CAIRO: Egypt's tourism sector has picked up this fiscal year as the slowdown caused by the global economic crisis eased; however, ongoing trouble in European markets is making forecasts for next year less clear. Egypt's tourism industry will not be deeply affected this year by the ongoing financial turmoil in Europe, Minister of Tourism Zoheir Garranah told Bloomberg this week. Egypt recorded solid revenue in the tourism sector, with a 24 percent increase, which brought the first quarter 2010 figures to $2.7 billion, Garannah was quoted as saying. A long-term forecast, however, may be less rosy as the real fallout from Europe's financial crisis will begin to show come next year, he indicated, especially since 70 percent of tourists to Egypt come from European countries and use the euro as their currency. Coupled with the euro's depreciation in recent weeks, this may translate into a decline in the number of European tourists reaching Egypt's pristine beaches and historical sites. Cairo-based investment bank Beltone Financial said in a statement, “Activity in Egypt's tourism industry has picked up some momentum during fiscal year 2009/10, recovering from the slowdown that was caused by the global economic downturn.” Moreover, the firm said it expects “total tourism revenues to grow 10 percent year-to-year to $11.5 billion in 2009/10 after falling 3 percent year-to-year to $10.5 billion in 2008/09.” Although revenues in the 2010/11 fiscal year would continue to grow, Beltone said, it would be at a slower rate — 7 percent to $12.3 billion. Mona Mansour, director of research at CI Capital, an investment firm based in Cairo, sees a possibly positive outcome from a depreciating euro. “It seems that on the one hand, yes, indeed a depreciated euro would negatively impact the tourism sector, but on the other hand, in times of economic difficulty, potential travelers are looking for budget destinations, such as Egypt,” she said. “In the context of the financial crisis, Egypt's tourism has performed well in comparison to other geographical areas of the globe. Currently, figures show a 6 percent decline and a 4 percent drop globally, but in Egypt, on the other hand, the fall is around 2 percent,” Mansour said. “The numbers for Egypt haven't been as bad as was originally being predicted,” she stated. In part as well, “credit needs to be paid to the government for having promoted the sector effectively,” Mansour indicated. As a key earner for the country — representing 48 percent of all services within the national economy and 24 percent of all goods and services — the government has taken the necessary steps to ensure that the sector remains strong, she stated. For her part, Mansour believes that to help prevent a potential downturn at the very least in the sector, the Egyptian government should expand its marketing focus to regional zones such as Asia and Latin America instead of Europe, as both represent higher GDP growth areas. A second strategy, she said, would be to expand the number of routes for low-cost airlines operating in Egypt, which would make the country more financially accessible to tourists. Abdel-Fatah El-Gabaly, economic analyst at the Al-Ahram Center for Political and Strategic Studies, thinks that by solving some of the major infrastructure deficiencies that plague the country, especially in Upper Egypt, as well as significantly reducing the overwhelming traffic in both Alexandria and Cairo, Egypt would be able to attract more tourists. Nonetheless, he pointed out that the government began, for instance, an important rehabilitation project in Luxor, which is a major drainage operation that began in 2009 for monuments that have been affected by excess underground water.
