North Africa’s swiftly growing hotel market is entering a more uncertain phase as the war in the Middle East weighs on near-term travel demand and booking confidence.
Sources in the region said the upcoming season might fall short of earlier expectations, with some softness in inbound flows already visible. But investment pipelines and long-term development plans are unlikely to be affected, and the broader data paints a more resilient picture.
Any fall in performance will appear at odds with North Africa’s striking improvement pace seen in recent years, which has outpaced many hoteliers’ most optimistic expectations.
In the last half decade, the hospitality sector in North Africa, particularly in Egypt, has demonstrated strong and sustained growth, supported by a steady increase in international tourist arrivals and the rising global appeal of Red Sea destinations, said Stuart Leven, CEO of Orascom Hotels Management.
For Orascom, which manages a network of hotels across the region, operational performance has been equally encouraging.
“Occupancy levels increased to 75%, compared to 71% in the previous year, while average room rates [in 2025] rose significantly, up 30% year-on-year,” Leven said. “This growth has been largely driven by strong international demand, with foreign guests accounting for around 83% of total occupancy.”
This performance is enjoyed by other players in the region, but since the start of war in Iran, proximity to the Middle East is having a cost, notably for Egypt.
The U.S. Department of State included Egypt in a list of 14 countries on which it issued a “depart now” alert on March 2. Several European countries, including the United Kingdom, advised their citizens against traveling to some parts of the country.
Operations "are impacted,” said Leila Ben-Gacem, owner of boutique hotel Dar Ben Gacem in Tunis, Tunisia.
The geopolitical situation in the Middle East is one of two key factors putting pressure on hotel operations in Tunisia, Ben-Gacem said.
The other reason is growing Airbnb demand, Ben-Gacem said, but she and Leven said they see the region’s long-term future as robust.
Branded hotels in Egypt saw occupancy rise to 69.9% in 2025, compared with 64.4% the previous year and 66.9% in 2019, according to CoStar data.
In the first quarter of 2026, the upward trend continued, with occupancy reaching 66.7%, up 5.9% year over year.
For full-year 2025, average daily rate reached 6,471 Egyptian pounds ($122), up 31.6% from the previous year, while revenue per available room climbed 43% to EGP4,523.
Tunisia has posted similarly positive trends.
Occupancy in 2025 stood at 61.7% compared to 57.5% the previous year and 61% in 2019. In the first quarter of 2026, occupancy jumped 21.2% year over year to 46.4%.
In Morocco, the other main market in the region along with Egypt, growth has been more moderate.
In 2025, occupancy inched up to 61% from 59.4% a year earlier and 59.3% in 2019. During the first quarter of 2026, occupancy growth was limited to up 0.7%, reaching 51.1%.
Momentum break
Sources said their experience on the ground reflects the trends seen in CoStar hospitality data.
"Prior to the escalation of the regional conflict, the hospitality markets across the Middle East and North Africa were entering 2026 with strong momentum backed by outstanding 2025 results,” said Oussama El Kadiri, partner and head of hospitality, tourism and leisure, Middle East and Africa, at business advisory Knight Frank.
Egypt recorded all-time high visitation numbers, driven by the leisure segment’s recovery and the consolidation of Cairo as one of the region’s strongest cultural hubs.
The opening of the Grand Egyptian Museum on Nov. 4, 2025, reputedly the world’s largest archeological museum, is one major tourism driver.
El Kadiri said Morocco maintained its position as the most visited country in Africa for the second consecutive year. Marrakech recorded one of its strongest performances with a year-on-year increase in RevPAR of 15%.
“The [North African hospitality] market was not only recovering but moving into an expansion cycle,” said Nandini Roy Choudhury, senior analyst, Future Market Insights.
She said Egypt has Africa’s largest hotel pipeline, with 185 planned hotels and almost 46,000 rooms. This represents more than one-third of the continent's hotel pipeline.
Some European and long-haul travelers are likely to postpone or switch to destinations perceived as safer due to the war in the Middle East, even if Egypt’s main resort areas remain operational, she added.
“The immediate impact [of the war in Iran] is more visible in booking behavior, air connectivity concerns, insurance and risk perception, and in softer pricing in some leisure segments,” Choudhury said. “Travel advisories continue to highlight regional tensions and security risk, which can influence tour operators, airlines and first-time leisure travelers."
Despite these persisting concerns, hoteliers do not expect the conflict to have a tangible impact on their North African operations.
“The [Iran] conflict is now creating a short-term confidence shock rather than fundamentally changing the long-term hospitality story,” Choudhury said.
Abdellah Essonni, regional vice president for North Africa at hotel management firm Aleph Hospitality, said hotel industry growth in the region will be secured by infrastructure development, driven in part by preparations for the 2030 FIFA World Cup, which is enhancing accessibility, capacity and destination appeal. Morocco, Portugal and Spain are co-hosting the 2030 tournament.
“Morocco’s tourism sector remains resilient and is projected to experience strong momentum through the summer season,” Essonni said. “The country has further elevated its global profile as a premier sporting destination, notably through its successful hosting of the Africa Cup of Nations 2025."
Choudhury said her prediction is that hotel investment and development will become more selective but certainly not coming to a standstill.
“Projects already under construction or backed by strong developers are likely to continue, particularly in strategic tourism zones,” she said. “Investors may delay final investment decisions, financing closures, land commitments or brand signings for projects that are still at an early stage. Higher risk premiums, more conservative demand assumptions and pressure on short-term ADR and occupancy forecasts could affect feasibility models."
At Orascom, Leven remains optimistic.
“With recent signs of stabilization in the region, we are optimistic about continued recovery and sustained demand,” he said. “Fundamentals … remain strong, and we are confident in our ability to navigate external dynamics while maintaining solid operational performance."