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Sunday, 21 July 2019

Falling ruble keeps Russian tourists off Egypt's beaches

Slide of Russian currency threatens recovery of Egyptian tourism sector as President El-Sisi calls for intervention

Deya Abaza , Dalia Farouq , Sunday 21 Dec 2014
Tourists
Egypt's Red Sea beaches draw many Russian tourists (Photo: Reuters)
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The slide of the ruble is keeping Russian tourists away from Egyptian beaches and halting the nascent recovery of a tourism industry already suffering from three years of turmoil, industry insiders say.

The demand from Russian vacationers is down 40 percent this December compared with last year as spending a holiday in Egypt becomes more expensive, Ehab Wahdan, general manager of the Egypt office of Moscow-based tour operator Tez Tour, said of his company's business.

The worst hit places are Egypt’s Red Sea resorts, the most popular destination for Russian tourists, particularly in the winter months when Egypt offers a warm climate at relatively affordable prices.

Russians are the largest single tourist group in Egypt, making up about a fifth of foreign vacationers in the country in the past four years, as well as 60 percent of tourists to the Red Sea, according to official data. 

“Everyone in the business here is at breaking point,” said Aly Nouh, owner representative at Movenpick in Soma Bay near Hurghada, one of the biggest tourist spots on Egypt's Red Sea coast. “No other nationality can fill the shoes of the Russians; they constitute a clear majority of the tourists in Hurghada.”

The ruble lost more than 50 percent of its value this year on the back of declining oil prices and economic sanctions from the West. It currently trades at around 60 to the dollar.

Short-lived recovery

Egypt’s LE49 billion ($7 billion) tourism industry began recovering in 2014 after plummeting in the second half of 2013 due to the bloody violence that followed the ouster of president Mohamed Morsi.

The 2.7 million tourists who visited Egypt between July and September this year generated around $2 billion, a 70 percent increase over the same period last year which saw 1.6 million tourists generating $900 million.

Red Sea destinations in particular saw something of a comeback this summer as many European nations lifted warnings against travel to Sinai, imposed following a terrorist attack on a tourist bus in February 2014.

But Moscow's economic woes may handicap this recovery.

"Our occupancy is down to 25 percent now, if that, and we are charging as low as $32 per person per night," said Sayed Kassem, owner of two hotels in Hurghada. In September, when the ruble was trading between 37 and 39 to the dollar, Kassem says his hotels were still offering double rooms for $60-70 a night, with occupancy of up to 90 percent.

The Ministry of Tourism declined to provide Ahram Online with the breakdown of tourist figures in October and November. 

President Abdel Fattah El-Sisi, however, took note of the decline during his visit to Hurghada last week, and tasked the cabinet with finding a solution to encourage Russian tourists to return, Cairo-based daily Al-Masry Al-Youm reported.

One in seven Egyptians

Employing one in seven Egyptians, tourism is one of Egypt's main sources of foreign currency. According to Central Bank data, tourism generated $9.7 billion in the 2012/13 fiscal year -- almost double the revenues from the Suez Canal.

"The sector is dying," Kassem said, citing mounting costs of energy and food, as well as tax hikes on substances like alcohol.

Egypt’s government in July issued a spate of fuel and electricity price hikes, along with tax increases, in an attempt to shore up the state’s coffers and tackle a widening deficit.

"Our cost per customer is $18-20, and I have to pay over 24 taxes amounting to 22 percent of my profit," Kassem said. "The government is bleeding us dry just when we need the most help,"

Tez Tour's Wahdan sees no solution but to wait it out. “The ruble needs to stabilise, for people to adapt and make travel plans and budget accordingly.”

"Until then," says Wahdan, "all the sector can do is keep the rates low and hope for cold weather in Russia this winter."

