Tourism in the Land of the Pharaohs

 

Egypt’s tourism industry has historically accounted for about 13 percent of the economy and corresponding levels of employment. While the country’s political instability and social upheaval have severely affected its hospitality industry, the country can still capitalize on the sector’s traditional role as an engine of economic growth and employment, especially with a brighter outlook beckoning. Its positive impact can be increased, in particular, by enhancing linkages with other local economic employment opportunities for people in communities near antiquities sites

 



Ups and downs
According to Euromonitor, the bomb attack on the road leading to the Great Pyramids of Giza in December 2016 and the kidnapping of two Mexican tourists earlier that same year, raised concerns among tourists about security levels in Egypt. These incidents affected the country’s tourism landscape, as did the decision to devalue the Egyptian pound, since many tourism companies incurred losses as a result of local price increases. Small airline companies, in particular, were badly affected by the economic instability that followed the floatation of the Egyptian pound, with some struggling to survive. Passenger numbers dropped significantly, with customers seeking lower ticket prices. However, other concurrent developments have been more positive, including a rise in internal travel for both leisure and business purposes, which is driving up lodging online retail value sales. The strong presence and activity of online travel intermediaries have encouraged rising numbers of customers to make their bookings online. In a separate development, Egypt is also sharpening its focus on medical tourism as an alternative to attracting mainstream visitors. A medical conference was held in March 2017 in Sharm El-Sheikh to explore the country’s potential in this segment. Longer term, heightened security measures, including those implemented at the country’s airports, are expected to provide tourists with added reassurance. The government has also made a concerted effort to improve road infrastructure throughout the country, which will have the two-fold effect of enhancing transportation and boosting safety levels. 









Lower numbers of arrivals
With tourism long a key contributor to Egypt’s national economy, existing transport and accommodation infrastructure is well developed across the country’s most established holiday destinations.
The short-term outlook for the tourism sector, however, remains poor in light of ongoing domestic and regional security concerns, with arrivals expected to record a third consecutive year of decline in 2017. While the market has proven resilient to shocks in the past, the government is investing heavily in marketing campaigns to revive visitor numbers. According to BMI Research, the inbound market is expected to contract by 3.2 percent in 2017 to 5.2 million visitors. However, the company noted figures released by Egypt’s Tourism Promotion Authority, which indicated that arrivals were up 51 percent in the first four months of 2017. If these figures prove to be accurate and growth continues, BMI said it would look to revise its forecasts. There were other positive signs for Egypt, with tourism revenues jumping by 170 percent in the first seven months of 2017 to reach USD 3.5 billion, Reuters reported. The number of tourists visiting Egypt rose by 54 percent in the same seven-month period to reach 4.3 million, driven up by visitors from Germany and Ukraine. However, that number is still well below the 14.7 million who visited Egypt in 2010, before the 2011 uprising that toppled long-time autocrat Hosni Mubarak and heralded a prolonged period of political and social upheaval. Europeans made up 75 percent of visitors while Arabs accounted for 20 percent, said an official, who asked to remain anonymous. Egypt




hopes the number of tourists will reach 8 million for the full year, up from 4.5 million in 2016. Tourist revenues should hit USD 6 billion in 2017, up from USD 3.4 billion last year, despite an ongoing flight ban from Russia. Russians accounted for a large proportion of tourists to Egypt, notably to the Red Sea resort of Sharm El Sheikh.

Rebooting plans
According to BMI, the government is investing in a range of marketing campaigns to revitalize the tourism industry and take it back into positive territory. A regional tourism campaign launched in September 2016 has been the main recipient of USD 28 million of investment so far, with further marketing initiatives in the pipeline.
Other measures to attract tourists include a proposed tourism harassment bill. If implemented, the law would see hefty fines imposed on anyone found guilty of bothering tourists in key areas such as Cairo.
State-led initiatives and improving political stability are beginning to have a positive impact on the Egyptian hospitality and tourism market, which is showing signs of growth. The government has been working to improve bilateral relations with various markets, which could yield opportunities across sectors of the economy, including hospitality and tourism. The industries are also expected to benefit from several major hospitality projects taking shape that are scheduled to come in the near future.

Major hotels in the pipeline
An uptick in tourism will likely create new demand for additional hotels and resorts. According to BNC Project Intelligence, there is a growing market for branded hotels offering a world-class service. Major cities, such as Cairo, offered 15,652 branded hotel rooms in 2016, including the Ritz-Carlton (245 rooms) and the Royal Maxim Kempinski (331 rooms).
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