In the years leading up to the Covid-19 pandemic, the tourism sector was a key contributor to economic growth and foreign exchange. Egypt was expecting significant growth in tourism going into 2020 with the opening of new flight routes and museums, as well as investment in antiquities. The pandemic’s impact on the tourism sector in markets around the world was significant, as travel restrictions were implemented and borders closed to contain the spread of the virus. Nonetheless, public investment in the sector and concerted marketing campaigns aimed at fuelling engagement laid the groundwork for a rebound. Indeed, in 2021 and the early months of 2022 international arrivals began to pick up pace, as new source markets materialised.
Structure & Oversight
The Ministry of Tourism and Antiquities (MoTA) is responsible for implementing government policies related to the sector, as well as for providing oversight of industry players such as travel administrators and tour guides. The ministry was created in 2019 after a reshuffle merged the Ministry of Antiquities and the Ministry of Tourism. The merger was meant to bring emphasis to not only traditional sun-and-sand beach offerings such as Sharm El Sheikh and Hurghada, but also antiquities tourism. The MoTA has invested heavily in cultural tourism through the restoration and promotion of monuments, museums and archaeological sites in the years since its establishment.
As part of Egypt Vision 2030, designed in line with the UN Sustainable Development Goals, the MoTA is working with the Egyptian Tourism Federation to develop a national strategy for sustainable tourism. Moreover, the ministry intends to carry out a digital transformation of the sector through a three-pillar strategy that involves building websites, developing infrastructure and creating databases.
After travel restrictions were imposed during the early months of the pandemic, the MoTA worked with other government offices to implement several programmes aimed at reinvigorating the tourism industry and ensuring that it continued to build upon post-2017 sectoral growth. First, the government prioritised vaccinations for tourism workers, particularly in the Sinai and the Red Sea governorates – home to some of the country’s most-visited resorts – to support the reopening of tourist destinations. Second, it extended two pandemic-support initiatives implemented by the Central Bank of Egypt (CBE) through the end of 2022. Specifically, these were rescheduling of debts and arrears, and postponing of fees owed to the government. The government also continued its scheme to reduce aviation fuel prices through April 2022, and provided workers in affected industries with a monthly subsidy for a three-month period. Third, the government eased access for tourists, requiring only a negative PCR test upon arrival. The government also waived entry visa fees for tourists at the beginning of 2021.
Performance & Size
Tourism contributes substantially to Egypt’s economy. After a fall in tourism revenue following the Arab Spring in 2011, tourist expenditure increased to Egypt’s highest level in 2019 before falling due to the disruption of the pandemic in 2020. According to The World Travel & Tourism Council (WTTC), international arrival spending totalled LE261.6bn ($16.6bn) in 2019. This figure decreased by 70% to LE79.6bn ($5.1bn) in 2020 but rose to LE108.6bn ($6.9bn) in 2021.
Domestic tourism spending saw a similar trend, falling by 32.3% from $11.1bn in 2019 to $7.5bn in 2020. In 2019 domestic tourism spending accounted for 41% of total tourism spending, while in 2020 this figure increased to 65% due to restrictions on international arrivals and concerted efforts by tourism officials to attract Egyptians to the country’s cultural and destination offerings. That year also saw a 55% decrease in the total contribution of tourism to GDP, from $32bn – or 8.8% of GDP – in 2019 to $14.4bn – or 3.8% of GDP – in 2020.
In November 2019 the MoTA introduced the Tourism Reform Programme, known as E-TRP. The programme included a number of objectives, including increasing the number of individuals employed in the sector and encouraging sustainable practices throughout the industry value chain. It was based on five pillars: institutional reform; legislative reform; promotion and marketing; infrastructure and tourism development; and global tourism trends. The pandemic, however, put pressure on employment in the sector. In 2019, 9.2% of the workforce was employed in tourism, or around 2.4m people. By 2020 this figure dropped to 6.2%, or 1.6m workers. This reflected a global trend in tourism, in which the number of jobs in the sector in 2020 fell by 18.5% worldwide.
In FY 2019/20 the government invested LE15.2m ($965,800) in the sector, with economic authorities and public companies contributing an additional LE43.5m ($2.8m) and LE260.1m ($16.5m), respectively, according to the CBE. The following fiscal year these entities invested LE11.7m ($743,400), LE2.8m ($177,900) and LE393.5m ($25m), respectively. The private sector accounted for the bulk of investment over this period, or LE5bn ($315.9m) in FY 2019/20 and LE6bn ($379m) in FY 2020/21.
Visitors & Source Markets
In 2019 there were just over 13m international visitor arrivals, an increase from 11.3m the previous year and 5.4m in 2016. The pandemic had a sharp effect on the number of international visitors, which fell to 3.7m in 2020. The principal inbound source markets that year were Germany (14%), Saudi Arabia (9%), Libya (6%), Italy (5%) and Poland (4%). Arrivals from the rest of the world accounted for 62% of the total, suggesting a diversity in source markets. Leisure tourists accounted for the bulk of tourist spending, or $10bn of the $11.5bn spent in 2020.
Another major source market for Egypt is Russia. However, the February 2022 invasion by Russia of Ukraine – another key source market – is expected to have a significant impact on Egypt’s tourism sector. Indeed, visitors from the two countries typically account for 40% of the beach holidaymakers who visit Egypt each year. In March 2022 Moataz Sedky, vice-chairman of the tourism committee of the American Chamber of Commerce in Egypt, told local media that he expected tourist arrivals to fall by 35% over the course of the year.
Despite the payment impediments posed by international sanctions, by April 2022 Egypt was able to welcome its first group of tourists from Russia after such trips were stopped the previous month. The excursions are managed by Biblio-Globus, a Russia-based tourism operator, which will manage flights to Hurghada and Sharm El Sheikh.
Air Developments
Several new and resumed flight links have opened up in recent years, as did new domestic routes linking tourist destinations. In August 2021 Russia resumed flights to Sharm El Sheikh and Hurghada following a six-year hiatus. The flights were previously halted following the crash of a Russian airliner in the Sinai Peninsula.
In October 2021 flights between London and Sharm El Sheikh resumed after they were halted in March 2020 due to pandemic travel restrictions. Germany also resumed flights between Frankfurt and Hurghada in 2021. New international flight routes include the June 2021 launch of Air Canada’s first direct route between Montreal and Cairo, and Fly Dubai’s link between Dubai and Sharm El Sheikh, announced the same month.
Egypt also inaugurated several domestic flight routes. In 2021 the MoTA launched an initiative to merge beach and leisure tourism with cultural tourism by offering flights between the Nile Valley and coastal cities. In October of that year Egypt Air opened a new route between Sharm El Sheikh and Luxor. The flight was part of a wider incentive programme implemented by the Ministry of Civil Aviation to facilitate flights between cities in the Red Sea and Upper Egypt. In addition to boosting domestic tourism, the link offers international travellers the opportunity to see Egypt beyond its beaches.
After welcoming its first international flight in 2020, the LE300m ($19m) Sphinx International Airport in western Cairo closed for renovations in 2021. The reopening of the expanded airport is expected to coincide with the November 2022 opening of the Grand Egyptian Museum, which is in proximity to the site. The Red Sea governorate’s LE2.3bn ($145.3m) Berenice International Airport welcomed its first flight in September 2021. The airport, which has the capacity to handle 600 passengers an hour, is expected to boost tourism in the region thanks to its link with the Wadi El Gemal National Park, and to attract greater levels of investment.
Hotel Infrastructure
After shutting down at the beginning of the pandemic, hotels were permitted to open at 25% capacity in May 2020, a percentage that gradually rose before hotels were permitted to operate at full capacity in October 2021. Occupancy rates were low during the initial months of the pandemic, at 28.4% for the first 10 months of 2020 compared to 67.8% for the same period the previous year. Several hoteliers used the drop in arrivals to refurbish their hotels.
In February 2021 the National Bank of Egypt and AlSharif Holding Group signed a LE978.2m ($61.8m) long-term financing agreement for the modernisation and development of the 260-room Shepheard Hotel in Downtown Cairo. The developer aims to renovate the property and increase the number of rooms to 316 by the end of 2024. Foreign investors were also involved in hospitality renovations: in September 2020 the Abu Dhabi Tourism Investment Company announced that it would implement a series of hotel renovations in 2021, and refurbished three facilities in Cairo, Hurghada and Sharm El Sheikh.
In May 2021 the CBE amended an initiative to make it easier for hoteliers to afford renovations, financing a maximum of 90% of the costs of replacement and renewal, up from the previous 75% rate. It also increased its credit risk guarantee for facilities granted from 60% to 70%, with commercial banks responsible for the remaining disbursement.
In addition to renovation projects, 19 new hotels were opened in 2021. These added 3000 new rooms to the total, which measured in at 205,000 in February of that year. There are several new hotels and resorts in the pipeline that are set to further boost the number of rooms in the market: 14 projects with 3570 rooms are set to be completed in 2022, followed by 12 properties with 2990 rooms in 2023.
Niche Markets
In recent years the MoTA has prioritised expanding Egypt’s reputation for tourism offerings beyond sun, sea and antiquities. The ministry and the Egyptian Tourism Authority are working to promote cultural and historical sites, Nile cruises, ecotourism and museums, as well as adventure, spiritual and therapeutic tourism. Moreover, the MoTA is working with the Ministry of Youth and Sport in the planning of several upcoming international sporting events, including diving, high diving and artistic swimming events that are scheduled to be held between 2023 and 2026. Egypt is also aiming to become a top destination for golf, with over 25 golf courses across the country.
