Despite the four-year crisis in Egyptian tourism, it is still working and achieving growth – albeit slight – according to tourism sector workers. They added that the sector is still capable of passing the crisis, whilst also dragging other sectors out of the red with it as well.
Tourism suffers over four years
Over the past four years, Egypt’s tourism has been paying the bill for the political instability, with revenue falling from $12.5bn in 2010 to $7.3bn in 2014.
However, the country’s tourism sector achieved a slight growth during the first half (H1) of 2015 amounting to $3.3bn, compared to $3.2bn during the same period last year.
According to a Ministry of Tourism official, the income earned during the stated period is too low when compared to the huge tourism resources Egypt has. Recent events, including bombings and terrorism, have, however impacted negatively on this income.
The senior official, who occupies a leading position at the Ministry of Tourism and preferred not to be named, said Egypt’s tourism is able to increase by more than 20% annually in terms of numbers. This will, in turn, see an income growth of more than 15% per year. The official expects that the current year will be an extension of the crisis, and tourism will complete its fifth lean year, adding that recovery may start with the beginning of next year.
The official also anticipated that revenues will not amount to more than $8bn, but at the same time, he said there would be an improvement compared to last year’s revenues of $7.3bn.
Labour immigration activity limits growth ability
Egyptian tourism can employ more than 1 million workers over the coming five years, according to Elhamy El-Zayat, Head of the Egyptian Tourism Federation (ETF). El-Zayat explained that with every 1 million tourists coming to Egypt, 20,000 jobs are provided.
El-Zayat said that the decline in tourism, which Egypt has been experiencing over the past four years, is a major reason for the growing phenomenon of unemployment. El-Zayat added that the growth in tourism over the last two decades has changed Egypt’s income distribution map, especially for young people in remote areas of Upper Egypt and the Delta.
According to the Ministry of Tourism’s Sub-Accounts Unit, the number of tourism sector workers peaked in 2010 with the influx of 14.7 million tourists, with 3.5 million workers directly and indirectly employed.
El-Zayat called for the need to configure a realistic vision based on reality and not just theories that could be hard to achieve. He added that Egypt cannot receive 20 million tourists, as the country does not have the room capacity or infrastructure to serve this flow.
Hossam El-Shaer, Chairman of the Egyptian Travel Agents Association, recognised that skilled labour has abandoned the sector over the past four years, which is a major impediment to recovery.
El-Shaer said that training tourism workers is essential to restore the efficiency the sector once had before the 25 January Revolution.
Tourism is one of the hardest hit sectors in Egypt due to the large-scale reduction in its labour, according to an Egyptian Chamber of Hotels official.
The official added that the alleged training courses supported by the Ministry of Tourism have stopped. The official added that the ministry’s Tourism Fund is funded by these programmes, and has been suffering from a decline in income over the past four years, which has negatively affected its support. He added that many workers employed in the tourism sector emigrated, particularly to the Gulf states like the UAE, where they are working in the growing tourism sector there.
Egypt currently has 225,000 hotel rooms, a third of which are in the Red Sea and South Sinai regions, according to the Egyptian Chamber of Hotels. Current occupancy in the Red Sea area stands at 70%, according to the Ministry of Tourism official, while in Sharm El-Sheikh, it stands at 65%. The official added that the occupancy rates will decline again with the beginning of the school year.
The official does not expect tourism numbers to increase at the end of 2015 by any more than 10 million tourists. He added that the number of arrivals during the H1 of 2015 amounted to 4 million tourists, compared to 3.6 million tourists during the same period last year.
$6bn in tourism income expected by end of 2015
Unlike the previous forecast, Ahmed El-Khadem, former President of the General Authority for Tourism Activation, believes the income expected by the end of 2015 will not exceed $6bn under the low price of Egyptian tourism services.
He attributed his expectation to the continued decline in demand to visit Egypt by the high spending tourist stratum. This runs in conjunction with the high cost of operation and pressure exerted on Egyptian companies by foreign agencies – seeking further lower prices.
Adel Rady, Chairman of the Tourism Investors Association in Marsa Alam, agreed with El-Khadem, adding that d Egypt will not achieve tourism revenue of more than $6bn. He added that the tourism flow coming from Italy and Poland declined following the assassination of former Prosecutor General Hisham Barakat, so people should not be overly optimistic, but should rather intensify fact-based marketing.
Marketing is Egyptian tourism’s black horse
El- Zayat called for the amendment of the foundation upon which marketing is based, in addition to the need for dealing with social media to counter campaigns against tourism operated by satellite channels hostile to Egypt.
The Ministry of Tourism has contracted with JWT marketing company to promote Egypt for three years at a cost of more than $60m.
El-Zayat believes marketing needs to be intensified in the European markets, and especially the Western Europe market. In addition, more marketing is needed in Asia, in light of the GDP growth of these countries in recent years.
The Ministry of Tourism shows great flexibility in dealing with foreign travel agencies that send tourists to Egypt, according to Adla Ragab, economic advisor to the Minister of Tourism Khaled Rami. She added that the ministry draws upon the views of these companies regarding cessation of promotional flights to Hurghada and Sharm El-Sheikh airports.
Ragab believes that a large proportion of promotions marketing will be directed to areas that suffered a decline of tourism especially in Luxor, Aswan, and Taba. She added that the situation in Hurghada and Sharm El-Sheikh is much better than other areas.