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Continuing political instability, along with severe security issues and separate bombings in the country, have all triggered one of the worst economic crisis in Egypt since the Great Recession. Drastic drops in international arrivals and incoming tourist receipts, a sharp decline in economic growth and the devaluation of the Egyptian pound have all led to ballooning unemployment, widespread fuel shortages, empty hotels and a crippled travel and tourism industry.
While many analysts believed that the Egyptian economy would be resilient enough to recover within just a few months, continued unrest has prevented the country from offering an image of safety and stability. The industry remains extremely fragile and almost paralysed, which means that the path to recovery still appears to be difficult.
Egypt is one of the key tourism destinations in the Middle East; yet, the entire travel and tourism industry in the country came to a standstill in 2013, with the number of tourist arrivals falling by a steep 14% and incoming tourism receipts recording a drop of over 20%. The country experienced a strong decline in the number of arrivals from traditional source markets such as the US, Russia, the UK, Italy, and France, all of which saw falls of over 20% in 2013.
Travel bans and warnings due to escalating security problems, which in turn triggered countrywide cancellations by big tour operators such as TUI and Thomas Cook, have all had a major impact on the country and its travel and tourism industry.
Indeed, hotel occupancy rates in September 2013 were reported by the Ministry of Tourism to be 0% – a figure which had never been seen before – in places such as Abu Simbel and Aswan, while, in Luxor, occupancy rates stood at just 1% in the same month, forcing many hotel owners to temporarily close their properties. Empty museums and tourist attractions and half price offers have become the norm in a country where tourism accounts for about four million jobs and approximately 11% of GDP.
Egypt’s travel and tourism industry may see a recovery in 2014, with Euromonitor International predicting 3% growth in international arrivals, but prospects are especially uncertain, owing to the continuing political turmoil. Concerns have been raised about the ambitions of the ruling military political circles, as well as the Islamist parties, which are well established in Egypt. Also, turmoil and instability are continuing to affect the entire region, with Syria continuing to suffer the effects of civil war, while Iraq is on the brink of one.
Regional players such as UAE, Saudi Arabia and Kuwait have all pledged a total of US$14.9 billion to help the Egyptian economy in 2013 and 2014. Supported by Arab aid, the government has introduced two stimulus packages, which could help, albeit temporarily, boost the travel and tourism industry as well. Improving tourist numbers is now as much of a priority as sustaining investment and maintaining planned development projects, including hotels and other tourism facilities.
The government has launched a marketing campaign in the hope of attracting 13.5 million tourists in 2014. Refocusing marketing efforts on cultural tourism and away from Cairo, such as on Nile cruises and promoting Luxor and Aswan, is being hailed by the trade. A push to increase airline capacity to the country and heavy advertising in key markets such as UK and Russia, while also targeting Asian and Latin American markets, are all the subject of more focus.