Issa sounds positive note on tourism despite Gaza war uncertainty: Egypt is on track to meet its target of attracting 15 mn tourists this year despite the impact of the war in Gaza — and is introducing new incentives to support tourism in South Sinai, Tourism Minister Ahmed Issa said in an interview with Reuters.

Refresher:

  • 2023 has been a boom year for Egyptian tourism: Tourism — which is our largest source of foreign currency and either directly or indirectly supports one in every seven jobs in the country — had been experiencing something of a boom prior to 7 October. Revenues from tourism hit record highs in 3Q 2023 and tourism arrivals reached 11 mn in 7M 2023.
  • The mood changed on 7 October. As we reported last week, the market for regional package tours dried up alongside the Israeli tourism market, setting up a month that officials thought would be c. 10% ahead of last year’s figure — but 15% short of the Tourism Ministry’s target.
  • Prime Minister Moustafa Madbouly warned yesterday of the war’s potential impact on tourism during a meeting with ministers and central bank officials yesterday.

Much of the fallout has been contained, says Issa: Less than 10% of bookings have been canceled since the war started more than four weeks ago, and tourist numbers were up 7% y-o-y in the year through to the end of October, thanks to higher arrivals from Germany and China, the minister said, speaking on the sidelines of a travel industry fair in London. Egypt welcomed 1.3 mn tourists this October, up 8% on the same month last year, Asharq Business quoted him as saying.

The government is stepping up incentives: Egypt will offer package holiday companies an additional USD 500 per chartered flight landing in Sharm El Sheikh, which has raised the most concern among holidaymakers owing to its proximity to Gaza, Issa told Reuters. Egypt currently offers companies a subsidy between USD 1.3k and USD 3.5k when charter flights meet a certain occupancy rate, as an incentive for companies to attract higher footfall to the country. This policy was extended in 2022 and again this year.

That’s not all: We were told last week that senior government officials have begun damage control with several new responses to the crisis, which include convening a forum for key industry players, regulators and industry associations to put heads together, alongside increased marketing spend and allocations for familiarization tours by global tour operators.

We’re more vulnerable than other MENA countries: S&P Global yesterday named Egypt, Lebanon, and Jordan as those whose tourism sectors are most likely to suffer as a result of regional conflict — but the loss of USD weighs harder on Egypt’s economy, given our dwindling FX reserves and upcoming debt payments. Tourism revenue losses of 10-30% “could cost the country 4-11% of foreign exchange reserves,” the report warns.

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