The number of soft drinks supplied to hotels and resorts in South Sinai has decreased by 80% since the beginning of November 2015 due to the lower inbound tourist traffic to Egypt.
A number of suppliers, who spoke on condition of anonymity, said that Sharm El-Sheikh used to acquire about 60% of the total soft drink sales in South Sinai.
They added that some international companies operating in Egypt have mandated other companies to manage their stores in Sharm El-Sheikh—formerly the biggest market of soft drinks in Egypt—due to the decline in sales.
Tourism income has declined during the current fiscal year (FY 2015/2016) down to $6.1bn compared to $7.3bn in the previous FY 2014/2015 due to the decline in inbound tourism to Egypt since last November.
The current occupancy rate in Sharm El-Sheikh hotels ranges between 30% and 35%, which is considered higher than that of May. One of the suppliers who spoke to Daily News Egypt expects that occupancy rates will increase in July, supported by Egyptians’ summer vacations which may contribute to increasing sales.
He said the decline in supplies is not only limited to soft drinks but also includes fruit and vegetables, which are sold to hotels at higher prices compared to the local market.
The Nuweiba-Taba region currently receives the lowest proportion of food supplies, according to suppliers. They added that each hotel in this region used to receive a truck full of two tonnes’ worth of different food supplies per week before the 25 January Revolution in 2011.
Ali Kenawy, a trader in Obour market, said that the price of fruit and vegetables increased by more than 30% over the last two months, which reduced the quantity purchased by hotels despite the rise in occupancy rates during the past two months.
Kenawy expressed his hope that sales would improve during the coming period, adding that hotels and resorts used to be the largest consumers, buying more than 20 tonnes of fruit and vegetables per week.
A supplier in Sharm El-Sheikh said that as the profit margin has fallen dramatically over the past five months due to the rise in prices, even soft drink companies have raised their prices despite the drop in demand due to the low tourist traffic to Egypt.
Suppliers have limited their work in the Red Sea region, especially in Hurghada, and Sharm El-Sheikh, over the past five years, the supplier added.
“Our work was not limited to Sharm El-Sheikh and Hurghada. We used to supply fruit and vegetables to Luxor, Aswan, Alexandria, the North Coast, and Marsa Alam in the far south,” a supplier in Cairo said.
Competition is increasing among suppliers as a result of the decline in tourist traffic to Egypt. Cairo now has highest occupancy rates–about 70% over the past month—supported by Arab tourists to Egypt.
Adel El-Sherbini, a member of the Hotel Commerce Chamber in South Sinai, said that many hotels close unoccupied rooms to decrease expenses and reduce their consumption of fruits, vegetables, and soft drinks.
Many hotels which incurred losses although they still operate so as not to leave the market in the hope that the situation will improve in the coming period, El-Sherbini concluded.