Tourism in Egypt faces the threat of a slowdown as a result of the global recession. It has been down for two months, Financial Times said. In a report titled "Tourism in Egypt suffers in crisis", the British daily said Tourism is an industry that is crucial to the health of the wider Egyptian economy, providing direct and indirect employment to 12.6 per cent of the workforce, according to official figures. After foreign direct investment, it is the country's largest source of foreign revenue, bringing in $10.8bn in 2007-08 and accounting for 6.5 per cent of gross domestic product. Economic conditions have been deteriorating in most of the countries from which tourists come to Egypt. The top four – Russia, Britain, Germany and Italy – all have weakening economies and falling currencies. EFG-Hermes, a Cairo-based investment bank, said in a report last month that it expects arrivals to fall by 18 per cent in 2009, with most of the decline coming from markets in western and eastern Europe. It says that the Egyptian tourism industry is already starting to retrench, with hotels in some leisure destinations laying off temporary workers, who make up 30 per cent of the labour force. The most affected areas are the beach resorts of the Red Sea and southern Sinai. Over the last two decades, the resorts of the southern Sinai Peninsula and the Red Sea have grown spectacularly, attracting huge investment in hotels and infrastructure and developing into popular destinations for European holidaymakers in search of a cheap holiday after a medium-haul flight. While the offering in the past centred around Nile cruises and the Pharaonic monuments of Cairo and Upper Egypt, now the majority of the country's visitors come for sun, sea and sand holidays in the new resorts and often bypass the cultural destinations. Last year the average occupancy rate in hotels in southern Sinai was 77 per cent and by the Red Sea it was 86 per cent, but occupancy in the two areas now is in the vicinity of 40-45 per cent, according to official figures cited by EFG-Hermes. One problem is the strength of the Egyptian pound. Furthermore Turkey, a strong regional competitor, has become more attractive after its currency was devalued by about a third. To maintain a competitive edge in a shrinking market, Egyptian hotels may have to reduce their already low prices even further, Financial Times added.
