Orascom Development Holding AG (ODHN) Earnings Call Transcript & Summary

[Technical Difficulty] We're happy to be hosting today, ODH 2Q '24 results conference call. From the management team, we have with us Omar Hamamsy, CEO; Ashraf Nessim, CFO; and Ahmed Abou Ella, IR Director. As usual, we will start off with the presentation by the management team, and then we will open the floor for questions. I will now hand over the call to Omar for the presentation.

Thank you, good afternoon, everyone, and very happy to be with you to talk you through how we did over the last 3 months in the second quarter of 2024. Another very strong quarter for Orascom Development, one that we're very excited about, building on the back of a very strong year 2023, building on the back of a very challenging environment in the first quarter of 2024 where we had a major devaluation in one of our major markets, the Egyptian market. But on the back of this, we're building on extremely strong foundations that we've been working on over the last 4 years, and I'm very happy to report that our numbers and our performance and our intrinsics and the resilience of the company for this quarter, for this year and moving forward are exactly as we hope them to be in the face of such extreme adversity. So let's take a very quick look at the numbers as a whole. Our revenues for the second quarter were up 25% in comparison to the similar period last year. Our adjusted EBITDA, which effectively is our operating profits are up 69% for the same period, and our net profits are up 54% for the same period. So across the board, very strong performance in that second quarter. Obviously, the performance on the net profit offsets quite a bit, but not completely. The negative impact we had from that devaluation I referred to in Q1 2024, which puts us still at a negative level for the year-to-date, something we're working really hard to mitigate against and compensate for by the end of the year, we hope. But if you look at it from an adjusted perspective, if you remove the effects of the one-off effects, including primarily the FX effect, you will see that actually our first half net profits were up 37%. So across the board, the intrinsics of the business are very solid, and we continue to be very optimistic that a lot of the difficult macroeconomic headwinds that we've been facing over the last 4 years, starting with Corona, then with the Russia-Ukraine conflict, which affected our European businesses, then with the devaluation in Egypt first round and the economic difficulties the country faced in the second round and then more lately, the Gaza war. You can tell that the business has continued growing very healthily across all of these in an extremely resilient manner despite all of these extreme challenges. I would say that the outlook at this point looks a lot more positive and I am personally very optimistic about the next few quarters and years going forward. If you go to the next page, just to give you a very rough feel for how the intrinsic business did in Egypt, specifically, since it's an important market and because it's the one that primarily contributes to this whole discrepancy associated with the FX for the first half of the year. You can see on the left side, the actual CHF results. These are the ones we just saw a minute ago for the first half. However, you can actually see also how in Egyptian pounds, the numbers across the board all the way till the net profit number were incredibly positive, and the growth rate was extremely strong. Sales more than doubled in real estate, revenues grew 65%, gross profits grew almost 100% adjusted EBITDA. So operating profit grew almost 100% in the local currency. So the business is very resilient. The underlying fundamentals for the business is very healthy, and I'm personally very encouraged by that. Let's now look at our businesses segment by segment. We'll start perhaps with a double-click on real estate, on the real estate segment. Our real estate sales for the first half of 2024, were up almost 60% at CHF 433 million, and that gives us a very healthy deferred revenue balance. These are the revenues that will have almost CHF 0.75 billion. These are the revenues that we will be recognizing over the course of the next 5 to 7 years as construction and deliveries are completed. They are almost guaranteed effectively, revenues for us in the markets where we operate. So very good growth number on real estate sales and always a very good leading indicator of the health of the business. On the next page, tracking the progression of our construction and deliveries, you can see that our revenue in the same segment, the real estate segment was up 9% to CHF 167 million for the first half of the year. And our adjusted EBITDA, which is our operating profit was up 2%. That number is, in my mind, a very important one because the adjusted EBITDA, the operating profit at this moment in time is the confluence of us constructing or awarding contracts for construction and recognizing the revenues there, at the time when inflation was at its peak and the devaluation or the value of the Egyptian pound, which drove a big chunk of those numbers was at its absolute worst performance, right post devaluation. In relation to sales values and hence, revenue recognition or sales recognition, that were 2 years old. The reason I'm saying this is because in that -- in the face of this, we were actually able to generate that growth and a healthy -- very healthy, I would say, adjusted EBITDA margin or operating profit margin. And that is a testament to everything that we've been talking about in the last 4 years quarter-on-quarter, where we talk about how our pricing is increasing, how our margins are being protected, what we're doing on cost controls, et cetera. and it's precisely to be in that place during the most difficult periods of time. And I would say that this first of this half of this year is probably the hardest sort of financial challenge we've met, and I think we're coming out in a pretty resilient place there in the real estate segment. The hotel segment on the next page shows an equally or actually even more positive story, also despite some headwinds in the macro environment we're operating in. I'll speak about it in a minute. But our revenues were up 8% half-on-half. Our operating margin up 13% half-on-half. Those numbers could have been even stronger had it not been for the fact that with what's going on in Gaza, our Taba destination, which was on track to rebuilding and accelerating at a very healthy clip, and you saw those numbers last year, has actually been mothballed again because of the geopolitical risk over there. And despite this, despite effectively 2,500 rooms or [ keys ] not functioning across our entire system, which is not an insignificant number, we were able to actually grow both revenues and operating profits for the first half of the year. And again, something I'm very proud of for the team for what they've accomplished, the yield management they're doing, the reinvention of different source markets from which they're bringing our customers and the exceptional quality of service that they're providing in the hospitality segment. If we go to the next page, a third line of business that 4 years ago, 5 years ago was almost an afterthought and was pretty negligible in our overall business; it's one that we've been growing quite regularly. It's a very consistent form of recurring revenue and recurring income for us from all our commercial assets. I'll remind you, these are things like our after sales services for real estate, these are things like marinas, revenue that we get from schools, hospitals and retail, office, et cetera, rentals and all of that, a business that we've been focusing on a lot more, again, 15% half-on-half growth despite the currency challenges and a dramatic improvement in our operating profits, a growth of 55% there. Again, something I'm very happy about and you'll see in a minute, they're beginning to really contribute on the next page, if you look at it, beginning to really contribute to the mix of our revenues in a very, very real manner. We see that on page 16, the next page. Our revenue mix very healthy. We've also -- so not only have we had the revenue growth from CHF 253 million for the first half of last year to CHF 306 million for the first half of this year. Not only did we see growth across all segments, but we've also completed as, again, our strategy has been shaped as we've been executing on it, a land transaction worth almost CHF 30 million, which we recognized in the second quarter here. That is due to the sale of a piece of land in the [ mansions ] to 2 sub-developers. And it's -- we'll talk about it in a minute when I I'll give you a bit more details about it, but very lucrative sale for us and a very big win-win for El Gouna as well as for the sub-developers who will be working with us over there. You can see also across the board that all the different segments are growing very nicely, and that's something that I'm very optimistic about. On the next page, you'll see the geographic distribution. I think the one thing to highlight here is the return of Salalah, Oman, something we're very excited about. I had mentioned probably a year ago that we have a new team in Oman now, led by a great leader on our side. [indiscernible], who has been working very diligently, has grown his team, has redirected our commercial strategy, particularly around real estate. And between him and also our new leader of hotels, Stuart, have been working together hand in glove to find synergies between the hotel visitors and the real estate purchasers. And that has actually translated in very exciting early results. And you can see here that [ Oman ], between Salalah and Sifah is contributing to almost 17% of our total revenues, and I expect that number over time to continue to increase in a very healthy manner. So maybe I'll spend a few minutes just with very quick highlights from different destinations, not all of them, but I'll give you just some bits and pieces to give you a flavor of what we've been focusing on and what's going on there. Maybe we start with El Gouna, as we usually do. You'll see quite a bit of information on the slide in front of you, but I'll highlight a couple of points. The first one is very happy about the occupancy rate in our hotels there. It reached 73% in the second quarter of 2024. That's pretty much the same occupancy rate as last year the same period, so that's an important thing. The second important thing is that foreign visitors represented 81% of our visitors there in that second quarter. Again, that's, I think, a very healthy metric and represented overall for the first half of the year, 84%. That's good because it also tells us that our ability to generate foreign currency, so euros, francs and dollars from those foreign visitors is healthy and very much alive despite all the challenges in the region that we are aware of. And despite the fact that we've had this devaluation in the Egyptian pound, we've actually been increasing our ARRs in the hotels. We've reached now CHF 90, which is an 11% increase versus the same period the first half of the year versus 2023. If we look at it on the next page in a few numbers, I'll point you to the table on the left and at the bottom part of the table, this