CAIRO, Egypt—While other destinations in the Middle East have seen hotel performance falter, Egypt’s market continues to expand. Not only is the economy expected to grow by 5 percent in 2010, according to Citigroup, but domestic tourism increased as much as 16 percent in 2008 from the previous year, according to Euromonitor International.

Instead of vacationing abroad, locals instead are choosing to explore their own national treasures, and a handful of international hoteliers are looking to capitalize. Hotel companies such as The Ritz-Carlton Hotel Company, Fairmont Hotels & Resorts and MGM Mirage, are looking to tap into the Middle Eastern country as an optimal spot for expansion.

Pascal Duchauffour, area VP, Middle East for Ritz-Carlton, said the company’s decision to open in the Egypt’s capital, Cairo, was an easy one.

“We have always wanted to open a Ritz-Carlton in Cairo,” he said. “This city and the country of Egypt will always be a draw for tourists and business travelers alike. It was just a matter of waiting for the right location and right partners.”

According to STR Global, Cairo posted occupancy of 62.9 percent (-14.7 percent), average daily rate of US$124.40 (-4.3 percent), and revenue per available room of US$78.26 (-18.4 percent) year to date through September.

Despite poor performance results in the capital city, Duchauffour said the doubling of the number of domestic guests in 2009 further confirmed the Egyptian market as a viable region for expansion. Ritz-Carlton has partnered with the high-profile Misr Hotels group, which has close ties to the Egyptian government, for the Nile Ritz-Carlton, which is set to open its doors several years from now after an extensive renovation. Other projects for the company include a recent deal to manage the former Nile Hilton as the Ritz-Carlton Cairo, Palm Hills. Including its Sharm el Sheikh location, the company has a total of three hotels in its Egypt portfolio.

Rezidor Hotel Group built on the country’s reliable tourism industry by opening a Radisson Blu in Cairo last December. Marko Hytonen, Rezidor area VP, said it was just a matter of time before the company took this step.

“Opening in Cairo is a natural progression to our existing portfolio in Egypt,” he said. “As we already have hotels in Sharm el Sheikh, El Quseir and Alexandria, it became a question of when we could open in the capital, not if. The key was taking time to find the right property.”

Rezidor has 2,000 guestrooms in Egypt.

Other big names with properties in the pipeline include MGM Mirage, which recently announced a decision to open a resort near the country’s pyramids by 2013. The plan, called The New Giza, is set to spread atop 1,500 acres of land and will include three hotels and a community of villas. Similarly, Cairo Festival City, developed by the Dubai-based Al Futtaim Group, will debut a real estate, retail and hotel project that will open in several phases, beginning with a mall in 2011.

“The Egyptian government is a huge source of support to developers,” said Mohamed El Mikawi, Cairo Festival City’s senior general manager. “The government has worked for years to implement economic reforms that facilitate business in Egypt.”

Fairmont opened its Nile City hotel, its third property in Cairo, this fall. The hotel, which is part of the Nile City complex, also boasts the largest spa in the country—a whopping 22,000 square feet.

For Frank Naboulsi, the GM of Fairmont Nile City, the opening complements the company’s overall expansion goals.

“Within the Middle East, Cairo is a very important destination for both business and leisure travel, and this new hotel is a key part of our ongoing growth and expansion in the region,” Naboulsi said. “Cairo is a dynamic city with many opportunities for growth and development in the coming years. We hope to contribute to the vitality of the city and take advantage of its growing popularity with travelers, both from long-haul destinations as well as within the region where our brand presence is growing.”

Rocco Forte's recent puncture into the Cairo market was done under similar motives.

In November the London-based hotelier announced it will begin managing the famed Shepheard Hotel. The move, according to Richard Power, brand managing director, was part of an overall brand expansion strategy.

"If you are ambitious about the Middle East and North Africa, then you have to be in Cairo," Power said.  "It's a pivotal place where East traditionally meets West and has a strong hotel market in its own right. This was also a resilient move economically as it produces outbound for our European hotels and builds brand awareness, which further enhances our position in Europe."