The re­vival of Egypt’s tourism in­dus­try

Hospitality News Middle East - - IN THIS ISSUE -

Tra­di­tion­ally a tourism­re­liant econ­omy with a long-stand­ing rep­u­ta­tion as a fa­vored des­ti­na­tion, thanks to its iconic land­marks and daz­zling at­trac­tions, Egypt has faced tur­bu­lent times in re­cent years. How­ever, there are signs that it has now turned a cor­ner. Karim Khal­ife, part­ner at Y2 Con­sult­ing, sheds light on the coun­try’s muchan­tic­i­pated re­vival

Egypt has trans­formed over time from a cul­tural and his­toric her­itage­cen­tered coun­try to a more di­ver­si­fied and leisure-ori­ented, mass-tourism mar­ket. As such, it has be­come the coun­try of choice for a di­verse touris­tic ex­pe­ri­ence, com­bin­ing cul­ture, ad­ven­ture and re­lax­ation, which has pro­vided it with re­silience to con­front the sig­nif­i­cant chal­lenges it has faced since 2011.

Chal­leng­ing head­winds

Prior to 2011, Egypt was one of the world’s largest tourist des­ti­na­tions and the main draw for trav­el­ers vis­it­ing north Africa, wel­com­ing 14.7 mil­lion vis­i­tors an­nu­ally. In 2010, the sec­tor em­ployed about 12 per­cent of Egypt’s work­force, gen­er­ated rev­enues of nearly USD 12.5 bil­lion and con­trib­uted more than 10 per­cent of GDP. How­ever, the po­lit­i­cal and eco­nomic in­sta­bil­ity fol­low­ing the 2011 Egyp­tian revo­lu­tion and the mil­i­tary coup in 2013 shat­tered Egypt’s tourism sec­tor, while also se­verely dam­ag­ing the as­so­ci­ated ho­tels, restau­rants and re­lated ser­vices. The eco­nomic rip­ples of this down­ward spi­ral were fur­ther ex­ac­er­bated by a se­ries of ter­ror­ist at­tacks and air­line dis­as­ters, be­gin­ning with the down­ing of a Rus­sian air­liner in Sharm el-sheikh in Oc­to­ber 2015, killing all 224 pas­sen­gers — most of them tourists — which led to Rus­sian flight bans and flight re­stric­tions from other coun­tries. Although the coun­try has been marred by po­lit­i­cal tur­moil and so­cial un­rest, the sec­tor be­gan to show signs of re­cov­ery at the end of 2016 fol­low­ing the de­val­u­a­tion of the Egyp­tian pound. It con­tin­ued to bounce back through 2017, though per­for­mances re­mained be­low their peak lev­els of 2010.

Re­vers­ing Egypt’s for­tunes

Egypt was the se­cond-fastest-grow­ing tourism mar­ket in the world in 2017, ac­cord­ing to a United Na­tions World Tourism Or­ga­ni­za­tion (UNWTO) re­port, with lo­cal of­fi­cials re­port­ing that in­dus­try rev­enues jumped by 170 per­cent in the first seven months of the year. Ar­rivals to­taled 5.9 mil­lion be­tween Jan­uary and Septem­ber, the Min­istry of Tourism re­ported, up from 3.8 mil­lion over the same pe­riod in 2016. By the end of 2017, vis­i­tor num­bers had risen to 7.263 mil­lion, with fore­casts from BMI in­di­cat­ing that vol­umes could reach 9 mil­lion by 2021. The gov­ern­ment has re­cently em­barked on sig­nif­i­cant ef­forts to boost the sec­tor, in­clud­ing de­valu­ing the Egyp­tian pound, which has helped to at­tract tourists look­ing for a low-cost

A strong in­di­ca­tor of Egypt’s ma­ture tourism in­dus­try and promis­ing fu­ture is the up­com­ing pipe­line of cap­i­tal-in­ten­sive lux­ury ho­tel de­vel­op­ments, driven by both gov­ern­ment re­forms and in­cen­tives

des­ti­na­tion. The coun­try also is­sued a new in­vest­ment law (no72 of 2017) as part of its en­deavor to ful­fil the needs of the lo­cal busi­ness com­mu­nity and at­tract for­eign di­rect in­vest­ment. Hall­marks of the law in­clude in­cen­tives, in­vest­ment guar­an­tees, re­duced bu­reau­cracy and sim­pli­fied pro­cesses and pro­ce­dures. The Gen­eral Au­thor­ity for In­vest­ment and Free Zones (GAFI) is play­ing a key role by act­ing as a one-stop-shop for all in­vest­men­tre­lated li­cens­ing pro­ce­dures. Egypt is also of­fer­ing in­cen­tives and re­duc­ing levies for air­lines and tour op­er­a­tors in or­der to draw more vis­i­tors to the coun­try. On a sep­a­rate, but equally im­por­tant note, the se­cu­rity sit­u­a­tion has im­proved and flight re­stric­tions are eas­ing, af­ter the gov­ern­ment spent mil­lions of dol­lars tight­en­ing air­port se­cu­rity pro­ce­dures. Egypt has been work­ing in par­tic­u­lar on re­sum­ing air travel be­tween Cairo and Moscow, while sev­eral agree­ments have been signed re­cently with China and Ro­ma­nia, paving the way for bi­lat­eral pro­mo­tion of the tourism sec­tor.

An op­ti­mistic out­look

A strong in­di­ca­tor of Egypt’s ma­ture tourism in­dus­try and promis­ing fu­ture is the up­com­ing pipe­line of cap­i­tal­in­ten­sive lux­ury ho­tel de­vel­op­ments, driven by both gov­ern­ment re­forms and in­cen­tives, and the long stand­ing, strong tourism fun­da­men­tals which are at the very base of the Egyp­tian econ­omy. Global ho­tel op­er­a­tors, bank­ing on the mar­ket’s long-term growth po­ten­tial, have main­tained their de­vel­op­ment plans for Egypt, with a num­ber of high-pro­file ho­tel open­ings ex­pected by 2019. Egypt is the leader in new ho­tel de­vel­op­ments in Africa with more than 50 ho­tel projects cur­rently un­der­way. It is in this con­text that Star­wood de­cided to pen­e­trate the Egyp­tian mar­ket by launch­ing the ST. Regis ho­tel, set to open in March, a project rep­re­sent­ing a to­tal in­vest­ment of USD 1 bil­lion. Hil­ton ho­tels world­wide has also an­nounced re­cently that it aims to in­crease the num­ber of ho­tel rooms it man­ages in Egypt by 40 per­cent by the end of 2022. Sim­i­larly, Emaar Hos­pi­tal­ity Group has re­vealed plans to de­velop a ho­tel, Vida Marassi Ma­rina, in Mar­rasi re­sort on the Mediter­ranean coast, as the first project un­der the com­pany’s Vida Ho­tels and Re­sorts brand in Egypt.

Health­care tourism is an­other niche area ripe for growth, driven for­ward by the de­vel­op­ment of med­i­cal cen­ters at tourist re­sorts, as ev­i­denced by Porto Ghalib in Marsa Alam and the Marassi project on the north-west coast

An­other key ex­am­ple of the com­mit­ment of in­ter­na­tional chains to con­tinue their long-term de­vel­op­ment plans in the coun­try is the sign­ing of In­ter­con­ti­nen­tal Ho­tel Group for a 187room new ho­tel to be built in Cairo. BMI ex­pects the num­ber of ho­tels in Egypt to num­ber around 930 by 2021, up from 730 in 2017. Egypt’s re­vi­tal­ized tourism sec­tor is also con­sid­ered to be di­verse and dy­namic, hold­ing the po­ten­tial to grow well be­yond the tra­di­tional cul­tural and leisure seg­ments. Among the highly promis­ing niche ar­eas wit­ness­ing in­vest­ments are res­i­den­tial tourism, to­gether with the eco, busi­ness, con­fer­ence and re­li­gious seg­ments. Health­care tourism is an­other niche area ripe for growth, driven for­ward by the de­vel­op­ment of med­i­cal cen­ters at tourist re­sorts, as ev­i­denced by Porto Ghalib in Marsa Alam and the Marassi project on the north-west coast. The Egyp­tian gov­ern­ment it­self ac­knowl­edges the im­por­tance of the in­dus­try, with the Tourism De­vel­op­ment Au­thor­ity ( TDA) sup­port­ing the state’s pol­icy of a sharp fo­cus on tourism de­vel­op­ment, rec­og­niz­ing it as the se­cond-high­est con­trib­u­tor to gross na­tional in­come. Among its key roles, the TDA man­ages and de­vel­ops desert lands to es­tab­lish tourist re­gions, and guar­an­tees a flex­i­ble and ef­fi­cient in­ter­ac­tion with in­vestors. Pos­i­tive fore­casts of in­creas­ing vis­i­tor num­bers and higher lev­els of cap­i­tal ex­pen­di­ture, as well as pro­gres­sive re­forms re­sult­ing in a raft of de­ci­sion-mak­ing and laws, pro­vide an op­ti­mistic out­look for a coun­try that has en­dured a tu­mul­tuous few years and make for good in­vest­ment op­por­tu­ni­ties in the long term, build­ing on a strong tourism foun­da­tion.

Newspapers in English

Newspapers from Lebanon

© PressReader. All rights reserved.