is in Egyptian pounds, but you can also see the same table in Swiss francs. And here, this is the real estate performance. You can see very clearly that in either currency, the net sales are up dramatically over 2x net sales increase in Swiss francs, almost 3x increase in local currency. You will also look at the very important metric, which we look at religiously, which is our average selling price in Egyptian pound in local currency, up 67% for the first half of '24 versus '23. And in Swiss francs, again, despite the devaluation, because of devaluation up "only 24%" , that's still a dramatic increase and one that is a very positive one. On the next page, the revenues, no major surprises here. The only part that you'll see perhaps increasing is the contribution of the land component, which is that sale that I spoke about a few minutes ago. On the next page, O West continues to perform very well. We're well on our deliveries. We've delivered 316 villas to homeowners in the first half of the year. We're continuing with an objective of almost delivering 1,000, the remaining 684 villas for the rest of the year. Our club over there is progressing. We have over 4,500 customers now, and we're beginning to have collaboration between O West and El Gouna, in terms of what we call O Plus, which is a lot of the design, renovation, property management, home services, which contribute to a lot of the commercial recurring revenues and recurring income elements that I spoke about earlier, and we're leveraging and cross sharing those learnings across different destinations and getting them up now increasingly in O West. If you look at it in numbers, again, Egyptian pounds on the left side so that you can see the raw underlying performance. And of course, Swiss francs on the right side, both incredibly healthy. Price increases in local currency, 64% half first half versus first half of the year before. Net sales up almost 60% in local currency, and you can see the numbers in the 20s percent across the board in Swiss francs. If we go to Makadi Heights, our third large destination in Egypt, the one thing, I think, to highlight here is that we've entered an agreement with the government, represented by the Tourism Development Authority, the TDA, where we basically got a -- where we worked out a deal with them, where in exchange for $5.6 million to be paid over 10 years, we are getting a new development time line over the Makadi Heights land bank, which is approximately 1.4 million square meters left over an 8-year period. So that's something that actually is tremendously value-creating for us. It gives us the opportunity to pace ourselves to make sure that we're capturing the land value and the real estate value and the offerings value at our own pace, at our own organic healthy pace and gives us plenty of time to complete the project over there. The rest of the numbers you can see on the next page, a very healthy performance there, again, in local currency and in francs. Local currency more than doubled the sales in the first half, average selling price almost up 55%, 54%. And the numbers, of course, directly corresponding in Swiss francs, very healthy increases across the board. I mentioned Salalah earlier in Oman, so maybe just give you a bit of a feel of what's going on there. Very healthy real estate sales, continuing a nice upward trend, basically 88% up in relation to the same period last year, very, very healthy there. Our hotels maintained extremely positive performance there despite the seasonality effect that we get. Our occupancy rates increased 3 percentage points to 65% for the same period versus 62% last year. And if we look at it on the next page with a bit of numbers, you'll see that the net sales, as I said, up quite dramatically. Average price is also up quite a lot in an environment like Oman, particularly in a place like Salalah, up 22% for the same period. That's something that we're very excited about and that we've been working real hard on. And then across the board, you can see that the hotel performance is also solid and one that we're excited to continue hopefully going forward. Last tidbit on another important destination for us, growing very nicely, very healthily and where we've also moved and made some changes in the leadership team. So we've announced a few weeks ago that Raphael Krucker, who runs our Andermatt destination will also be running our Lutica Montenegro destination. We think there is a bunch of synergies between those 2 destinations. We think that actually having proximity of the 2 destinations and the leadership teams is something that's very positive. And we can start seeing -- of course, we will see much more over the course of the next 12, 18 and 24 months, but we're already seeing very strong strides across the board there. The construction and delivery has been growing at a very nice pace. It's becoming a lot more of a year-round destination with lots of place making and events that we're organizing there, and the total revenues have remained pretty stable in relation to last year. If we look at it in numbers on the next page, you will see again a very strong performance on real estate. So real estate sales up almost 2x at CHF 43 million in this case. Prices, again, in what is a relatively inflation limited environment, prices up 18% in Swiss francs. So something we're very happy about and the performance overall that's very strong. At this point, I'm going to pass it on to Ashraf, our CFO, who's going to walk you through our income statement, our balance sheet, our debt position and our cash flow, and then we'll come back with a couple of words on the way forward, and we'll open it to questions.

