What reforms are supporting Egypt's tourism industry?

After years of recovery following the decrease in tourism that resulted from the 2011 revolution, Egypt is once again attracting international visitors, with annual growth for 2020 projected in double figures. Although the spread of the Covid-19 pandemic significantly impacted the global tourism industry throughout the first half of 2020, it is expected that the growth seen in Egypt’s tourism segment in recent years will likely resume in 2021.

Structure & Oversight

In 2019 the structure of Egypt’s tourism sector changed significantly when the Ministry of Tourism merged with the Ministry of Antiquities to become the Ministry of Tourism and Antiquities (MoTA). Khaled El Enany, who was at the time the minister of antiquities, was named minister of tourism and antiquities. Merging the two ministries was a move to further develop Egypt’s antiquities tourism, with the aim of shifting the country’s multifaceted travel industry away from the more traditional sun-and-sand offerings.

In November 2018 the MoTA launched the Tourism Reform Programme – known as E-TRP – which outlined a new tourism strategy. The programme covers a number of objectives, including hiring at least one member of every household directly or indirectly in the sector, and driving sustainable tourism forward. The reform presents a wide-reaching strategy with five pillars: institutional reform; legislative reform; promotion and marketing; infrastructure and tourism development; and global tourism trends. The programme aims to revise and improve the legal framework governing the industry, which has been in place since 1970. Administrative restructuring will improve bureaucracy in the system through modernisation and digitisation, supported by capacity building, which aims to enhance the skills of all those working within the sector. This includes greater access to vocational training and improving the English-language skills of those employed in hospitality.

Performance & Size

According to The World Travel & Tourism Council (WTTC), Egypt’s tourism industry has demonstrated rapid growth since the decline that followed the 2011 revolution. In 2019 travel and tourism contributed LE496.4bn ($30.6bn) to Egypt’s GDP, around 9.3% of the total, representing a 0.2% increase on the previous year.

In 2019 the tourism industry indirectly employed almost 2.5m people – representing 9.7% of total employment in the country, with the WTTC estimating that this figure would reach approximately 3.2m by 2029. Growth, however, will likely be somewhat more subdued than anticipated as a result of the Covid-19 virus and its effects on the sector.

Airports & Flight Routes

Since 2018 Egypt’s government has invested heavily in new international airports as part of its plan to reinvigorate tourism. In July 2019 construction began on Capital International Airport, 70 km east of Cairo, which will serve the new capital city starting in late 2020 or early 2021. This comes as part of ongoing infrastructure development efforts to alleviate pressure on Cairo International Airport. Further investment in the Sphinx International Airport – located close to the Great Pyramids, west of Cairo – will also commence new flight routes and support greater air traffic for those visiting the current capital.

In February 2020 EgyptAir announced the return of a connecting flight between Sharm El Sheikh and Hurghada – resort cities – and Luxor, which is said to hold around one-third of the world’s antiquities. The new flight, set to run once per week, would link those leisure resorts with archaeological sites.

More flight routes are set to open as a result of the MoTA incentives programme, which was introduced as part of E-TRP. Working closely with the Ministry of Civil Aviation, the MoTA programme – which runs between 2018 and 2020 – provides incentives based on different criteria. A number of requirements include non-discrimination between charter and regular aviation, and the distinction of governorates or destinations that receive high numbers of incoming tourists.

According to the MoTA, in October 2019 the programme resulted in around 22,300 flights, transporting some 3.6m tourists during the first 10 months of that year. A new aviation incentive unit, established by the MoTA to manage a digital database, will use results from this programme to inform future incentive strategies.

Source Markets

Most tourists travel to Egypt for leisure purposes – accounting for around 86% of total visitor spending – while business travel makes up the remaining 14%. According to the UN World Tourism Organisation (UNWTO), in 2019 visitor numbers increased by 21% to 12.6m arrivals. This figure had been expected to reach approximately 15m in 2020, rising to heights last seen in 2010; however, global travel restrictions due to the Covid-19 pandemic are likely to affect this figure. Although the long-term effects of the virus on the sector remain unclear, it is expected that tourism will resume growth in 2021. According to the WTTC, in 2019 international visitor spending accounted for 59% of total tourist spending, with the domestic market contributing the remaining 45%.

According to the most recent “Egypt Tourism and Hospitality Market” report from Colliers, as of 2018 tourism to Cairo was driven largely by business travellers from within the region. Corporate visitors accounted for around 67% of hotel occupancy, followed by meetings, incentives, conventions and events (MICE) activities (20%) and leisure visitors (13%). Leisure travellers tend to stay closer to the pyramids, booking short stays in the capital on their way to other destinations within the country.

Security & Health

Following the dip in tourism after the 2011-13 political transition, Egypt experienced a drop off in tourist activity. Despite relative political stability, a somewhat negative international public perception of security kept tourists away. The bombing of two tourist buses – one in December 2018, which killed two people, the other in May 2019, injuring 16 – damaged Egypt’s public image. In addition, travel warnings regarding access to specific regions made many tourists uncertain of which areas were safe to visit. However, significant government efforts to improve security and the public perception of Egypt as safe to visit have resulted in tourism numbers gradually increasing, returning to levels last seen prior to 2011.

To enter any of Cairo’s famous museums or to gain access to the pyramids, visitors must currently undergo an identification check and metal detector scan. Similar schemes have been established following terror attacks in major European cities, such as bag checks in museums in both London and Paris. Additionally, the police are more strictly enforcing an existing rule that requires tour operators to maintain and submit their tour group itineraries.

Officials are also looking to address health concerns in light of the Covid-19 pandemic. In mid-June 2020 hotels were mandated to adhere to guidelines established by the Chamber of Hotel Establishments, including operating at 25% capacity and other preventative measures. Hotels must also follow government regulations, as well as guidelines from the World Health Organisation.

Arrival Markets

Tourism to Egypt is led by Germany, which made up 15% of total visitors in 2019, followed by Saudi Arabia with 8%, and Sudan, the UK and Libya, each with 4%. According to data published ahead of the 2019 Arabian Travel Market (ATM), an annual travel and tourism exhibition held in Dubai, the number of European tourists to Egypt is forecast to rise from 6.2m in 2018 to around 9.1m in 2022. Tourism from Russia and the UK experienced a dip following an attack on a Russian plane in October 2015. The incident resulted in a two-year travel ban from both countries; however, direct routes to Sharm El Sheikh were reopened in 2019 following Egyptian investment of nearly £20m to improve security, and tourism levels have returned to normal.

New airport safety measures include the construction of a six-metre-high wall separating Sharm El Sheikh from the rest of the Sinai Peninsula. To encourage visitors to return to the region, the government has introduced a number of additional security measures at the airport. The first passport check occurs at the motorway exit to the airport, while inside the airport, there are new swab tests, as well as photograph and fingerprint processes.

Efforts to improve security have been made in other airports. Egypt invested LE60m ($3.7m) in a new security scanning system at Marsa Alam International Airport, which includes computed tomography – or CT – scans, set to be completed by the end of 2020. A similar device was installed in Terminal 2 of the Hurghada International Airport in 2018.

Travel from the Middle East rose substantially between 2015 and 2020, with Saudi Arabia accounting for 6% of all visitor arrivals in 2018 and 8% in 2019. Tourist arrivals from the Middle East are expected to grow from 1.5m in 2018 to 2.2m in 2022 – an increase of around 50%. The MoTA has increasingly focused new promotion strategies on emerging tourist markets in recent years. Subsequently, a video from Egypt’s People To People campaign was awarded the best promotional film award in the Middle East by the UNWTO in September 2019.

A number of sector representatives, including the Egyptian Tourism Authority (ETA) and the Egyptian Hotel Association, were scheduled to attend the ATM in April 2020, but the event was moved to 2021 due to the Covid-19 pandemic. Egypt’s attendance is intended to further promote the sector within the Middle East and on the international stage.

In addition to marketing campaigns targeted at the Middle East, the MoTA is also focusing promotional activity towards Eastern Europe and new markets in Central and South Asia. Following the temporary decline in tourism from the UK and Russia, the MoTA turned its attention to alternative markets. Japan, China and Vietnam are some of Egypt’s most promising tourist markets, with around 670,000 tourists from Asia visiting Egypt in 2018, the most recent year for which this information is available. In 2017 Japan reopened its direct flight between Tokyo and Cairo, following a four-year hiatus due to low demand. The MoTA is aiming to increase the total visitors from Japan to around 130,000 annually, following a 38.2% increase in visitors between January and September 2019.

Hotel Infrastructure

Travel agencies have flourished due to the increase in tourism over recent years, with many making group bookings in hotels and helping to drive occupancies rates up. Greater demand from travel agencies across the country reflects the growth in the business and leisure tourism, as private investors signal plans for widespread development. As part of its 2018 E-TRP strategy, the MoTA is aiming to increase the total number of hotel rooms from 89,993 in 2018 to 238,114 rooms by 2030.

Hotel occupancy rates increased in 2019, with average revenue per available room (RevPAR) growth of 20% compared to 2018. In the first 10 months of 2019 Cairo, Hurghada, Sharm El Sheikh and Alexandria experienced RevPAR growth of 12%. In 2019 the occupancy rate in Cairo was 75%, up from around 70% in 2018. This trend was expected to continue with estimated occupancy rates of 81% in Cairo, 84% in Alexandria, 64% in Sharm El Sheikh and 70% in Hurghada in 2020; however, the outbreak of Covid-19 in the first half of the year has led to a considerable drop in overall rates. In January and February 2020 Cairo’s average daily room rate and RevPAR were $92 and $71, respectively, before dropping significantly in March.

In a move to significantly boost hotel offerings, the Egyptian Hotel Association (EHA) announced planned infrastructure investments of $800m for 2020. In November 2019 Maged Fawzy, chairman of the EHA, told local media that around 100,000 rooms were under construction and 8000 of these were expected to be completed in 2020, but as of June 2020 this had been delayed until at least 2021.

In 2018 E-TRP introduced new norms for hotel classification, with the aim of ensuring that national hotel classification criteria meet international standards. The EHA has overseen this process by contracting independent standards agencies to carry out comprehensive reviews across the sector.

New Projects

Meanwhile, a number of international hotel giants have announced new projects across Egypt, focusing on Cairo and the surrounding area. In February 2020 Saudi Arabia’s Hospitality Development Group announced its intention to build eight hotels over two years, at an investment cost of about $450m. The new hotels are set to be located in Cairo, Hurghada, Sharm El Sheikh, Marsa Alam, Luxor and Aswan. In 2018 the Marriott International and Hilton hotel groups announced several multimillion-dollar projects across Egypt, which are slated for completion by 2023.

Niche Markets

Millions of visitors flock to Egypt every year, not only for its sun-and-sea tourism, but also for its rich cultural heritage and wide array of historical sites. Beyond Cairo and the famous Great Pyramids, Luxor is attracting large numbers of tourists with its expansive range of archaeological offerings and popular hot air balloons. According to Tharwat Agamy, chairman of Luxor’s Tourism Companies Chamber, in 2019 land hotel occupation in the city increased by 90% and floating hotel occupation increased by 100%.

Egypt held its first niche tourism forum in 2013, with representatives from National Geographic’s Centre for Sustainable Development and over 100 dignitaries in attendance to discuss and plan the development of the country’s promising niche travel sector. The country has since highlighted the growing potential for ecotourism, with Egypt’s Tourism Development Authority emphasising the potential development of four specific ecotourism zones: coastal, desert, riverbanks and wetland.

Although ecotourism is developing somewhat more slowly than other areas of the industry, the Egyptian government has already established 21 protected areas in response to pressure by foreign donors. The EU and other institutions have funded environmental protection projects including a number of resort destinations in national schemes.

Religious tourism is another of Egypt’s niche segments. Egypt is home to a large number of historic temples, synagogues, churches and mosques. In 2018 the country was an official Roman Catholic Church pilgrimage destination, and it is hoped that this will result in greater numbers of Catholic pilgrims in the years to come.

