In the end, he assured, businesses operating in the deep south are the winners. Environmental protection is simply good business.
RED SEA BY AIR AND WATER

Developers recognized early that the future of Egypt’s deep south Red Sea coast, a coral-rimmed coastline stretching from Quseir to Sudan, was inexorably linked to its transportation infrastructure. Only the most robust tourists would brave the bone-jarring 210-kilometer drive from Hurghada, so if the Port Ghalib project were to succeed, it would need a functioning airport and seaport to link the area directly to global source markets and tourists.

Since opening on November 5, 2001, Marsa Alam’s $55 million international airport has taken center stage, serving as an international air gateway to Egypt's south Red Sea. The world’s first airport to be totally developed under a BOT (build, operate, transfer) system, it was developed, designed, built and financed by the M.A. Kharafi Group of Kuwait under a 40 year concession agreement and is operated for the Group by France’s Aeroport de Paris.

The airport’s 3,000-meter-long runway can handle all aircraft carrying European and regional tourists to Egypt today. Built before anything else at the Port Ghalib destination, the airport has been a major stimulus for resort development in the region where room growth has increased from 800 to 8,000 rooms during the period since the airport opening.

James Pringle, Senior Counselor for the M.A. Kharafi Group, says an unexpected increase in passenger throughput led to a decision to expand the airport’s passenger terminal to accommodate 2,400 passengers per hour by the end of the year - a full five years ahead of schedule. Pringle added:"Marsa Alam airport was designed to handle 900 pax per hour, but we frequently handle 1,200 per hour in the existing design. In order to maintain standards of performance and safety, we are increasing capacity.”

Work is also continuing on Port Ghalib’s international marina, Egypt’s first official private sea port of entry. Upon completion in 2007, the 3,300-meter quay, 1,000-berth marina will put the harbor master, customs and immigrations control under one roof so that clearance can be reduced to 20 minutes - hard to beat at any port in Egypt. At the arrivals hall, small x-ray machines for carry-ons and big x-rays for check-in luggage already installed will be an extra bonus, speeding up processing.

In October 2005, VIP halls with separate entrances were opened, equipped with a gym, a restaurant and a dedicated reception area. “Our Marina business is looking up,” confides Pringle. Last year, over 3,500 yachts visited Port Ghalib, with the Vasco da Gama rally being the first international yacht rally to include Port Ghalib as one of its major stops.

by Hazel Heyer
eturbonews.com

June 15, 2006   Posted in: Egypt