The Ministry of Tourism has prepared four tourism development mega-projects to be announced during the March 2015 economic summit, according to Investment Advisor to the Minister of Tourism Ibrahim Ashmawy.
During an interview with Daily News Egypt, Ashmawy said that investment opportunities on areas over 1m metres will be offered in different parts of the Red Sea governorate.
The aim of the Ministry of Tourism is to attract $5bn in investment activities before 2020 by diversifying investment models and intensifying marketing efforts for projects at international exhibitions according to Ashmawy.
“There is a mandate from the president to restore tourism and investment in the coming period,” he said.
You stated there are mandates from the president to restore tourism and investment. What are the ways in which you will fulfil the president’s instructions?
The tourism sector has many activities that involve all state agencies, and we are working to restore tourism to Egypt to 2010 levels when Egypt was able to attract 14.7 million tourists.
Tourism indicators in Egypt have significantly improved compared to last year, especially beginning from July last year.
Regarding the president’s instructions, the entire sector, whether this be the administrative apparatus of the state or the private sector, is working to restore tourism traffic. We have two parallel paths to do this, the first of which is increasing numbers of those arriving from traditional markets in Europe and the Arab countries.
Russia usually exports more than 30 million tourists to Egypt per year but only 3 million have visited in recent years. Britain, France, Italy, and Germany represent similar cases and we hope to attract 6 million tourists from Russia over the next 2 years.
Egypt has not witnessed normal rates of passenger traffic from these countries annually in recent times, and we hope to raise those numbers each year.
How do you plan to do that?
European tourism to Egypt represents 72% of total tourism annually, but Egypt’s share of this huge market is still relatively small.
We are now working on utilising modern marketing methods to target difference tastes and groups of tourism consumers and investors at the same time.
Our plan relies on digital marketing by intensifying promotion on the Internet and social networking websites like Facebook, as well as specialised visual and print media with the goal of reaching new groups of people that hope to visit Egypt.
We are working to change tourists’ stereotypes about Egypt and we will succeed in doing so because we have the ingredients and the ability to attract larger numbers and increase our income, including generating more job opportunities and eliminating unemployment.
Tourism investment activity is rising once again and investments will be made to expand hotels and service centres, which in turn will increase average spending.
We hope that average tourist spending will exceed $100 per day during fiscal year (FY) 2014/2015.
At present, this figure is no more than $75, and I believe that service investments will increase this figure exponentially.
Simply restoring this activity to its previous strength drives other industries and services like a locomotive.
What about the second part of the plan?
The second part involves creating a presence in new tourism markets in Eastern and Southern Asia, and we have begun working on this through coordination with EgyptAir and the private sector, represented by the Egyptian Federation of Chambers of Tourism.
Air routes are currently operating between Egypt and cities in Indian to attract visitors in order to raise occupancies in these areas.
China is an enormous tourism market that recently appeared, having achieved significant growth in income in recent years. Tourism subsidises economic air routes in all markets.
We have changed the system for incentivising charter air programs from subsidising vacant seats to subsidising filled seats and granted certain areas greater incentives to increase hotel occupancies.
But entering new markets was always difficult due to the aviation obstacle. How will you solve this?
Yes, this is true. We have begun working with the Ministry of Civil Aviation in this regard and there are already flights operating between Egypt and India at the moment.
You’re talking about restoration of tourist numbers. What about investment in the sector?
We are working on the two issues in parallel, and we aim to attract more foreign and domestic investments in the sector for new products under various investment models.
Can you clarify a bit more what you mean here?
Of course. The Ministry of Tourism will offer lands under the four investment models, beginning from allocation with right to sell, usufruct, partnership, and infrastructure participation.
This system is new and requires many investors, and the state is working to implement it in a beneficial manner that will increase returns from investing in the sector. The investor benefits from the state developing the land and extending infrastructure.
This saves a lot of time, especially for infrastructure projects which require considerable effort and money on part of the investor.
Is it possible for the state to exit from these projects in the future?
Yes, the state is aiming to do this, which will encourage investors to implement the project. We are also working to increase revenues, and when this happens, why wouldn’t the state exit the project by offering it on the Egyptian Exchange? This will allow the state to exit and begin another project.
What is your opinion on Arab investments in the sector?
Total investments made for lands subject to the mandate of the Tourism Activation Authority (TAA) amount to up to EGP 70bn, the foreign component of which, Arab or otherwise, does not exceed 3%.
Of course, these investments are very small and do not meet the ambitions of the state and those working in the sector, so we will work to market the many investment opportunities available in the near future at international exhibitions while also publicising the benefits of investing in Egypt.
What invectives do you offer to investors?
We are working to provide lands to investors without having to go through procedures, which will help prevent disputes between the state and investors in the future. As I said previously, new investment models form new methods that will help incentivise investment in the near future.
What about the idea of the ‘one-stop shop’ investment window?
I was assigned by the minister to follow-up on implementation of the idea and make it a reality, and we are working to achieve this.
The ministry recently offered lands which reached record prices per metre. What is your opinion on this?
Indeed, for some plots the price per metre reached $201, but this is in Ain Sokhna where hotel density is very high and land plots are limited.
How do you feel about the tourism sector’s ability to meet its sovereign obligations to the state as the deadline nears for the financial deadline granted to the sector at the beginning of the year?
This is an important question. At present, from my personal perspective, I feel that it is more beneficial to grant a deadline of three years for tourism activity to be restored without exempting these debts and allowing them to be paid back over five years in instalments.
The banking system has also greatly supported the sector in light of the decline witnessed over the past four years and continued to provide crucial support so that the sector could recover and completely regain its strength.