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6



Annette Barrow
27-12-2014 12:49pm
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'For Russia with Love'
The bad news of the fall of the Russian ruble against the Dollar may keep Russian tourists off Egypt's beaches in 2015 but the drop in oil prices may eradicate this negative result for Egypt. Let us remain positive for Egypt in 2015 in the wake of this negative news.The world is a big place for Egypt to reach out to and cash-in on to attract new tourists from every country within the seven Continents of the World to visit Egypt. The drop in oil prices will make airfares cheaper in 2015 and this will have a positive effect on Egypt’s tourism industry when airlines start to pass on these savings to the consumers in 2015.
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5



expat
22-12-2014 05:56pm
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32$.....5* red sea..
the rate is not new to luxor for example,it was also lots of times in the hurghada hotels common... its only shifting money arround,no profit in the country itself. and the funniest part,this guys from the west or russian,which would with this amount of money not even get a youth hostel bed in their own countries,expect here TOP VIP treatment...
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expat
23-12-2014 03:35pm
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@zakki
I agree,and the tourists should know this by now,but the fact is,that the hotels are sold and rated as 5*. And given the fact, that for example a big player is letting the germans book in his own tourist agent offices in D, do fly them in under his charter and places them in his hotels...the whole money spend stays in germany and NO benefit for egypt at all. the salaries are generated by the whicked all in system,where the good things are out of the package :)... .Back to my point,any tourist should know this by now and shouldnt be surprised. Quality looks another way. Different story in luxor,where the owners are FORCED to lower the rates like this due to the dead market..here everybody suffers
Sam Enslow
23-12-2014 02:07pm
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Provide what is promised
If a 5 star experience is promised to tourists that is what they should expect. Egyptians set the prices.
zakki
23-12-2014 08:44am
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stars
5* in hurghada is maybe 2* stars in Europe,the price is in relation to the quality...or why the owners of the hotels dont rise the prices? Yoy must also compare the whole touristic infrastructure. In anothet coutnries are the touristic cities much cleaner and no harrasment by each step...
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expat
22-12-2014 05:54pm
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what about that killed youngster female tourist in marsa alam?
not in the news untill now? lets see,when it goes viral in the west,how much damage THAT will bring again..
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3



Anatoly Moskin, Moscow
22-12-2014 12:28am
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Just commit another genocidal massacre and invite us to watch it
I suggest a solution: commit another massacre of protesters and invite tourists to witness the event. This could help.
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Dano
21-12-2014 09:16pm
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Egypt Middle Class & Tourism
As an American who spent several years living and working in Egypt I traveled to various parts of the country. In many cases there is little difference between the outlaying towns and the big cities with regard to lack of meaningful work and pay. I agree Egypt needs to work to develop a middle class to begin to neutralize the imbalance in wage scale and decent paying jobs. Egypt must also pursue tourism. They are the best at it and there is no place like Egypt. It's a mystical place that gets in your blood. I'm encouraged by El Sisi and think he will do well in leading Egypt to prominence and prosperity.
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NewEgypt123
21-12-2014 06:46pm
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Egypt needs a middle class
This is one more reason why Egypt needs to build up its middle class. If Egypt had a middle class that could afford to vacation on the Red Sea coast, Egypt would not have to rely on foreigners to spend money at these resorts. Egypt needs to focus on developing its industrial capacity, domestic consumption, and agricultural production. By developing itself, it will create jobs for Egyptians who will spend their money in Egypt. Keep Egyptian money in Egypt, rather than importing everything. Every import makes Egypt poorer.
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Dr.Feelgood
23-12-2014 07:39pm
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"Every import makes Egypt poorer"
Let's see what happens if the goverment stops importing grain. Think twice before posting nonsense!
expat
23-12-2014 03:38pm
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"middle class"
ever read the normal split of a society in a third world country? its 1-3% super rich,7-15% state employees and managers and the rest....living from the hand in the mouth. On top of this normal situation in islamic countries the overpopulation kills many ambitious thoughts
Allen
22-12-2014 08:38am
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It takes some brains to lift a family from poverty to middle class.
Having multiple childran by a family stuck in poverty reveales complete lack of planing common sence. Egypt itself can not create a middle class. That is the responsibility of each family.
zakki
21-12-2014 07:33pm
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Tourists money
Ist not a solution wait till egyptian middle class will make vavation on the coast. This Land need money from outside, money from tourists...The policy to brinng mass of russian tourists is wrong, better will be impove the quality of services and bring not mass but quality of tourists...The All Inclusuve concept and mass of russians tourists for cheap prices bring nothing to land...
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