CAIRO: There are more indications this week that tourism, representing a critical source of income to the Egyptian government, may be pulling out of its yearlong slide. Bloomberg reported Minister of Tourism Zoheir Garranah as saying that tourism revenues fell 6.4 percent in the first nine months of 2009, versus the same stretch in 2008. That's better than the 9.5 percent slide in the first half of the year and the 17 percent slide for the first three months of 2009. The cyclical nature of the industry demands that data be compared between years, not between consecutive months or quarters. Tourist arrivals fell 5.4 percent over the first nine months of the year. Exact figures are still sketchy as Garranah refused to release anything too specific. At least according to one brokerage firm, though, the 6.4 percent drop may mean that tourism from July through September might have rebounded completely. "Figures from the minister's statements imply that the first quarter of fiscal year 2009/2010 is actually at par with the same period in fiscal year 2008/2009, before the crisis began affecting the tourism industry in Egypt, both in terms of revenues and arrivals, wrote Beltone Financial in a note. Even though the financial crisis began in late summer last year, tourism didn't really begin to feel the pinch until the end of the year. In other words, tourism figures for the past quarter may be on par with those from a year ago. According to Bloomberg, Garranah said that the tourism industry will make a full recovery by the third quarter of 2010. The trouble for the industry, though, is that spending by tourists is coming back at a slower rate than the tourists themselves, according to Beltone. "We are inclined to believe the minster's expectation regarding a full recovery of the tourism sector by the third quarter of 2010, wrote Beltone. "The figures also imply that spending is recovering at a slower rate than that of tourism arrivals, as we had previously reported as the appetite to spend on luxury items is still relatively subdued, compared to before the crisis. Tourism is considered particularly important to the Egyptian economy because it is a major source of foreign currency and a significant source of revenue for the government. The government, recognizing the importance of tourism, had launched on a campaign to boost the industry significantly, investing in the infrastructure needed to raise the number of tourists and revenue. And, according to one economist, the industry is inherently a resilient one. There is a very strong and fundamental demand for Egypt, said Hany Genena, the director of research at Pharos Holding, noting that tourists from the Arab countries continue to flock to Egypt. Hotels themselves responded by cutting prices during the crisis, he noted. Egypt offers packages that are not offered elsewhere. This, according to Genena, was how the industry was able to survive the recession, suffering only a moderate slowdown in revenue. In the long run, though, Genena believes the biggest worry for the industry is the quality of the country's service industry. If Egypt can't continue to reform the sector and make visiting more hassle free, the industry may have trouble growing.
