Preparing for a harsh winter

The Egyptian tourism industry is to yet again suffer the consequences of terrorist attacks. Rehab Saad investigates
It was September, the beginning of the high season for tourism in Egypt. All indicators suggested that it would be a prosperous year. Hotels across the country were booked up to 75-90 per cent of their capacity for the season. Some were even overbooked. Nile cruise ships were gearing up to offer passengers unforgettable trips between Luxor and Aswan or around Lake Nasser, and travel agencies were expecting clients from the four corners of the earth.
This rosy picture was shattered by the 11 September terrorist attacks in New York and Washington. Most international airports were closed, many airlines rescheduled or cancelled their flights, airports tightened security measures and most tourists cancelled their trips for fear of flying. Hotels worldwide have been inundated with calls and faxes cancelling reservations, and travel agencies and tour operators around the globe have been faced with clients who decided to shelve their travel plans.
The attacks resulted in an devastating blow to the travel industry that, in turn, has led to massive layoffs, reduction in service and, in some cases, closure of operations altogether.
Experts on international tourism believe that there are three main factors currently wreaking havoc on the tourism industry: lack of consumer confidence in the safety of air travel; uncertainty about the future and the weakening of the global economy in recent months.
Secretary-General of the World Tourism Organisation (WTO) Francesco Frangialli predicted that the industry will be severely hit in the short term. He said that it had been expected to post a 3 per cent gain for the year prior to the attacks, but "now it [the industry] forsees double-digit drops in the last quarter of 2001 and the first quarter of 2002, compared with the quarters a year earlier," he said addressing the WTO's general assembly in Seoul last week.
WTO analysts agree that the full extent of the impact of the 11 September events is difficult to predict. "It is the first time that four aircraft have been hijacked at the same time. It is the first time that all US airports have been shut down and it is the first time that international air traffic has been thrown into such chaos -- so it is very difficult, if not impossible, to draw conclusions in such unusual circumstances," said Frangialli. He added that the magnitude of the tourism crisis would also depend a great deal on what happens in the weeks to come.
Egyptian officials and people working in the travel industry share the same opinion. In the meantime, they are adopting a "wait and see" attitude.
Minister of Tourism Mamdouh El-Beltagui said that the attacks created a global crisis that hit almost all countries. "What happened will have a major effect at the level of international relations, security, the economy, aviation and movement of tourists. However, we cannot predict the future. Everything will depend entirely on the timing of the military operations that are supposed to take place, their geographical location, their duration, as well as the reaction to them," El-Beltagui said at a press conference during the Mediterranean Travel Fair (MTF). The fair was held in Cairo from 24 to 26 September, with 26 countries participating.
"We can only deal with the present," El- Beltagui added. "Our statistics for the week ending 18 September show that Egypt witnessed a decrease in the number of tourists entering the country of between three and five per cent compared to the same week during September 2000," he said.
El-Beltagui added that Egypt is not dependent on the American tourism market -- this constitutes a mere four per cent of the number of tourists coming to the country. For Egypt, the European and Arab markets are the main sources of tourists.
However, according to hoteliers and travel agencies, losses are much greater. Most of them have seen their reservations drop by 10 to 30 per cent, while those who deal mainly with the American market, like the Mena House Oberoi hotel near the pyramids plateau, for instance, have suffered a 90 per cent drop in bookings compared to last year. And these operators are sceptical that business will rally in the near future.
Tourist villages and hotels that were scheduled to open in the coming weeks have postponed their inaugurations and some cruise ships are remaining at their off-season moorings.
The situation in south Sinai is particularly dire. Hotels in the coastal resorts of Sharm El-Sheikh, Dahab, Taba and Nuweiba were already reeling from the dramatic decline in business due to tensions in the occupied territories when the attacks in the US dealt their bookings yet another blow. "We are really suffering," said one of the area's hotel owners.
Ahmed El-Nahhas, head of the Egyptian Chamber of Hotels, foresees that hotels in October will witness a 25 per cent drop in business as far as the European market is concerned while business from the US will decline by 100 per cent. He predicted that the markets affected most would be Britain, France, Germany and Italy.
"People are not afraid to come to Egypt. They know we are a safe destination. They are only scared about travelling by air and most of our visitors come by air. Perhaps in Europe they can do domestic trips by cars, buses or trains, but here in Egypt we have oversees travellers," said a five star hotelier. He added that his hotel witnessed a 30 per cent drop in occupancy rates for the month of September compared to last year.