Between 2018 and 2020 the MoTA invested LE65m ($4m) in the renovation of the Eliyahu Hanavi Synagogue, the oldest and largest synagogue in Alexandria. It was inaugurated on January 10, 2020 and is expected to entice greater tourism in the coming years. The renovation of the synagogue, which had fallen into disrepair, demonstrates the Egyptian government’s ongoing commitment to repairing and restoring buildings of historical importance.

As part of the MoTA strategy to diversify tourist source markets, the ETA is also working to promote sports events and spaces. The Mena House Oberoi Golf Club, located close to the Great Pyramids, has welcomed golfers since the late 1800s. There are now 20 luxury golf courses to be found across Egypt, many of which have hosted large international golf tournaments. Since 2015 the country has hosted a number of gold tours as part of an initiative between the ETA and the Egyptian Golf Federation. Thanks to its warm winters and substantial investment in practice facilities, Egypt is now able to host major golfing events, attracting both amateurs and pros.

Marketing

The modernisation of marketing is a key goal under E-TRP. Pillar three of the reform, promotion and marketing, provides several objectives to improve the current tourism marketing strategy. The pillar contains three broad goals: to establish international marketing and promotion partnerships; to adopt modern, digital and competitive promotion approaches; and to diversify revenue streams and increase the sector’s resilience by tapping new international source markets.

To establish an effective marketing campaign, the MoTA intends to brand by individual destination, creating identities for each of Egypt’s different tourist centres. In addition, all marketing materials will be promoted via both traditional and digital media. The country has already demonstrated considerable innovation by establishing the first specialised tourism Instagram TV – better known as IGTV – channel in the MENA region. As part of tourist market diversification, the MoTA is aiming a new winter tourism campaign at India, China and Latin American countries. Another strategy is set to focus on the Gulf, to be carried out at the ATM in 2021.

The ETA website informs visitors about all of Egypt’s major attractions and tourist destinations. The site includes an interactive map displaying what each tourist area has to offer, general tourism information, as well as a link to download the ETA app. The ETA has also introduced the #ThisIsEgypt hashtag in order to encourage travellers to share their visits and discover other experiences.

In 2019 the MoTA announced that progress had been made on its tourism promotion campaign through partnerships with international marketing and media companies including New York-based creative agency Beautiful Destinations, US news network CNN, China’s travel site Ctrip, US-based Discovery Channel, online hotel-booking site Expedia and the UK’s digital marketing company Isobar.

The MoTA hopes to attract larger numbers of international visitors with the opening of the new Grand Egyptian Museum (GEM). The long-awaited GEM was originally slated to open in late 2020, but has been delayed until 2021 due to the Covid-19 pandemic. Through close collaboration and promotion of the #GEM2020 hashtag, the MoTA aims to establish Egypt as a prime destination for tourism.

The $1bn GEM will have a direct view of the Grand Pyramids, and is set to be the largest museum in the world with a focus on civilisations. Its exhibition of over 100,000 artefacts will include a Tutankhamen collection and several objects that have not been shown to the public since their discovery in 1922. In addition, the $17m Sphinx International Airport is expected to be fully operational for the launch of the GEM, alleviating pressure on Cairo International Airport. “The Giza Plateau is like Stratford in London,” Ibrahim El Missiri, CEO of Abu Soma Development, told OBG. “Following the 2012 Olympics, the area has been changed significantly due to massive investment. We plan the same for Giza.”

Outlook

Although the spread of the Covid-19 virus in the first half of 2020 significantly impacted tourism worldwide, Egypt’s push to develop its tourism reform alongside infrastructure investment and global promotional activities looks set to lead the industry to success in the longer term.

The move to establish the country as a world leader in antiquities tourism, and further development of its traditional sun-and-sea offerings, has reinvigorated Egypt’s tourism industry. A number of new flight routes and increased airport capacity will provide international visitors greater access to the country’s many attractions in the years to come.