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Resurrecting tourism
Published in Al-Ahram Weekly on 15 - 01 - 2014

Tourism is one of Egypt's main foreign currency earners, and the hard blows that the sector has been getting since early 2011 have contributed to depleting the country's foreign reserves and pushing up its levels of public debt.
In a bid to help the vital tourism sector, president of the Egyptian Tourism Federation (ETF) Elhami Al-Zayat has set out various schemes to bail out the ailing industry. Business and government officials have come up with a plan to create a $1 billion fund to inject capital into tourism companies that have been struggling in the aftermath of the 25 January Revolution, for example, and tourism companies, banks, and insurance companies have been asked to contribute to the fund.
The ETF, a non-governmental body representing the interests of hoteliers, travel agents, and other tourism-focused businesses in Egypt, has also been encouraging foreign investors, especially Arabs, to buy shares in Egyptian tourism companies, Al-Zayat said.
Any capital infusion into these companies could help alleviate their debt and boost their operations, he added.
A law firm has been commissioned to draw up a legal framework for cooperation among Egyptian companies and foreign investors, Al-Zayat said, adding that local investors would be allowed to buy back the shares of foreign investors after seven years of the initial purchase at full market prices.
Over the past three years, nearly 700 hotels and 250 hotel boats have defaulted on their loan payments due to the low level of business activity. In 2012, tourism companies in Egypt needed at least LE2 billion just to handle their running expenses, but they have had difficulty raising this sum from their activities.
“We need liquidity to pay employees, and there are other running costs such as electricity. The Electricity Ministry has been threatening to cut off our power supply,” Al-Zayat complained.
The new plans to assist the sector come in parallel to plans to reschedule the debts of the tourism companies through arrangements made with the Central Bank of Egypt (CBE), in which the servicing on outstanding debts will be postponed until the end of 2014.
The companies will be required to pay an additional interest rate of 1.5 per cent to postpone the payment of their debts. The move has come in the wake of other initiatives to support the tourism sector and its repayment abilities. The Ministry of Social Solidarity has also approved arrangements allowing tourism companies to delay or pay their social security contributions in installments.
Tourism officials are hoping that business will improve this year after several countries lifted their travel warnings on Egypt, including Russia, Germany, Italy, Cyprus, Ireland, Austria, Bulgaria, Sweden, and Switzerland. However, “things are not going to change overnight,” Al-Zayat warned.
During the period of the travel warnings against some foreign tourists travelling to Egypt, nearly 90 per cent of charter flights were stopped, which meant that foreign companies took their business elsewhere. To lure them back, it may take months of negotiations, and unless security now improves, the slump is likely to continue.
Occupancy rates in Cairo hotels now stood at 20 per cent or so, Al-Zayat said. However, rates were higher in the outskirts of the capital, for example in Al-Haram and Heliopolis, where the average was 65 per cent. The downtown area has fallen to as low as six per cent.
Downtown Cairo has been the area that has been most affected by the waves of unrest that have hit the country since the 25 January Revolution. However, Minister of Tourism Hisham Zazou said last week that tourism had started to get back to normal and that Cairo was no longer considered to be a dangerous destination by foreign visitors and that it was ready once again to receive tourists.
Cultural tourism, the specialty of locations such as Luxor and Aswan, has all but come to a standstill over recent months. But beach tourism, now offered at rock bottom prices in Sharm El-Sheikh and Hurghada, is attracting bargain hunters.
“We are doing all we can to bring back cultural tourism to Luxor and Aswan, but we cannot promise a speedy recovery,” Al-Zayat said.
The two historic cities of Luxor and Aswan have been hit hard by the political unrest following the ouster of former president Mohamed Morsi in July last year, with occupancy rates declining by 90 per cent. Some 283 floating hotels and cruise boats have nearly stopped operating due to the weak tourist flow.
But tourism officials are hopeful that calm will return to the country following this year's referendum and presidential elections, citing security as the key to the long-awaited recovery.
In its efforts to boost the tourism sector, the Ministry of Tourism is planning a music festival in cooperation with Rotana TV, the minister signing a deal in Dubai last month that involves holding 35 concerts for singers from across the region in Egyptian touristic cities.
These concerts, which aim at attracting Arab tourists, will take place in Sharm El-Sheikh, Hurghada, Luxor and Aswan and on the North Coast. The Tourism Promotion Office (TPO) is also planning a series of concerts for Egyptian expatriates living in Arab countries.
“I dream of tourism returning to what it was in 1992, when the average spend of a tourist was $135, compared to $60 or so today,” Al-Zayat said.
In Egypt, top hotels are now offering rooms for $80 or $70, a fraction of their normal rates. A comparable room in New York, Al-Zayat pointed out, would cost $500 or $600.
With a shortage of business, hotels and tourism-reliant businesses in Egypt have gone through hard times. “Right now, it is hard to speak about investment in tourism. Everything is in a holding pattern, and is likely to remain so until July,” Al-Zayat noted.
However, the EFT is not giving up, and its officials are holding talks with business partners all over the world. “We are targeting special markets. Rather than talking to everyone at once, we may start with Russia and the Arabs and then tackle France, for example,” Al-Zayat stated.
In Europe, local tourism constitutes almost 60 per cent of the tourism market. This is not the case in Egypt, partly because of the small size of the country's middle class, and partly because of the lack of interest in domestic travel, the EFT chief said.
According to World Tourism Organisation (UNWTO) experts, local tourism begins to pick up once a country's per capita income goes over $6,000, which is twice as high as Egypt's.
Al-Zayat has high hopes for conference tourism, saying that the average conference-goer spends five times as much as the average leisure tourist.
When Airbus held a conference in Luxor to discuss the building of a new passenger plane, 50 of the world's top executives showed up, including the CEOs of General Electric and Rolls-Royce, he added.
The government is also coordinating its efforts to revive the country's tourism sector. Minister of Civil Aviation Abdel-Aziz Fadel inaugurated a conference last week on the future of tourism in Luxor that is aimed to bolster Egyptian tourism, for example.
Fadel said that all Egyptian airports were secure and open to visitors without restrictions. Foreign Minister Nabil Fahmi also this week approved the tourism minister's request to halt the implementation of a rise in the visa fees for tourists until May 2014, the second time that the ministry has agreed to postpone the implementation of increased fees.
Implementation had been planned this month but was delayed to February and then to May 2014. The minister of tourism said that delaying the rise would encourage local and foreign tourism companies to promote tourism in Egypt.
The tourism sector, Egypt's major foreign currency earner, has had a tough time since the revolutions that toppled former presidents Hosni Mubarak and Mohammed Morsi. The political unrest that has swept the country since 2011 has had devastating effects on the sector, with Al-Ahram reporting recently that the sector had lost some $60 billion over the past three years as a result.

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