According to Michel Amour, sales manager of Iberotel hotels, his company weathered September with a minimal decline in bookings. But he predicts that business in October will drop by 20 to 30 per cent. As for the remainder of the winter high season, Amour is not hopeful. "Because it is a global crisis, foreign tour operators, for the first time ever, were taking our side. They refused to refund the cost of trips to tourists who cancelled their trips to Egypt in September. They believe Egypt is safe and thus any cancellations are unjustifiable, meaning that travellers must bear cancellation fees. A few travellers cancelled but the rest came rather than lose their money. However, those who booked for the coming months, and have a release period for payment, will have more freedom to cancel their trips and thus a major drop in business will take place later [in the season]," he predicted.
Enrique Giersberg, general manager of the Steigenberger golf resort in Gouna, declared that before the US attacks, occupancy rates at his hotel were 70 per cent. Now they are approximately 31 per cent. "I am not even sure that this percentage will stand at this stage. The problem is that travellers worldwide prefer to stay home, waiting to see what will happen in the region. This is everywhere in the world and is not connected to Egypt only," he said.
Giersberg believes that a dearth of information about Egypt abroad might worsen the situation. "People might not know whether airports in Egypt, for example, are open or closed. Likewise, they might not know what the situation is here. Egypt should provide this information through its embassies abroad," he stressed.
He added that any promotional campaigns abroad or efforts by the hotel would be futile. "They won't change anything. It is a worldwide reaction against terrorism."
However, the government, represented by the Ministry of Tourism, is adopting an ambitious plan to contain the effects of the crisis. According to El-Beltagui, the ministry will increase the number of trips to Egypt that it arranges for tour operators from different parts of the world. "We will also ask the private sector to intensify its marketing plans abroad. We have to work hand in hand," he said.
Although most international airlines have seen their business slump and are cancelling flights to various destinations, "they did not decrease their regular flights to Egypt. They did not change their schedules for flights to our country and this is a big plus for us," said Elhamy El-Zayyat, head of the Egyptian Travel Agents Association.
El-Zayyat is right. British Airways' stringent measures to reduce its exposure to the crisis -- it has scaled back its flying operations by 10 per cent by withdrawing 20 aircraft from service and has laid off 7,000 people -- left its service to Egypt unchanged. Moreover, Lufthansa, which has reduced service to the United States, has cancelled only one of its 20 weekly flights to Cairo and Alexandria.
Air Malta which offers two flights a week from Cairo to Malta did not change its schedule, but might be obliged to merge two destinations in one route, namely, Cairo-Larnaca-Malta, in the event that the situation deteriorates.
Air traffic between Egypt and the Gulf was barely affected: for Emirates Airlines and Kuwaiti Airlines things are "business as usual." However, a flight was recently cancelled by Gulf Air on the Cairo-Doha route because there were fewer than 14 passengers booked for the trip.
According to El-Zayyat, four major international conferences that were scheduled to be held in Cairo in the coming period were postponed. "They were not cancelled but only postponed because of the situation. They might be cancelled in the future, nobody knows," he said.
One of the major challenges that faced Egypt recently is the holding of the MTF, Egypt's travel fair, on its originally scheduled dates. Many people thought the event would be cancelled as it was held only two weeks after the attacks in the US. However, organisers determined that the show would go on. According to MTF planners the event was 10 per cent larger than the previous year. Tom Nutley, managing director of Reed Travel Exhibition the conference-organising company that planned the MTF, said, "Only 11 companies cancelled, and that is tremendous. It is normal to have three or four exhibitors cancel at the last minute for any of our events." Nutley added that a seminar on incentive tourism which was expected to be attended by 200 US companies specialised in this type of tourism was cancelled because most of those who had registered pulled out the day after the attacks. This cancellation represents a lost opportunity for Egyptian tourism as incentive tourism operators specialise in providing free trips to travel company employees as a kind of employment perk.
Nutley, like other tourist experts, concedes that the immediate future of his conference- organising business is tied to world events. "I have a fair in St Petersburg, I also have the World Travel Market (WTM) in London in November and the International Golf Show in South Africa in December. I plan to continue with these events and see no reason to cancel them. However, it all depends on what will happen in the future," he explained.
The World Tourism and Travel Council (WTTC) has recently forecast that worldwide demand for travel and tourism will drop by 30 per cent. It predicts that this will result in the loss of 26.4 million jobs throughout the travel and tourism industry across the globe. The decline in demand will impact on airlines, hotels, tour operators, car rental and credit card companies.
For Egypt, tourism experts predict that the sector will be severely disrupted in the event that war breaks out in the region. According to Ahmed El-Maghraby, head of the Egyptian Federation of Tourist Chambers, Egypt's income from tourism will be affected by 25 per cent, meaning a loss of $1-1.5 billion in the event that limited retaliatory attacks against terrorists take place. "Losses will be even greater in the event that a war erupts," he said.
Last year, 5.5 million tourists visited Egypt. In the period from January to August 2001, 3.5 million people visited the country. Income from this sector was estimated at $4.5 billion for the year 2000.
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