As usual, I will try to highlight some of the figures, which is -- the first one is the -- you can see the gross profit margin as well as the adjusted EBITDA margin, which is the operations side. You can see that there is good improvement compared to last year. Partially on the gross profit, it is related to the land sale, as we always mentioned that our lands in our balance sheet are at historical cost, which is very low. So every time we sell land, then we have a relatively good margin, and this is the direction that we are trying to do, going from now and actually going forward is to try to have a land segment as part of our operation. Also, you can see that the SG&A is almost fixed compared to last year, while the revenue is growing, which is a good sign that we are able to grow our revenue, our top-line without increasing the ratio of the SG&A. Also -- but unfortunately, after the operating or adjusted EBITDA, you can see that the big loss that happened, already mentioned by Omar, is the devaluation of the Egyptian pound. And we have to revalue all the foreign currency denominated debt in Egypt and therefore, recognize the loss in the P&L. Also the number to be highlighted here is the finance cost increase, mainly coming from -- in the first quarter, the Egyptian government and Central Bank of Egypt decided to increase the rates on the Egyptian debt by 6%. This is from one side in addition to -- in the first quarter as well, we had to withdraw from the O West current credit limit that we have, to continue construction, but we are trying to minimize any withdrawal until end of the year in order to try to minimize the finance cost as much as we can, till hopefully, within next year, the interest rate will start to go down. Looking at the balance sheet, there is actually nothing to be discussed on the balance sheet specifically, except that still we are able, I would say, to maintain our healthy cash balance. But as you know, most of this cash balance is strapped in Egypt. And hopefully, starting next year, we are working to a possible dividend payment from ODE, the subsidiary in Egypt to ODH. Also, we are working, as you know, that there is the famous CHF 100 million bond that will mature during October. So we are working to refinance this bond either by issuing a new bond or other means through normal bank debts. We are working on that, and we are working with advisers to reissue at least partially the bond and also some combination between, as I mentioned, between the new bond and bank debts. For the cash flow, you can see that practically the cash flow is really looking good compared to the previous year. The cash flow from operations, CHF 88 million compared to a negative CHF 13 million, but actually, last year, there was one-off of paying $60 million to the Egyptian government, related to the agreement that we have done on the 17 million square meter of land of [ Gouna ]. But even if I add that, still the numbers in '24 looks much better on all operating cash flow. And we are continuing the infrastructure overall on all our destinations, all the renovation in the hotels and this is shown in the CapEx, and we'll continue like that until end of the year. So this is practically it from my side, and I go back to Omar for some more comments.

