8 things to know about Egypt's ailing tourism industry

Cairo says it is making efforts to revive its tourism industry that has suffered after years of political instability and security concerns.

Photo by: Getty Images
Photo by: Getty Images

Egypt's tourism sector is reeling from years of upheaval and the 2015 bombing of a Russian airliner carrying holidaymakers home from the popular Red Sea resort of Sharm el Sheikh.

Egypt is hopeful that investments in airport security and a weaker currency will lift its ailing tourism sector from its six-year lull to levels before the 2011 uprising.

"I think if we are fortunate enough, this year we will come very close. We are hoping to close the gap as we go on," Egypt’s Tourism Minister Yehia Rashed said. 

“In the first two months of 2017, the development of arrivals was very, very good."

Here are 8 things you should know about Egypt's tourism industry:

Egypt hosted a record 14.7 million foreign tourists in 2010, before former autocratic president Hosni Mubarak was overthrown. Last year, only 5.3 million tourists visited the country. (AP)

1. Tourism has been one of Egypt’s main sources of income

Described as the “Cradle of Civilisation” because of archaeological excavations that showed that the North African region was inhabited since 6,000 BC.

From Alexandria on the Mediterranean to the Great Pyramid of Giza – the last of the Seven Wonders of the World – and Aswan to the south, Egypt is home to many ancient treasuries that attracts tourists.

At its peak in 2010, the tourism sector employed about 12 percent of Egypt's workforce and brought in nearly $12.5 billion in revenue.

Egypt's annual inflation rate in 2016 was the the highest since January 2011. The Egyptian pound, which had been pegged at 8.83 to the dollar, has been trading at nearly 19. (Getty Images)

2. Tourism’s glory days lasted until 2011

The industry took its first hit after the 2011 uprisings calling for greater democratic space toppled Egyptian leader Hosni Mubarak.

Tourist numbers dropped from 14.7 million in 2010 to 9.8 million in 2011.

Morsi is in prison, and his Muslim Brotherhood has been banned and labelled a terrorist organisation. This increased the existing political turmoil and eventually caused holidaymakers to feel unsafe to go Egypt. (AP)

Egyptians elected a president for the first time in 2012. But a military coup led by then army chief Abdel Fattah al Sisi overthrew newly elected president Mohammed Morsi one year later.

The number of tourists fell as Egypt faced criticism over alleged human rights violations and a crackdown on Morsi supporters.

3. Russian plane crash

The industry took another blow in October 2015 when a Russian passenger plane was bombed in Egypt’s Sinai Peninsula, killing all 224 passengers on board.

The crash had resulted in direct or indirect losses to the tune of approximately $280 million within the first two months after it took place. 

Russia, Germany and the United Kingdom subsequently decided to suspend their flights to the Red Sea resort town of Sharm el Sheikh and called back their citizens after the incident.

Tourists from the three countries accounted for more than 40 percent of the total tourism flow to Egypt.

Egypt has spent millions of dollars to upgrade security at its airports, particularly in Cairo and several destinations popular with foreign tourists, like Sharm el-Sheikh and Hurghada on the Red Sea, since the downing of Russian plane. (AP)

4. Struggling economy

The economy relies on agriculture, tourism and cash remittances from Egyptians working abroad mainly in Saudi Arabia and the Gulf countries.

Rapid population growth and a limited amount of arable land are also straining the resources and economy.

Foreign direct investment in Egypt has fallen from its 2008 peak of $13.2 billion to $6.8 billion in June 2016.

5. Efforts to revive tourism

After Russia and many European countries suspended their flights, Egypt focused on attracting tourists from China, Japan and Gulf countries.

By late 2016, tourism had picked up because of the government's new strategy.

Vice President of Blue Sky travel agency said Tamer al Shaer said tourists from China increased by 60 percent and Ukranian vistors rose to 30 percent. 

Getting back to pre-uprising tourism numbers is a key goal and tourism officials said that depends on Britain and Russia resuming flights. 

Egyptian Federation of Tourism head Karim Mohsen said: “Russians and Britons are the backbone of Sharm el Sheikh.”

Egypt’s Mediterranean coastline has long been a hotspot for foreign tourists who want to soak up the sun on beaches. (AP)

Hossam Abougabal, Egypt expert and analyst at The Middle East Economic Digest (MEED), told TRT World that tourists have started returning to Egypt as Europe and Gulf countries have become more expensive.

6. Tactics to attract tourists

Egyptian authorities launched a social media campaign #ThisisEgypt to attract tourists from all around the world.

That campaign saw many social media users share their images of Egypt.

The Egyptian Museum, home to the golden mask of Tutankhamun and mummies of pharaohs, has extended its hours and is open into the night.

Annual passes are available to encourage Egyptians to visit the sites, while patrons and archaeological missions still contribute to the preservation of Egypt's ancient heritage.

The government hopes to renew interest with new excavations. One such example, is an eight-metre statue that was discovered in the groundwater of a Cairo slum this month.

The colossus is thought to be of King Psammetichus I, who ruled from 664 to 610 BC and, if confirmed, would be the largest statue of the Late Period ever discovered.

Last November, archaeologists discovered a 7,000-year-old city in the country’s southern province of Sohag. (AP)

However, the state coffers cannot cover everything.

"Priority is given to restoration," said Fayza Haikal, an Egyptologist and professor at the American University of Cairo.

"But there are excavations that have been stopped due to lack of funding."

The excavations "have waited for 5,000 years and can wait," she said, but important restoration work has also been delayed.

7. Efforts to restore the economy

Egypt is pursuing a raft of reforms in an attempt to revive its economy.

Authorities last year decided to float the Egyptian pound as part of an economic reform program connected to a loan from the International Monetary Fund (IMF).

Under the $12 billion loan deal, Egypt needs to cut energy subsidies, raise taxes and seek more international financing.

"I think Egypt's made a ... good start" on the reforms, said Chris Jarvis, the IMF’s chief in Egypt.

Egypt on Monday received the second tranche of a $3-billion World Bank loan. (AP)

But analysts said luring foreign investors will take time.

"Everyone is expecting 2017 to be a difficult year," said Walid Allam, the chief financial officer in Egypt for Swiss elevator manufacturer Schindler.

"But we expect that starting in 2018 there will be a bit of a revival," he said. "We are talking about a state, not a company that would take a decision and profit from it after a week or two."

8. Need of diversifying income streams

One of the challenges for Egypt is to diversify its sources of foreign currency, said political economist Amr Adly, nonresident scholar at the Carnegie Middle East Center.

This is particularly important as the main sources now – workers' remittances, crude oil exports, the Suez Canal and tourism – "proved to be very volatile and cannot be depended on," Adly added.

According to Adly, diversifying income sources would help boost local industries including agriculture and manufacturing.

This, eventually, would increase foreign investor confidence, encouraging commitment to long-term investments.

Author: Zeynep Sahin

TRTWorld and agencies