New hotel projects across Algeria increasing bed capacity

While Algeria’s tourism sector is still in its infancy, a recent spate of investment directed at hotel construction is expected to boost the industry’s bed capacity over the next few years. Indeed, over 1000 tourism projects have been approved by the ministry overseeing the sector since 2008, representing a total investment of AD470bn (€4.3m) and expected to generate 135,000 new beds and 54,000 jobs once completed.

In a speech given on World Tourism Day in September 2015, the minister of tourism, Amar Ghoul, announced a medium-term target of achieving 500,000 new beds. That is a dramatic expansion over current capacity. With just 100,000 hotel beds available nationwide, Algeria still has some headway to make before supply can rival that of other major regional destinations such as Egypt, Turkey, Morocco or Tunisia. “Demand is rife, particularly at times coinciding with major events taking place in cities like Algiers, during which visitors are compelled to seek accommodation as far as 20-25 km outside of the capital,” Samy Elidrissi, manager of ALT Algérie travel agency, told OBG.

Business Accommodations 

New bed capacity, catering primarily to a business clientele, has become particularly popular in recent years and has come to comprise the main focus of ongoing developments. “A vast majority of projects are currently taking place in Algeria’s main cities on the back of swelling demand in the business segment over the past few years, and also due to the margins that can be generated,” Alex Fezouine, manager of travel agency XL Travel, told OBG. “The average price for a room within the city hovers at around €180 a night as opposed to €30 along the coast,” he added.

Business-focused projects are also more likely to operate as a year-round business, circumventing downturns coinciding with times of low demand. The greatest need for new accommodation is within the country’s capital city. 144 projects are slated for development in Algiers through to 2017. Already home to more than 170 establishments in the hospitality sector, representing a total bed capacity of just under 20,000 beds, new projects are expected to contribute an additional 25,000 beds once finalised, generating some 15,000 jobs and mobilising up to AD130bn (€1.2bn) in investment. The aim in the medium term is to bring the capital’s overall bed capacity up to a total of 50,000.

Oran 

Oran is expected to benefit from the Mediterranean Games as it prepares its grounds to host the tournament in 2021. Currently under construction, the Olympic village of Bir El Djir will add up to 6500 beds once finalised. Expected by 2019, the project will extend over 40 ha of land and will serve to accommodate delegations and athletes. The project will also include training, sports and recreation facilities. The groundwork involved is expected to have a knock-on effect on ancillary infrastructure, with plans to build and upgrade existing and new infrastructure in anticipation of the event. The city’s tram network, for example, is expected to be extended from its current 18 km to 54 km, linking it to Oran’s Es-Senia Airport. Upgrades to the city’s sports infrastructure include plans to renovate the two multi-purpose stadiums of Akid Lotfi and El Hamri for a total AD150m (€1.4m).

As of November 2015, a new Four Points by Sheraton is also under construction. The 4-star hotel will comprise 170 rooms and mark the brand’s first foray into the Algerian market.

Overall, over 100 hotels are planned and due to be constructed in time for the tournament according to local media reports, adding to the city’s current range of over 150 hotels. In the immediate term, Oran is expected to receive a total of nine new hotels in 2016, contributing another 700 new beds to the city’s already existing 14,800 beds.

Countrywide 

In 2015 a number of other cities have seen a raft of new projects as well. Some of these include the Lala Doudja in Hydra, Le Soltane and Africa Nova in Hussein Dey and Best Night in Bab Ezzouar. In November 2015, EL Aziz Zeralda, the first hotel belonging to the AZ Hotels chain, was inaugurated in Zeralda, to the south-west of Algiers, with plans to open another three in Kouba, Vieux Kouba and Mostaganem.

Skikda, 345 km east of Algiers, saw the development of a new 5-star hotel, Royal Tulip, open in June 2015. Jointly managed by international chain Golden Tulip and the Algerian Ramdani Group, the hotel is estimated to have cost AD8bn (€73.6m) and comprises 14 floors and 243 rooms.

Carlson Rezidor recently announced it was opening its second Radisson Blu Hotel in the country. Due for completion by the end of 2017, the new hotel will be built in the coastal town of Tipaza (famous for its Roman ruins), 50 km west of Algiers, and will comprise 168 rooms and suites, two restaurants, two cafés and around 1000 sq metres devoted to meetings and conventions, among other amenities.

Other developments across the country include doubling hotel bed capacity in Tlemcen, in the north-west of Algeria, the capital of Islamic culture in 2011, to expand its current number of 3400 beds to 7000 beds in the short term. A further 73 projects have been earmarked for development in Tizi Ouzou, 100 km east of Algiers, 17 of which currently under construction, and are expected to generating 5000 new jobs and add up to 12,000 new beds. 52 km west of Tizi Ouzou, in the wilaya (province) of Boumerdes, a total of 101 new projects are slated for development over the next five years, with a view towards generating 20,000 new beds.

Challenges 

The scope and nature of recent and ongoing projects obviously varies from one city to another, depending upon the existing space and land readily available for development. For instance, while Algiers is home to hotels offering a bed capacity in the hundreds, such as the Sofitel and the Hilton, a number of the latest developments consist of small to mid-sized lodgings in the city centre, and are in many cases sponsored by investors that are new to the sector.

While this translates into more beds, a number of these buildings, according to XL Travel’s Fezouine, may not actually come to fruition. “Failing to comply with the norms and standards governing hotel construction, many establishments are unlikely to see the light of day,” said Fezouine. “With feasibility studies for hotel construction hovering around €250,000, many developers choose to bypass this fundamental step, resulting in a number of constructions that are not fully up to standard,” he added. Another major challenge that will need navigating are the projects planned within the country’s designated Tourism Investment Zones (Zone d’Expansion Touristique, ZET), many of which have experienced delays due to organisational, administrative and financial constraints. First developed in the 1960s, development plans for only 30 out of the country’s 205 identified ZETs have been approved so far. Given the surface area involved (53,000 ha), enabling and accelerating development within the ZETs will be a determining factor in unleashing the potential and the future of many projects.

Prices 

The impact of these developments on hotel offerings in the country’s main urban centres is generally seen to be positive. Fezouine reckons that prices – often judged to be some of the highest in the region – are likely to drop in the next two to three years as overall bed capacity increases. Reda Keraghel, general manager of Hotel Hydra, agrees, stating that the competition culminating from the reinforced bed capacity will encourage hoteliers to enhance and expand their services while the resulting lower tariffs will benefit the customer.