So that's basically the summary of where we are at, maybe a bit of a glimpse on overall, what have we been focusing on and where would we continue to focus. And I've been talking about those same themes from an operational perspective for the last 4 years. I won't repeat them in extreme detail, but maybe capture one of them and mention it and talk about it, which is the first one. I'll remind you of the 4 themes, they are around our monetization acceleration, especially for noncore assets that enhance our free cash flow to equity holders and that eventually will enable us to pay dividends to our shareholders, critical. The second one is our commercial and operational uplift. That's where we talk a lot about all our go-to-market strategies, our new segments that we open up, the product redesigns that we do, et cetera, et cetera, our cost base, our centralization of procurement, all these things, are growing recurring income base. In my commentary earlier, we've been displaying that very clearly every quarter in our results. And the last one is our capital optimization also along with a very, very large -- recently started a year ago, approximately human capital augmentation element, where we're going through a major culture change journey inside the organization, where our journey of institutionalization and functioning as a true multinational, highly professional organization that is completely independent of ultimately individuals or key men, if one may call it that way, is absolutely critical for the long-term sustainability of this company, and we're doing a lot there. But I will not walk you through all of them. I'll just highlight a couple of points on the monetization acceleration perhaps on the next page. We promised that we'd be doing a bunch of those, the markets in which and the times in which we've been operating have been very challenging. Despite this, I'm happy to say that over the course of approximately a 2-year period, so from August '22 until where we are today, we've successfully realized almost CHF 230 million of monetizations across the entire system. Of course, in August '22, we did the large deal we did with Vail Resorts with the sale we did there, that was approximately CHF 150 million for us. Then we -- in July last year, so a year later, did the El Gouna land sale, CHF 12 million. I'll remind you that was almost 50x -- 55x book value transaction, CHF 250 per square meter for that transaction. Then recently, the one I just mentioned, the CHF 29 million transaction in El Gouna, 145,000 square meters, 15.7x book value. So again, that's very important. It was CHF 200 per square meter. It's a piece of land that's obviously much more inland than the previous one. And so it really gives you a good sense for the amount of value that is actually stored in our land bank and the ability for us to transact on that and generate free cash behind it. And then last but not least, we announced a transaction that still has not closed, but where we have entered into an agreement, into a binding agreement, a purchase agreement with Cove Holdings Limited to sell our UAE assets' entire share capital there. This transaction's total enterprise value is USD 40 million or CHF 37 million, as you see it here, which actually works out to be about USD 115,000 per key in the asset there. Our -- so ODH and all the other shareholders of this asset will receive $23 million in cash proceedings from the entire equity stake, and we will be able to deconsolidate approximately $18 million of debt that we hold on that asset. So a very good transaction overall, one that we are hoping to be able to close soon, but we had announced it, and I thought I'd share some details on it, which hopefully you find helpful, and you understand a little bit more the overall monetization, both strategy and execution that we're doing, still more transactions in the works right now, that policy, that approach continues. I am hopeful truly that as [Technical Difficulty] in the political environment in the different places where we operate improves, that there should be more and more of those transactions that we will be bringing to you as our shareholders. On this, I will end our presentation, and I will pass it back to our colleagues from CI Capital for moderation of the Q&A.

