CAIRO: Egypt’s tourism sector has staged an impressive rebound from a slump in 2009 blamed on the global financial crisis. Arrivals were up 21 percent to 7 million persons while revenue jumped 17.6 percent to $5.58 billion over the first six months of 2010.
The third and fourth quarters, which include the peak summer travel season, are expected to continue that trend.
Zoheir Garranah, the tourism minister, expects the country to bring in 15 million tourists and $13 billion by the end of the year, and Egypt has outlined an ambitious plan to expand its tourism sector to attract 25 million visitors and $21 billion per year by 2022.
However, while the sector’s fundamentals remain strong, next year is expected to present challenges as the timing of Ramadan and uncertainty over the strength of the euro may discourage visitors from the Middle East and Europe respectively.
In the wake of Europe’s debt crisis, countries such as Greece and Spain may present stiffer competition as the weaker euro attracts dollar- and pound-wielding travelers. Moreover, the euro’s depreciation against the Egyptian pound may translate into a decline in the number of European visitors, who typically account for 70 percent of Egypt’s tourist trade.
Mona Mansour, the director of research at CI Capital, another investment bank, said that Europe’s financial difficulties may encourage travelers to seek out budget destinations such as Egypt. “In the context of the financial crisis, Egypt’s tourism has performed well in comparison to other geographical areas of the globe,” she told the local media.
Indeed, Egypt continues to be a very popular destination for budget travelers from Eastern Europe, and Russia in particular. The number of Russian visitors surged by 95 percent in the first quarter of 2010, as residents of that country sought to escape record low temperatures at home, and that trend shows no sign of abating.
According to the Association of Tour Operators of Russia and the state tourism agency, Rosturizm, Egypt was the second most popular destination for Russian tourists in 2010, behind Turkey. Russia’s Federal Statistical Service reported similar findings in September, when it declared Egypt to be the third-fastest growing destination for Russian tourists, increasing by 65.4 percent year-on-year during the first half of 2010.
Nevertheless, to forestall a potential downturn, Mansour said that Egypt should expand its marketing focus to regions with better growth potential such as Latin America and Asia.
In July Rachid Mohamed Rachid, minister of industry and trade, traveled to Argentina, where he signed a free trade agreement with the mercosur group of states, whose members include Brazil, Argentina, Uruguay, Paraguay and Venezuela.
The Egyptian Ministry of Tourism has also been making overtures to the Indian market that are beginning to pay off. Egypt hosted a record 34,400 Indian tourists in the first quarter of 2010 — which represents growth of 37.8 percent — and was recently voted the “perfect holiday destination” by the Pacific Area Travel Writers’ Association and the publication Safari India.
“Despite the fact it is already well-established as a holiday destination, Egypt still holds enormous growth potential, particularly as it moves into new and non-traditional markets, including Eastern Europe and Asia,” Eng. Ibrahim Saleh, the vice president of Al Kharafi Group in Egypt, told OBG.
However, a downside of appealing to budget travelers is that many arrive on package tours, seeking sun and sand at Egypt’s Red Sea and Mediterranean resorts. This means that they often do not visit other sites or inject much money into the local economy.
One market that offers enduring appeal in the post-financial crisis environment is domestic tourism, according to local business leaders. “The Egyptian Red Sea, specifically around the Hurghada region, is slowly but surely becoming a popular ‘second-home’ destination for Egyptians as overseas European purchases slow down with tougher economic conditions” Mohamed Kamel, the CEO of Egyptian Resorts Company told OBG.
Another is tourists from Arab countries. “On average, these tourists spend a lot more money than the others, and their stays are much longer,” Samy Mahmud, a spokesman for Egypt’s Ministry of Tourism, told local media in August.
Whereas European and American tourists tend to visit on low-priced, short-term package tours, many nationals from Arab countries book suites at luxury hotels for weeks at a time. Arabs currently account for 18 percent of Egypt’s roughly 12 million tourists, the highest share of Arab tourism in the world.
Although the prospects for Egypt increasing its share of Arab tourism are generally strong, there is a hurdle in shape of the Muslim lunar calendar. For the next five years, the peak summer season will coincide with the holy month of Ramadan. During that time, many Arabs prefer to stay at home where they can celebrate iftar with their friends and family.
In an attempt to lure visitors during the holy month, the Egyptian government is sponsoring a series of concerts, festivals, and folk shows, all of which are highlighted in a major advertising campaign. Meanwhile, EgyptAir and several luxury hotels have joined the effort by offering special travel and accommodation packages during Ramadan.
Egypt’s tourism sector is strongly positioned for the long-term. In September, the US edition of the magazine Condé Nast Traveler ranked Egypt second, behind only Turkey, in its Reader’s Travel Awards. With brand recognition like that, Egypt’s tourism industry should be able to weather the falling euro and the timing of Ramadan. –This article was first published by Oxford Business Group.
