The global financial crisis is having a significant impact on Egypt's tourism sector. But, writes Reem Leila, there are ways out It is an open secret that Egypt's tourism industry, the country's top hard-currency earner, has started to feel the pinch of the global financial crisis, with hotel bookings more than 30 per cent down in January 2009 when compared to the same month in 2008. Over the last two decades, tourism has proven to be a fast-growing economic sector, with an average growth of 25 per cent per year in arrivals over the past four years and a 32.5 per cent increase in receipts. However, because of the current financial crisis the situation in Egypt is the same as in many other countries: fewer tourists and less travel have led airlines, hoteliers and holiday companies to lose clients and to earn less, some of them going bankrupt as a result. Egypt has already felt the heat of the crisis, witnessing a decline of between 10 and 15 per cent in reservations for Christmas 2008 when compared to the Christmas before. The global financial meltdown has posed a particular challenge to the tourism industry in Egypt, since the tremendous growth in the sector over the past few years had been expected to continue. Nevertheless, the country is still expected to be among the few that will escape the full impact of the crisis, and, according to Hisham Zaazou, assistant to the minister of tourism, the tourism industry in Egypt is expected to remain within the range of what might have been expected for 2009 despite the financial crisis and the conflict in the neighbouring Gaza Strip. "Nearly 13 million people visited Egypt in 2008, and we have high hopes of either increasing the number of tourists this year or at least preserving the current number," Zaazou said. The impact of the Gaza war on tourism in Egypt has been felt in Taba, especially on the Israeli market, Israelis forming the majority of tourists in the area. According to official figures, more than 200,000 Israelis holidayed in the Sinai last summer, some estimates suggesting that Israeli tourists pump up to $150 million annually into Egypt's economy. "It was to be expected that Israelis will not want to travel to a place where they have made themselves hated," Zaazou said. Zaazou went on to say that the World Tourism Organisation (WTO), the world body responsible for the industry, expects that growth in the tourism industry worldwide will range between a negative figure and zero per cent in 2009. "We are part of the international economy," Zaazou said, recalling that Minister of Tourism Zoheir Garana had warned of the repercussions of the crisis on Egypt's tourism sector four months ago, stressing the need to develop the industry in order to ensure that it could retain its current high share of the market. "Egypt represents four per cent of the annual increase in international tourist flows, and in order to retain Egypt's share of the international market the ministry has intensified its promotion and advertising campaigns abroad," Garana said. Hoteliers in the Sinai resorts of Sharm El-Sheikh, Hurghada, Dahab and Nuweiba have reported serious impacts on occupancy rates, which are hovering at around 50-60 per cent of their high-season averages. Other resorts, such as Safaga and Qusseir are reporting 25 per cent and 22 per cent of their high-season rates, respectively, while operators of Nile cruises between Luxor and Aswan have reported a 30-40 per cent drop in tourist bookings owing to cancellations. Tourism in Cairo is down by nearly 40.6 per cent. According to Zaazou, the "Russian market was among the most severely affected, Russian tourists cancelling their reservations in Egypt due to the severe decline in the rouble on the international currency markets." In an attempt to boost the country's tourism industry during the current crisis, the ministry of tourism has announced that it will exempt hotels from contributing to the tourism promotion authority and will cut the fees paid by charter flights. "The ministry has agreed to exempt hotels from the tourism promotion fees that it ordinarily collects in order to lessen their burden during the financial crisis," Zaazou confirmed, adding that the ministry would also be setting up a working group to deal with the fallout from the crisis, with measures being reviewed every three months. Zaazou added that the Aviation Ministry had also agreed to reduce landing, take-off and ground-handling fees for charter flights, waiving them entirely for charter flights making 11 trips to designated destinations in the span of three months. It would also pay part of the cost of unreserved seats on flights to different airline agencies. The ministry would be altering its advertising campaigns to focus more on Egypt as an affordable holiday destination, he said. "Enhanced contacts with major tour operators have been made, in order that they can participate in marketing activities for tourism in Egypt and expand international promotion," he said. According to Elhami El-Zayat, former chairman of the Egyptian Tourism Federation and also the CEO of Emeco Travel, most tourist destinations in the Middle East are now welcoming fewer and fewer tourists. "Tourist destinations in the Middle East, and destinations in the Mediterranean area that have been affected by the crisis, such as France and Spain, have started to announce price reductions and give incentives to tourists," El-Zayat said. However, he added that Egypt's tourism sector could not follow a similar price-reduction strategy since prices in Egypt were already very affordable and any extra reductions would affect the quality of services offered. A clearer picture of the number of reservations made by tourists in Egypt would be available by the beginning of March, he said, especially for reservations made by visitors coming from Europe and Asia. El-Zayat said he expected the advertising campaigns conducted in European countries for Egypt as a tourist destination would have a positive impact on visitor rates. For its part, the Egyptian Central Bank said in December that revenue from tourism in 2008 had increased by more than 15.2 per cent, or $3.3 billion. "Tourism revenues for the 2009 fiscal year could stay unchanged at around $10.6 billion, El-Zayat said, "which represents some eight per cent of GDP." Germany currently tops the list of countries sending tourists to Egypt, followed by Italy, France, Spain, the UK, Russia and Israel. "We are not expecting many Russian tourists over the coming months, but we have hopes for the Italian, Spanish and British markets, whose nationals prefer to come in the summer," he said. The current economic crisis has reduced the disposable income of Europeans, who form 80 per cent of Egypt's tourism market, and this means that they may be tempted to stay away from travelling to destinations abroad, choosing domestic tourism instead. Fortunately, however, Egypt is still considered to be a close destination by many European tourists, and this has even led to a danger of the sector overheating. According to Riyad Qabil, secretary-general of the Association of Egyptian Travel Agents, a recent report analysing the Egyptian tourism sector had stated that tourist arrivals in Egypt are expected to grow at nearly six per cent over 2008- 2012, and that they had grown by 16.63 per cent over the period 2003-2007. The impact of these high rates of growth could be cooled by proper management, Qabil said, adding that since Egypt does not always have a reputation for higher-end tourism the country should focus instead on mid-level and eco- tourism rather than more five-star hotels. With the deepening recession, tourists are looking for cheaper and more affordable alternatives for their vacations, he said, and "Egypt is among the lowest-cost destinations on the Mediterranean coast. Currently, the country attracts mass tourism, and it can take full advantage of this by giving increased stakes to local communities in the tourism sector and helping them generate more revenue from it." Some, however, are more pessimistic about tourism's prospects in Egypt. For Rawya El-Sabahi, a tour guide, tourism in Cairo and Luxor has been heavily affected by the global financial crisis. "I have been working 15 days in January over recent years, but this year I only worked one day," she said, adding that the average number of tourists in the tourist groups had also fallen from 10-15 to 2-4 members per group.
