We lead the news well this morning with a deep look at the state of the tourism industry, now arguably our largest source of foreign currency and a sector that directly or indirectly supports roughly one out of every seven jobs in the country.

Officials are working overtime to blunt the impact on the industry of Israel’s war in Gaza. Just a few weeks ago, we weren’t just talking about a record 2023 for Egypt’s tourism industry — we were looking forward to an even more promising 2024. That’s changed in recent days, as regional media outlets have raised questions about cancellation rates heading into the final months of the year amid reports that a growing number of tourists are delaying booking decisions.

Smart strategy paid off in 2023, where we’ve seen tourism arrivals come in at 11 mn in the first nine months of the year, with a record 4.2 mn people visiting in the three months ending 30 September. The industry’s boom prior to 7 October owes to a basket of factors, including:

  • Climbing the value chain: Faced with the loss of Ukrainian and Russian tourists after the outbreak of war last year, tourism officials made a smart play: Instead of trying to drive demand with incentives, they focused on reducing the risk for the value chain on the supply side; that encouraged operators to allocate resources to Egyptian tourism products. In practical terms, this meant additional incentives for aviation, co-marketing campaigns, and other programs directed at international wholesalers to encourage them to put the product in the hands of retailers in source countries.
  • Post-covid catch-up has seen plenty of well-heeled European, North American and Asian tourists eager to check an Egyptian holiday off their bucket lists.
  • Diversification of our inbound markets to make us more attractive to longer-term growth markets such as China, India, and beyond.
  • An industry-wide emphasis on “committed sales” where operators commit to blocks of seats, rooms, et cetera, from clients who pay deposits up front.

Where are we now: We’ll still see tourist arrivals in October close 10% above the same period last year, a top official told us. That’s about 15% short of the ministry’s target for October, but an exceptional performance in light of the shift in mood on the Middle East since 7 October. The shortfall owes primarily to regional tours — packages that take visitors through Egypt, Jordan, and Israel — as well as a drying up of the Israeli market. There have been no significant cancellations “in source markets that have bought ‘Egypt-only’ products,” the official told us.

“The Israeli market has left Sinai, certainly,” said Hamed El Chiaty, who leads Travco, the nation’s largest owner and operator of hotels. “But the turndown in other markets, including the UK, Belgium, and Scandinavia, appears now to have been temporary as people absorbed what was happening with the war. There was definitely a drop-off in the first days, but there’s a growing understanding that Egypt is safe and that mainland and Red Sea destinations are very far from what’s happening.”

Travco has seen bookings picking up “in the past three or four days,” El Chaity added. “It’s starting to improve, particularly bookings for Hurghada and Marsa Alam.”

Where’s the risk? It’s all about how long Israel’s war in Gaza lasts. Officials think they have visibility through the end of the year, the senior official told us, but “the concern now is for January and February,” as tourists making bookings now may be reticent about paying reservation fees in light of what’s happening in the region. The hope is that we’re talking about “delayed” bookings and not “lost” bookings, a high-profile industry CEO told us.

Senior government officials are leading a crisis response plan that’s going down well with many top industry participants we spoke with. Among the highlights:

#1- A clearinghouse for ideas and problem-solving. Tourism Minister Ahmed Issa has pulled together a high-powered committee that includes top industry players (think: El Chiaty and Naguib Sawiris), regulators, and industry associations. It gives industry participants a forum through which to stay on the same page.

#2- Blanket outreach to the 300 operators who make up our full value chain: “Our priorities are to keep the airlines committed with all the seats, the wholesale tour operators committed with all the hotel rooms, and the retailers committed to sell the product on the streets of the source countries. So, when the crisis ends, last-minute bookings can find the product available for them to buy by January in February,” the senior official told us.

#3- Fresh incentives are in the works, including an “extension of the aviation incentive program for the next period, while lowering the qualifying load factor for flight eligibility for incentives,” according to an Egyptian Tourism Authority (ETA) communication sent to top industry players globally.

#4- More marketing: The ETA is coughing up additional funding for joint marketing campaigns as well as for “familiarization trips” to Egypt for both international tour operators and airlines. More money for an “extensive [targeted] online campaign” is also in the works, the note from the ETA says.

#5- Happy tourists are the best ambassadors: The ETA is working with operators to capture video and other testimonials from satisfied tourists now on the ground in Egypt, making the case “in a variety of languages” that Egypt is a great, safe place to visit.

THE INDUSTRY IS, SO FAR, TAKING IT IN STRIDE-

Local leaders like Travco aren’t pulling back from investment plans: El Chiaty says Travco is pushing ahead with plans to open eight new hotels nationwide. “All are under construction and we’ll be completing properties in November and February, with the rest to come before July of next year.” The properties are split across Marsa Alam, Cairo, Sharm El Sheikh and Hurghada, and Travco is also in the process of closing the acquisition of two new hotels in Cairo.

Global hotel brands are also doubling down on Egypt:Accor and Hilton have both recently announced ambitions to scale their footprint in Egypt in the coming years.

Tags: