Karim Mohsen, the head of the Egyptian Tourism Federation (ETF), blamed the all-inclusive packages for the decline of service quality in Egypt recently. He said that the all-inclusive package has been first started in the Mediterranean, Europe, and Turkey, before being implemented in Egypt ten years ago. But it has been implemented randomly since then.
In an interview with Daily News Egypt, Mohsen demanded applying certain criteria on hotels that offer these packages, such as lowering their rating from five stars to four.
There is a committee formed by the Ministry of Tourism to develop a price guide of tourism services in Egypt. What is your take on this?
It is better to leave the issue of prices to the market’s supply and demand. No agency should intervene in imposing prices. This intervention was the reason behind the lack of stability in the tourism market in the past period.
Regarding the quality of service provided at tourism facilities and hotels, I believe that the government should rather put forward strong rules and oversee their implementation.
Another solution is to lower the ratings of hotels that offer all-inclusive packages. This will raise the prices of accommodation in Egypt and improve the quality of service provided, especially with the presence of controls and supervision over the quality.
People have to know that all-inclusive packages are the main reason behind the lack of development in tourism areas in the past 10 years.
Tourists who can have all three meals and drinks at hotels will not walk out of their rooms. This harms taxi drivers and other tourism facility providers. That means that the packages harm the national Egyptian economy in the end. Tourism is an economic activity that provides job opportunities and develops local community.
Did you take part in the committee that developed the indicative prices?
The Egyptian Tourism Federation did not partake in this committee. It was formed from the Egyptian Chamber of Hotels and its public assembly. This is my point of view: I believe that having a price guide in a free market will not fix the problem that the sector has been suffering from over the past few years.
There was a dispute between the Egyptian Tax Authority and the ETF regarding taxes on incentives provided for charter flights. What is the situation in that regard now?
There was a meeting with the Egyptian Tax Authority over the past few days. We agreed to leave the court to rule. I believe that the judiciary will rule in favour of the ETF.
The ETF did not receive any money from these incentives that the charter companies received. The ETF was simply a link to deliver the money to these companies, but our budget did not see one pound of these funds.
We agreed with the Egyptian Tax Authority to separate taxes from the wages of the ETF employees and the taxes related to the charter incentives, which the Egyptian Tax Authority is demanding.
In your opinion, how much are these taxes?
I stress that the ETF did not take one pound of this money, but only delivered them to the charter flights companies. According to the Egyptian Tax Authority, these funds have amounted to EGP 120m since 2010.
We are waiting for the court ruling in this regard. In the past period, based on the Central Auditing Organization’s recommendations, payment of these incentives to foreign and local charter flight companies was decided to be done by the Egyptian Tourism Authority.
Moreover, these dues are paid to the Egyptian airports and are deducted from the cost of landing and takeoff that the companies pay. This was better than the first method.
Since 1 November 2016, the file was handed over to the Egyptian Tourism Authority. The ETF does not have anything to do with that issue now.
During the recent period, the parliament passed a value-added tax law. How do you think it will impact the sector?
We agreed with the Ministry of Finance to exempt the sector from payment of the value-added tax for one season. I believe this indicates that the state supports the tourism sector.
How do you see Egyptian hotel occupancies during the recent period?
From October 2016 until the end of March, occupancy rates have increased in Luxor, Aswan, and Cairo, reaching as high as 100%. This is tangible improvement, compared to the same period last year. This contradicts the modest rates in Hurghada and Sharm El-Sheikh, which remain low due to the continued suspension of British and Russian flights.
If Russian flights to Egypt are not resumed this year, Egypt will only reach a 30% growth in tourism inflows compared to 2016, when the number of tourists reached 5.3 million.
The growth in occupancy rates was not confined to traditional hotels, but also included the floating hotels.
I believe that Egypt is able to attract tourists to its different destinations. We have various products to offer, including beach tourism, archaeological tourism, and safari trips.
Pope Francis is set to visit Egypt next week. How can that be used to promote Egyptian tourism?
The pope’s visit to Egypt is an important event that provides good marketing by itself. The Egyptian Tourism Authority is the best agency to make promote and market Egyptian tourism, supported by its potential and financial resources, as opposed to companies and tour operators whose only pursuit is their private interest.
