Egypt’s tourism sector hopes for a return of holiday-makers

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Despite emerging from one of its weakest performances in years, the Egyptian tourism sector shows signs that could portend a modest recovery in 2014.

Tourism has long been a key pillar of the economy, accounting for more than 11% of GDP and among the largest sources of jobs, providing direct and indirect employment to 13% of the workforce, according to the World Travel and Tourism Council.

However, two years of internal unrest have taken their toll. In early 2014, Tourism Minister Hisham Zaazou said in an interview that the preceding 12 months had been the worst on record for the sector, with visitor numbers down and hotel occupancy rates in single figures in some regions.

According to the Tourism Ministry, through to November 2013, Egypt had recorded around 9.3m arrivals, compared to the nearly 15m visitors that came in 2010, prior to a series of political upheavals.

Earnings, too, eased in 2013, with receipts likely to be 40% or more down on the $12.5bn result from 2010 and short of the $10.5bn recorded in 2012. Ministry data show tourism revenues amounted to $6.6bn through the first 11 months of last year.

Turning a corner

Despite the lacklustre results in 2013, tourism officials believe that a corner may have been turned, with the new year holding out brighter prospects. More than 20 countries, among them Russia, China and France, have revised or removed their travel restrictions. These changes will not guarantee a surge in arrivals, but they are likely to re-assure potential visitors and contribute to the rebuilding of the country’s tourism brand.

Moreover, the latest monthly data indicate an upward trend. Around 600,000 visitors were recorded in November 2013, which, while a decline of 39% on the same month in 2012, was a significant improvement over the 200,000 tourists who came in September.

The Tourism Ministry has forecast arrivals to rise to 13.5m in 2014, generating revenue of around $11bn. Though still short of the pre-crisis levels of 2010, if achieved it will be the best result for the sector since the beginning of the decade.

One factor that could help Egypt’s cause is the affordability of travel to the country. Many hotels, travel agencies and tour companies have reduced their prices in an effort to attract customers. Another, and one that tourism officials and private operators have been stressing, is that many of the main resorts and holiday draws are in regions far removed from centres of tension.

The interim government intends to boost the industry by spending around $40m in marketing and advertising in the coming year, while Zaazou said late last year the government was developing a new plan, set to be released in 2014, that would encourage foreign investment in the sector.

Regional competition

Another challenge that Egypt’s tourism trade faces will be overcoming the gains made by others in the region. Neighbouring Israel achieved a new record high for arrivals in 2013, with entries hitting 3.53m, despite a sharp drop in visitors from Egypt and Jordan. This result included solid arrival numbers from countries such as the US, Russia, France and Germany, all traditional key markets for Egypt.

Turkey also looks set to post a new record for inbound tourists, with more than 33.4m visitors passing through Customs control as of the end of November, a 9.5% increase over the first 11 months of 2012, according to data released at the end of December. Egypt will need to address the rise of competition in the region if it hopes to swell its own visitor numbers.

Though the evidence suggests the tourism sector is rebounding, there is the potential for obstacles to take much of the bounce out of any recovery, particularly should the elections scheduled for later in 2014 prompt domestic unrest. Ultimately, the country’s comparative advantages in terms of tourism development remain attractive but leveraging them may continue to prove tricky over the short term.

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