Egypt’s tourism sector started to pick up momentum in the second half of the year thanks to factors including the return of Russian tourists to Sinai in August and the glitzy ceremonies of the Pharaohs’ Golden Parade in Cairo in April and the opening of the Avenue of the Sphinxes in Luxor in late November.
The rejuvenation of the sector came following a severe setback caused by the spread of the Covid-19 in early 2020. However, the Omicron variant of the virus is now casting shadows of uncertainty over the sector, at least in the near term.
Had it not been for the discovery of the new variant in November, Egypt would have achieved the high growth in tourism witnessed in 2019, said Kamel Abu Ali, head of the Albatros tourist company.
According to Ministry of Planning figures, Egypt’s hotels and restaurants sector achieved 181.8 per cent growth in the first quarter of this fiscal year, indicating that the negative effects of the coronavirus on the sector were wearing off.
Many decisions have been made to support the sector since the outbreak of the pandemic. In July, the Ministry of Health updated procedures for visitors, saying that fully vaccinated passengers did not have to conduct PCR tests.
Abu Ali said that the return of Russian tourists to Egypt’s Red Sea resorts had revived tourism to Sharm El-Sheikh and Hurghada as they top the list of travellers arriving in Egypt. Russian tourists returned to Hurghada on 9 August after a six-year ban on flights to the Red Sea cities and Sinai following the 2015 downing of a plane that killed 224 mostly Russian passengers.
August also saw an increase in tourists flying to Egypt from Eastern Europe and Spain, said Mohamed Hassanein, head of Galaxia Tours, a tour agency.
Another decision aimed at upgrading the services offered to tourists in early Decemberwas made by the Ministerial Committee for Tourism and Antiquities, which raised the minimum price of accommodation per night to $50 in five-star hotels, $40 in four-star hotels, $30 in three-star hotels, $20 in two-star hotels, and $10 in one-star hotels, as of 1 May 2022, with the exception of the governorates of Luxor, Aswan, the New Valley, and the cities of Taba and Nuweiba, where the decision will be applied starting on 1 November 2022.
Setting a minimum price for tourist hotels has been a demand made by the country’s tourism sector for years to prevent the deterioration of services in some hotels. Bad service has affected the reputation of tourism in Egypt, and slashing the prices adopted by some hotels in recent years has attracted low-spending tourists, many people in the tourism sector believe.
The decision to set a minimum price for hotel rooms was taken along with the gradual revival of the tourism sector, said Abu Ali.
However, Tarek Shalabi, head of the Marsa Alam Investors Association, believes the decision could be a double-edged sword as while some hotels in MarsaAlam have raised their prices, many tour operators that had contracts with hotels for prices ranging from $18 to $20 had refused to accept the new raises.
Shalabi added that contracting other companies requires the organisation of more international exhibitions, currently limited due to the pandemic.
Karim Al-Miniawi, member of the board of directors of the Chamber of Tourism Companies and CEO of the tourist company IMCO, said Egypt had received a large number of tourists from Ukraine, the US, Poland, and the Czech Republic.
According to the Ministry of Tourism and Antiquities, Egypt received 3.5 million tourists in the first six months of 2021, representing revenues of $3.5 to $4 billion, almost the same revenues gained in all of 2020.
Economic and social development plans made by parliament approve targets raising the flow of tourists per month to 400,000 in the first half of the year and 750,000 in the second half. They aim at increasing tourism revenues in the current fiscal year to $6 billion, which is less than the $6.8 billion the World Bank had anticipated.
The Pharaohs’ Golden Parade that saw 22 mummies belonging to the kings and queens of the ancient Egyptian New Kingdom moved from the Egyptian Museum in Cairo’s Tahrir Square to the National Museum of Egyptian Civilisation (NMEC) in Fustat and the celebration marking the opening of the Avenue of the Sphinxes in Luxor made international headlines, promoting Egypt as a premium tourist destination.
Al-Miniawi said that the two events had highlighted the cultural aspects of tourism in Egypt and helped promote it as a leading brand, especially as international media outlets were competing to cover the ceremonies.
But the spread of the Omicron variant of Covid-19 has resulted in a decrease in the number of tourists coming to Egypt, with Abu Ali and Shalabi reporting that cancellations have taken place from the German and French markets, respectively. Shalabi said hotel occupation rates in Marsa Alam had dropped from 80 to 60 per cent after the appearance of the Omicron variant.
France and Egypt have decided to accept only travellers presenting negative PCR tests, resulting in the cancellation of 30 per cent of reservations.
Hassanein said that few companies had cancelled the reservations of their clients, adding that the sector was holding its breath in anticipation of World Health Organisation (WHO) statements on the Omicron variant. If the variant does not respond well to vaccinations, tourism rates are unlikely to rise higher than last year’s.
Shalabi said that before the outbreak of the coronavirus, Marsa Alam used to receive large numbers of tourists from Germany, Italy, and the UK, while this year the majority of tourists have come from Poland, Ukraine, and the Czech Republic.
Al-Miniawi said that the state’s initiatives to support the tourism sector had helped, but they were not enough. The problem was not the decisions that had been made, but their implementation. The banks had not fully applied decisions announced by the Central Bank of Egypt (CBE) to support the sector, he said, adding that only a fraction of tourism companies had benefited from the initiatives.
In February, the CBE extended moves to help fund tourist companies with guarantees from the Ministry of Finance. These included allocating LE3 billion of the LE50 billion dedicated to funding tourist companies to credit facilities, aiming to help them pay workers’ salaries and operation and maintenance costs.
The initiative was originally meant to end by June 2021 or when the LE3 billion was spent, whichever was closer. The grace period was extended to December 2021, with the first instalments to be paid in January 2022 for the following two years. The state also decided to put off insurance and electricity payments.
Shalabi said Marsa Alam had not benefited from the postponement of payments of electricity bills since the city is lit by diesel-operated generators. He hailed the aid received from funds established to support the unemployed and the state support the tourism sector has been receiving, even if this is through loans. However, the banks have not always been forthcoming in approving loans to tourism companies, seeing them as a high-risk sector, he added.
He said expectations for the tourism sector had looked very promising before the appearance of the Omicron variant. The future of tourism in Egypt in 2022 will be determined by the efficacy of available vaccines against Covid-19, he said.
Had it not been for the emergence of the Omicron variant, Egypt’s tourism sector would have completely recovered by the first quarter of 2022, Al-Miniawi said.
*A version of this article appears in print in the 23 December, 2021 edition of Al-Ahram Weekly.