Thank you Omar for the presentation. Thank you, Ashraf. We will now open the floor for questions. [Operator Instructions] We have a question from Daniel Brki.

Yes. I have 2 questions. First on O West. The number of contracted units sold was down 18%. Is this something specific? Is it timing? Yes, could you explain this one? And then if I'm not mistaken, the hotel EBITDA margin was down in the second quarter compared to the second quarter of last year. Is there a specific reason for this? And finally, I know you don't give guides, but you still can give us some flavor what you expect for the second half of the year? So what results would be satisfying for you?

So on the O West side, no, it's more a question of local dynamics in the market here. What happens very often in Egypt is -- and with this round of devaluation, what happens every time we have a big round of devaluation is there's usually a short period of time -- it can last anywhere between 4 weeks, sometimes up to a couple of months, where the market kind of pauses a little bit and people are under a certain amount of uncertainty and therefore, do not necessarily transact in real estate as much. And that's what I think you saw here. For us, the key thing we focus on is ultimately value. And what is important for us to continue on an acceleration path of our net sales. And I think from a unit perspective, an absolute number of unit perspective, I think anyway, we'll end the year higher than last year. So this is already some rough guidance for you, and I'm relatively optimistic that the momentum should continue. On the EBITDA question for the hotels, I will simply remind you that Taba, again, which is 2,500 rooms and which had in 2023, been ramping up very nicely, life was getting much better there, we finished the year at -- I can't recall the number off the top of my head, but I think it was around CHF 20 million, maybe CHF 20 million plus, CHF 23 million of revenues there. That went suddenly to 0. And of course, we don't immediately just simply cut our costs and fire people. We act in a very responsible manner, and we try to reorganize people, try to run on absolute minimal burn rate, and that's one of the major drivers that you saw here for the difference in the EBITDA of the hotels. As far as high-level guidance is concerned, I'm very optimistic right now about the outlook of the company. Like I said, I think the bulk -- look, the -- like I said, 4 years and 4 major crisis, almost every time we are done with a big crisis, again, corona, Russia-Ukraine, then Egypt macroeconomic meltdown, then major devaluation, then Gaza, if you ask me, are we done pretty much with all of these big things, I'll say most of these shocks have been absorbed, we have resiliently responded, so we've redirected our business every time in other places. I am genuinely optimistic and I think pragmatically comfortable that the worst is behind us and that therefore, the growth going forward, including for the second half of the year, should be relatively healthy. If there's perhaps one minor question mark, it would be for the Cairo market just because since the devaluation and since what I referred to a few minutes ago for O West, a couple of minutes before O West, the Cairo market in this period is usually very quiet because most of the sales that happened during the summer happened on the north coast of Egypt. So everybody, all the spending, all the brokers, all the real estate agents, et cetera, are focused there. We will see when we come back in September, how the Cairo market picks up. I'm optimistic there, but I don't want to be overly optimistic. But net-net, when you aggregate everything together, I'm very optimistic for the rest of the year, both on hotels, on real estate and on commercial. Ashraf, I don't know if you want to add or maybe even edit some of the stuff I said?

No. Maybe just on the hospitality part, the question is also, there is in Salalah in Q1 is the highest season, is almost more than roughly 95% occupancy in Salalah. Then when we go to Q2, it started to, in general, start to be very hot and then on the Ramadan season, so the occupancy comes down sharply in Q2, which is the normal low season. So this is why we can see that there is this drop overall in the hotels, in addition to [indiscernible] as mentioned.

We have a question in the Q&A box from Daniel Brki. He says that the company has been delivering very well on the operational level, but there has been a disconnect between this and the stock performance. He's suggesting that maybe increasing the stock liquidity, bringing in new corner shareholders, increasing free float or arranging more management visits to potential investors could help. Also asking what measures is the management team discussing with the Board to support the stock performance?

Yes. Absolutely spot on and obviously, top of mind for all of us, including myself very directly, as you know. There's a couple of things over and above all the suggestions that you are talking about that we're also working on. The first one is we are having very active discussions right now with the Board around starting to have some dividends flow from ODE, so Orascom Development Egypt. So the Egypt entities as they operate, up to ODH, right? And also from all the deals and transactions and monetization events that I have been talking about a few minutes ago, also having a methodology by which a bunch of free cash flow would be made available in the form of dividends also to ODH's shareholders, right? I -- we don't yet have enough of it at this moment and we haven't yet transacted on paying dividends from ODE to ODH. It's something we have a large task force working on right now, including members of the Board of Orascom Development Holding in order to make sure that, that works. We think that this is going to be an important -- a very important milestone. I don't believe that in the last 10 or 15 years, any dividends have been paid up to ODH nor any dividends from ODH have been paid to shareholders, I may be wrong, but I believe, certainly in the recent future, in the last 7 or 8 years, that has not been the case. So we think that this is going to be a very important milestone over and above the different investor meetings and roadshows that we have been attempting to -- that we've been having and we'll continue to have both inside Egypt for the ODE share and outside for both ODE and the ODH. There's a bunch of investor road shows coming up, 2 of them, I believe, separate events coming up in September, for example, this year.

