South Sinai Investors' Association Chairman calls on government to intervene regarding hotel pricing

Despite hardships in the sector over the past four years, it is still working and gaining experience in dealing with crises, says Hesham Ali

Tourist occupancies in Sharm El-Sheikh hotels have increased to more than 65%, as a result of family vacations during Eid Al-Fitr, according to Hesham Ali, Chairman of the South Sinai Investors Association.
In an interview with Daily News Egypt, Ali noted that before the holidays, occupancies were between 40% and 45%. He believes that the phenomenon of price wars does not only affect hotel revenues, but also affects Egypt's reputation as a tourist destination as a result of declining service quality. In his opinion, this calls for the intervention of the Ministry of Tourism.
How were occupancies this week, with the Eid Al-Fitr holidays?
Occupancies have increased from 45% last week to 65% this week with the arrival of Egyptian families to Sharm El-Sheikh. This is a very good thing because 45% occupancy is weak for Sharm El-Sheikh, which has 30,000 hotel rooms out of a total of 62,000 rooms in South Sinai.
Is there a major difference in prices for accommodating Egyptians between this season and before?
I do not expect a big increase in prices this season compared to last season, and I do not expect prices to increase more than 5% or 10%. This price increase is reasonable in light of the increase in operating costs of South Sinai hotels. Occupancies during the rest of the summer season will be more than 50% with the flow of Egyptians for the summer vacation.
There is a major focus on Sharm El-Sheikh, often at the expense of other South Sinai destinations. Why is that?
This is true, but it may be justified because Sharm El-Sheikh has about 50% of the hotel rooms in the governorate, in addition to its having all the elements of tourist attractions. It is an integrated city that doesn't only rely on hotels, there are also markets to which tourists go at night, and cafes and other things that are not available anywhere else in South Sinai.
Investors are always complaining about the government ignoring the other areas. How can this be resolved?
Lately the government was supporting the other tourism areas in South Sinai; whether El-Tor, Dahab or Nuweiba, which benefits occupancies in these areas. Unfortunately, marketing for those regions is lower than marketing for Sharm El-Sheikh, which requires more efforts over the coming years. Another reason is the general decline in Egyptian tourism over the past four years.
What are the occupancy rates in other areas in South Sinai?
Occupancies in Sharm El-Sheikh are the highest, compared to the other regions. As I mentioned before, it exceeds 60%. In the meantime, Egyptians are visiting Dahab to spend their holidays, so occupancies there vary between 30% and 35%. In Taba and Nuweiba, occupancies do not exceed 15%, which is a very low percentage.The Ministry of Tourism, in cooperation with the Ministry of Civil Aviation and the Taba-Nuweiba Investors' Association, launched a tourism programme for four days. The prices of this program start from EGP 1,500, whether via airplane or tourist buses.
But this programme was suspended during Ramadan. What are your views on this?
Suspending the programme during Ramadan means that Egyptians generally prefer to stay home while fasting, rather than going to the beach. I think that the programme should have been activated starting from the last three days of Ramadan, so that Egyptians would visit the region.
You mentioned that the tourism sector is going through a crisis. How do you evaluate the way that this crisis was handled?
Tourism is the sector most affected by the political unrest over the previous four years and with the terrorist operations in the entire Arab region, and not in Egypt only; this is a very important point. We have to know that terrorism is not only in Egypt. It is in France, England, Turkey, Tunisia, America, and worldwide. There must be international solidarity to combat and eliminate it.
As for the sector, South Sinai includes 62,000 working hotel rooms out of 225,000 rooms operating in Egypt. The hotel rooms in South Sinai represent around 45% out of the total tourism income of Egypt annually.
It is necessary to distinguish between what it is going on in North Sinai and South Sinai, where the area is very safe, whether because of the security efforts, or the efforts of the local people in the area, who protect tourism because it is an income source for them. Tourism is a significant income source for Egyptians, where it goes directly to their pockets.
The losses of tourism in the previous four years are significant, and all the workers in the sector know that. However, in spite of these harsh difficulties, the sector is still working, gaining significant experiences in handling the crises, whether those take place in Egypt or those related to the international economy.
The price war between Egyptian hotels is always there, and it is a significant reason for the decline of the service quality. What is the solution to this crisis?
The policy of decreasing prices to increase competition is a dangerous phenomenon to Egyptian tourism. It increased in the past four years with the decline in tourism to Egypt, in comparison to before 25 January 2011.
There is a group of investors agreed amongst themselves to pursue a policy of not lowering prices. However, the truth is that as soon as they completed the agreement and each returned to their work, they violated that agreement.
This kind of policy requires strong intervention by the Ministry of Tourism through activating the monitoring of the quality of services offered to the tourist. There can be no good service with low prices; this does not only affect Egypt's reputation, but affects state revenues over the short and long term.
What are your expectations for international tourism next winter?
International tourism next winter will not differ much from last year, but the Middle East region is facing crises. I expect that the latest incidents in Tunisia and the events in the East, whether in Syria or Iraq, will create fear among the international tourism companies.
Will that fear affect reservations during the winter season in Egypt?
Definitely. However, Egypt is not Syria or Iraq; Egyptians hate terrorism and combat it side by side with the government, and that is what makes Egypt able to overcome the crisis.
I do not expect the next winter season to differ from the last winter season, as Russian tourism is recovering again with the increase of the rouble's exchange rate against the dollar in the last two months.