Talaat Moustafa Group (TMG), one of Egypt’s largest real estate developers, is shifting its focus beyond residential communities as it plans to nearly double its hotel portfolio over the next decade, betting on tourism, hospitality and entertainment to create more stable sources of income.

The company, led by billionaire Chairman and CEO Hisham Talaat Moustafa, aims to grow its hotel portfolio from about 20 properties today to between 35 and 40 hotels, turning hospitality into a business line that could rival its traditional property development operations.

The expansion reflects a broader trend across the Middle East, where real estate developers are increasingly investing in hotels, entertainment and mixed-use destinations to diversify earnings beyond property sales, which can be affected by market cycles.

Speaking to Al Arabiya Business, Moustafa said the strategy would strengthen the connection between TMG’s residential developments, hotels and entertainment assets, creating integrated destinations where communities can live, work and spend.

Hospitality becomes a key growth driver

TMG’s push into hospitality is already reflected in its financial performance. Hotel revenue rose 21% in the first quarter to about $90 million (EGP4.3 billion), supported by higher occupancy rates and stronger room pricing.

Occupancy across its hotel portfolio increased to 63% from 60% a year earlier, while average daily room rates climbed 15% to about $285 (EGP13,677).

Recurring income now accounts for 53% of TMG’s consolidated revenue, helping reduce the company’s reliance on one-off property sales and providing a more predictable earnings base.

The company has accelerated its hospitality expansion through acquisitions. Its hospitality arm, ICON Hospitality, acquired a 39% stake with management control in Legacy Hospitality, the owner of seven historic Egyptian hotels, in a deal valued at up to $800 million.

TMG is expected to increase its stake to 51%, while Saudi investors linked to the Public Investment Fund also joined the consortium.

The acquisition gives TMG control over some of Egypt’s most recognised tourism assets, including the Winter Palace in Luxor and the Old Cataract in Aswan.

To reposition the properties for the luxury market, TMG has partnered with international hotel operators. Mandarin Oriental will manage the restored Winter Palace and Old Cataract hotels, while Four Seasons and Steigenberger will operate other flagship developments.

Building Egypt’s luxury tourism pipeline

Beyond acquisitions, TMG is developing new hospitality projects across Egypt, including Four Seasons hotels in Luxor and Madinaty, a luxury resort in Marsa Alam and a mixed-use destination near the Grand Egyptian Museum.

Moustafa also revealed that TMG is preparing a major entertainment project with Gulf investors, as the company looks to capture rising demand for leisure experiences across the region.

The move supports Egypt’s broader tourism ambitions as the government invests in airports, museums, coastal resorts and hospitality infrastructure to attract more international visitors and increase foreign currency earnings.

TMG’s financial strength is helping support the expansion. First-quarter net profit rose 24% to about EGP5.5 billion ($108.7 million), while revenue increased 39% to EGP13.1 billion ($259 million).

Contracted sales reached EGP49.1 billion ($970.9 million) during the quarter, while cash and cash equivalents stood at about $1.8 billion (EGP86.7 billion) at the end of March.

The hospitality division continued to strengthen its contribution, with EBITDA rising 41% to EGP2.5 billion ($49.4 million) during the period.

From Egyptian developer to regional player

Moustafa, who owns a 43.2% stake in TMG Holding, has led the company since its establishment in 1974. The group now operates hotels across Egypt through ICON Hospitality, including properties managed by global luxury brands such as Four Seasons, Mandarin Oriental, Kempinski and Steigenberger.

With a land bank exceeding 128 million square metres across Egypt, Saudi Arabia, Iraq and Oman, TMG’s portfolio includes major developments such as Al Rehab, Madinaty, Celia, Noor City and SouthMED, a $21 billion tourism-focused project on Egypt’s Mediterranean coast.

Last month, TMG joined Saudi Arabia’s Public Investment Fund in a multi-billion-dollar giga-projects plan, highlighting the growing flow of Gulf capital into large-scale urban and tourism developments across North Africa.