A couple of questions on the loss on [ ASA ]. Can you please elaborate on this and give also your view on how you think the destination is expected to develop? And by when do you expect profitability there?

It's as you mentioned, Omar, purely tactical because in ASA specifically, we only recognize revenue of the real estate component when we deliver the units. So it really depends on the timing when we deliver the unit to the client in order to recognize the revenue and cost and the profitability of the units that we sold. So in Q2, there was no plan to deliver any units. But from our plans during [ Q2 -- Q3 ] there are enough deliveries. And I think by end of the year, we are expecting to go back to profitability. It's mainly a timing issue on the delivery side of the real estate.

Yes. So this is a very tactical one. I frankly would completely -- I think it's completely negligible. We do it -- to your second part of your question about where is the outlook for ASA, we expect ASA to actually be profitable this year and to deliver positive profits to its 2 shareholders Orascom and Samih Sawiris, himself. And that's going nicely on track through -- and in a very consistent way. We have a very clear path with the ASA leadership team that they are executing on and that they've been nicely delivering against.

Another question on the Gaza conflict, and specifically on Taba. How long would it take Taba get back up and running?

So the approach we've taken on Taba actually purposefully at this moment was not to shut it down completely in order to keep exactly that flexibility of bringing it back up and running from an operational perspective. I'll speak about the commercial side in a second, but from an operational perspective, on extremely short notice. Extremely short notice means literally within a matter of weeks, less than 3 to 4 weeks, we can have Taba up and running at almost 100% operating level, which is an extremely rapid turnaround time. So the cost of doing that means that we have to maintain our team, who we've distributed quite a bit. It means we have to maintain the asset itself up and running at a very minimal level. This is things like all the hydraulic systems, all the AC units, all these kind of things. And that's how we have done it so far. And therefore, we're doing exactly that, and we're sitting and waiting. The commercial part is obviously the trickier one where if I look at the previous history, it took us a good, I would say, 1 year, 1.5 years to come up rapid, to come up to commercially viable levels of operating, i.e., occupancy levels in the north around 50% or north of 50% with ARRs that are, for us, what we think is appropriate for the asset. So that may take a little bit longer as tourists, especially Western tourists gradually gain the comfort that the region is safe, that the area is okay, et cetera, et cetera. That typically does take at least a few months, if not a year, 1.5 years. That's the answer on Taba.

How much room do you have to increase ARR in USD in Egypt, given the high foreign occupancy rate?

We think we have -- we still have quite a bit of room to increase. One of the things that Stuart, the new head of hotels who we hired from cruise line business is very strong at, and one of the primary reasons we brought him on board is his commercial yield and revenue management capabilities. He's built up an entire team in that area. That team has been working on a major transformation of our pricing of our yield management of the assets -- of putting all the assets together in the same destination so that we can do active dynamic pricing along the way as well as also making sure that we've upgraded and actually renovated completely our IT systems in relation to pricing and developing an entire e-commerce strategy. All of this has been ramping up gradually in the form of pilots throughout the first half of the year, and you can see the results there. Again, keep bearing in mind that Taba went completely off-line. If you looked at the results, actually destination by destination, they look really good, particularly in Gouna. Now in the second half of the year, we expect that those pilots to actually come to fruition and to start growing much more across the entire system, at which point I would expect to see the ARRs increase another step change, hopefully, which then another big step change the following year once we roll that out across the entire system of hotels, primarily to roll it out to Salalah to Andermatt. So that's the short answer there. I think we still have quite a bit of room to go.

Where do you see incremental land monetization taking place within the portfolio over the coming 6 to 12 months?