The country is working to leverage its vast ecological offerings across three deserts, two seas and the Nile Delta to develop its nature and adventure sport segments. Indeed, ecotourism plays a central role in Egypt Vision 2030’s framework for sustainable economic development. It has many strengths in the segment: the Red Sea’s Elphinstone Reef is considered one of the world’s best for snorkelling, and Egypt was ranked second in 2021 in the annual ranking of diving destinations published by DIVE international arrivals and traditional tourism revenue, but also docking fees, taxes, fuel sales and maintenance fees. This initiative builds on previous efforts to facilitate yacht tourism, especially in light of its potential in terms of luxury travel spending. In August 2021 local real estate developer Emaar Misr inaugurated Egypt’s first international yacht port, Marassi Marina Yacht Club, on the North Coast. The new port features 3300 hotel keys and 23 residential neighbourhoods, as well as beaches and golf clubs.
Digital Offerings
Another opportunity will be for Egypt to promote itself as a remote working destination. Worldwide pandemic restrictions have led many companies to move their workforces online, allowing their employees to work anywhere. This has driven an influx of digital nomads to tourist destinations around the world. Towns such as El Gouna on the Red Sea have began to promote themselves as a digital nomad destinations. These efforts have been supported by a wider drive to boost connectivity across the country, including a $360m plan to bring fibre-to-the-home internet to populations across 4500 villages (see ICT & Innovation chapter).
The government has also worked to digitalise tourist services. In 2021 the MoTA launched an e-ticketing system across 32 archaeological sites and museums, and installed smart electronic gates at a number of sites. The same year the authorities began a programme in which tourists receive an SMS upon arrival with the ministry’s hotline and emergency numbers.
Marketing
E-TRP aims to modernise Egypt’s tourism promotion activities. It targets three main goals: the establishment of international marketing and promotion partnerships; the adoption of modern promotion approaches; and the diversification of revenue streams. The MoTA has also prioritised attracting additional tourist inflows, especially in light of the reopening of borders in key source markets. To that end, the MoTA hosted Egypt’s pavilion at the Dubai Expo 2020, which was held from October 2021 to March 2022. The government has also invited journalists, travel bloggers and influencers on guided tours to enhance its profile as a tourist destination in both traditional and social media outlets.
In December 2021 the MoTA launched a “Sunny Christmas” online campaign to attract tourists during Christmas and the New Year, as well as those looking to escape cold weather in the northern hemisphere for Egypt’s warm beaches. In addition to domestic tourists, the campaign targeted visitors from France, Germany, Italy, the UK, Russia, Ukraine and the US.
The winter initiative followed previous campaigns that aimed at boosting domestic tourism during the pandemic, when restrictions limited international arrivals. In 2021 the MoTA promoted the “Enjoy your Winter in Egypt” initiative, working with the Supreme Council of Antiquities to offer Egyptians reduced prices at museums and archaeological sites. The government also introduced fixed-rate internal flight prices in 2020 and 2021 to encourage travel. Cheaper flights connecting Cairo and Alexandria to destinations such as Luxor, Aswan, Sharm El Sheikh, Taba, Hurghada and Marsa Alam allowed both nationals and foreigners to travel within Egypt more easily. The campaigns appeared to be successful, with Egypt seeing a 26% increase in internet searches related to domestic tourism and a 53% rise in searches for domestic flights during the summer of 2020, according to a 2020 report from US consulting firm BCG.
In 2022 the MoTA is using the 100-year anniversary of the discovery of King Tutankhamen’s tomb and the 200th anniversary of the decipherment of the Rosetta Stone – the latter of which led to the understanding of ancient Egyptian hieroglyphs – to further promote the antiquities tourism. The government hopes the restoration of several historical sites and the reopening of museums after pandemic-related closures will encourage cultural tourism. To kick off these efforts, in November 2021 the government reinaugurated the Avenue of the Sphinxes, a 2400-year-old ancient walkway in Luxor deemed the largest open-air museum in the world. Moreover, the upcoming opening of the Grand Egyptian Museum is expected to further boost the segment. The museum will be home to around 100,000 artefacts – 3500 of which belonged to King Tutankhamen – making it a centre for Egyptology, with easy access for tourists due to its proximity to the Great Pyramids of Giza.
Outlook
Through investment in tourist sites and antiquities, as well as private spending on hotel renovations during the pandemic, Egypt has reopened its doors to international tourists. The government has also sought to bolster the domestic tourism market, encouraging Egyptians to take their holidays in both beach and cultural destinations. In 2020, when international arrivals and tourism operations were affected by the pandemic, there was a worry that the tourism industry would lose its post-2017 momentum. However, new flight routes and marketing campaigns are set to maintain the upwards trend.
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