By Abdel Razek Al-Shuwekhi and Sara Aggour
Kempinski Hotels recently launched their latest hotel, the Royal Maxim Palace Kempinski, located in the Fifth Settlement, making it the third hotel in Egypt. Daily News Egypt sat down with the hotel’s General Manager, Oliver Kahf, to discuss the hotel’s vision and services, as well as the expected occupancy rate, targeted clients and anticipated revenues per available room.
Can you give us details about the hotel, and the investments made in it?
I don’t have any particular figures on the amount of investments in this property, but I know it was really substantial, between the property and facilities. Our owner has been very generous in giving us high-end equipment. What makes this hotel special is the ballroom. It is 3,000 sqm without any pillars, and the pool is set on top of the ballroom. We have a huge number of restaurants and outlets, 11 outlets to be exact. These outlets won’t open all at once. We only have 250 rooms. It is very clear that we are targeting the local market for our food and beverage services, because 250 rooms cannot fill 11 restaurants. We are very fortunate, as the community is growing and is really looking forwards to have new places to go and visit and spend time in.
Who is your target client at Royal Maxim Palace?
The category of hotel, the five-star luxury, has a limited demand. Our focus is the service and the luxury. We are prepared to have a lower occupancy, but catering for a particular guest, the one that seeks our services. The tourism segment is not our main focus but primarily the corporate customer, the businessmen. This segment comprises 70% of the clients we are expecting [to stay at our hotel]. The hotel has the biggest ballroom in Egypt and takes up to 3,000 people, so this means we can host the biggest [events]. It is focused on the corporate market, more than leisure market. The leisure market we would focus on is the local leisure market, such as someone who lives in Cairo and wants to enjoy our services and enjoy the weekend.
How can Egyptian tourism attract corporate tourism, especially when it doesn’t represent a large segment of the number of tourists visiting Egypt?
This is because of three reasons. The first is investment with strong infrastructure and facilities. The country is starting now to become investor-friendly and it is eliminating many hurdles that were there before. This is one very important aspect. Then you have the quality of life. If you want to get foreigners to live here with their families, you want to create an environment of securities and facilities. Egypt is a huge market. You have 90 million potential customers. You need to convince someone that whatever they put in will get them a return. Now, for example, the government decided to build a new capital; this is a very important step and it shows that the government is recognising what has to happen. There is a spirit of challenge and initiative. I see this as very positive.
Does Kempinski have plans to expand its investments in Egypt?
Like any hotel management, there is always the desire to expand, but Kempinski, as a company, has one brand only, unlike other hotel managements. This is why we need to be very selective in the property, because not all hotels fit in the luxury category. Not every owner wants to spend the amount that would make the hotel a five-star luxury hotel. You also have territorial restrictions, which restricts Kempinski or any other company from opening another hotel in the same zone. If an owner wants to build another Kempinski hotel 10 km from here, we will not be allowed because of those restrictions. Other companies would sometimes use a different brand because they have that option. If there is a suitable hotel in a suitable zone with the right investment, then definitely. For us, what is very important is that whatever project we look at fits our portfolio.
What about tourist spots such as Sharm El-Sheikh and Hurghada?
Hotel management companies are not the ones that pick a spot. The owner is the one that has the hotel and selects the management. With around 90% of the hotels that have an international company, the owner heads to the management again and asks whether or not they’d be interested in managing a new hotel. Kempinski is known to manage palaces, and that’s why we were approached by the owner here, Wagdy Karrar. He was in Abu Dhabi and he passed by the Emirates Palace, and he said “Why don’t I build something like this in Cairo?”
What is the expected occupancy rate?
We have just opened, so we are anticipating that for 2016, we will cross the 50% occupancy rate. What is important and what matters is the revenue per available room. I can have a75% occupancy and an EGP 500 rate, or I can have an EGP 3,700 average rate with 7% occupancy. What matters is the mix of the two. Our expectations are that we will be the market leader when it comes to revenues per available room. We are hoping that by the end of 2016 we will be the number one of our comp set.
How much of the 50% occupancy rate will Gulf clients comprise?
Of the 50%+ occupancy rate, we anticipate that half of this occupancy will form around half of that rate.
What about the average rates?
We will be the most expensive hotel in the surrounding area. The average price for a room per night per person is EGP 3,000. Companies and big producers get discounts of course, and we have already signed agreements with many companies.