The beleaguered industry
As the tourist sector braces itself for the anticipated war on Iraq, the government is extending it a helping hand. Rehab Saad reports
Expectations in recent months that a war could erupt in the region at any moment have been hard on Egypt's tourism industry. Trip cancellations have been rolling in from markets around the world, and, needless to say, new bookings are not making up the shortfall. The Ministry of Tourism and local tour operators agree on the reasons for the decline in business: people are reticent about visiting the region with the spectre of war looming because they face too many unknowns. Will there be a war? If so, when? Would a conflict spill over into neighbouring countries? Are airports expected to operate continuously? Will tourists visiting the region be able to obtain travel insurance?
The Iraq standoff is not the first crisis to put a dent in Egypt's tourism sector. For more than a decade, the industry has been dealt consecutive blows, starting with the Gulf War in 1991 and in the last two years 11 September, the war in Afghanistan and the escalation of Israeli aggression against the Palestinians. Towards helping the sector minimise its losses, the Ministry of Tourism is taking extensive measures.
Minister of Tourism Mamdouh El-Beltagui recently said he expects the number of visitors to Egypt to decline in the event of a war to between three million and 3.4 million this year, down from five million in 2002. "This means that the war will result in a loss of about 2.2 million tourists," he said.
El-Beltagui forecasted that the American market would be the most affected, witnessing a decline of 90 per cent, followed by the West European market then the Asian market, both of which are expected to decrease by 50 per cent. "The countries of Eastern Europe will be less affected, followed by the African and Arab markets, which will witness the least drop, declining by five per cent to 10 per cent," he said.
Statistics for the number of tourists visiting Egypt in January and February of this year put the American market at number 10, while Italy, Russia and countries of the former Soviet Union, and Germany were the top three markets, respectively, during the same period.
In financial losses, El-Beltagui predicted that the Egyptian economy would lose $2 billion this year owing to a decline in tourism. The decline in revenue would deal immediate blows to the country's balance of payments and tax revenues, the minister said.
Hard times have not kept tourists away altogether, though. Statistics for January and February of this year show that the number of tourists increased by 39 per cent compared to the same period last year, and by nine per cent over 2001 and six per cent over 2000. "Travellers have become aware that Egypt is distant from places of conflict," El-Beltagui said.
Given the generally gloomy picture, the ministry is setting its sights on attracting four million tourists this year, and it hopes that they will bring in some $3.5 billion. The ministry has developed an extensive plan to meet these targets that includes measures for marketing, providing subsidies, deferring payments, facilitating loans, and security
Promoting Egypt abroad is one of the pillars of the ministry's plan. A public relations campaign by the ministry will target foreign media, tour operators and major foreign travel agents. It will emphasise that Egypt is secure and distant from the expected areas of tension. Particular attention will be given to courting tourism from Arab countries, alongside encouraging Egyptians take domestic trips.
The ministry's incentive programme for charter flights, which is to be extended to mid-October, will figure high in its promotional campaign. The programme was launched in mid-November 2001 to rejuvenate tourism in the aftermath of 11 September. Under the scheme the Egyptian government pays 30 per cent of the cost of the charter seats when at least 50 per cent of seats on a plane are booked.
Debts, taxes and social insurance payments can become a nightmare for Egyptian investors during times of crisis. Towards reducing this burden, the ministry is negotiating with banks and government authorities to facilitate the rescheduling of bank loans and deferring payment of social insurance premiums and utility bills.
Amid international concern about riots and attacks on tourists, the Ministry of Tourism is working with the ministries of interior, information and foreign affairs, among other state organisations, to ensure the safety of visitors.
While the tourism industry has welcomed the plans, business-owners are extremely nervous about what the immediate future holds. As one hotelier, who spoke on condition of anonymity, said, "The situation is extremely complicated and any plans from our side would quickly become outdated, because we simply don't have the basic information we need on matters like the operation of airports, travel insurance and other important issues. We can only wait until the situation becomes clearer."
In the meantime, many hotels and travel agencies are scaling down their operations to minimise expenditures. Some hotels, for example, have temporarily shut down some of their food outlets. Others have closed entire floors that are not occupied in order to economise on electricity and maintenance costs. They are also slashing their advertising budgets, employees salaries and even laying off staff.
A travel agent who spoke to Al-Ahram Weekly on condition of anonymity, said that employees will be the real losers in the crisis. Those working without contracts, the travel agent said, "we call them 'casuals' -- they will be gotten rid of."
In spite of the crises the industry has faced in the last decade, it has grown considerably. During that period both the number of hotel rooms and travel agencies in the country have doubled. This growth has had positive affects on employment by the sector. According to Riad Qabil, secretary- general of the Egyptian Association of Travel Agents, "As the number of tourist establishments increased, the number of those employed also increased. There are now at least 10 million people working in tourism. Many of them support families, so a decline in tourism will really complicate things."
In a pro-active measure, some hotels and travel agencies are directing promotional efforts at the "unaffected" markets like the Eastern European countries and the domestic market. "Their [the East European market] fear of war is less than that of west Europeans and Americans," said Adel Zaki of ITTA tours. The Ritz Carlton Sharm El-Sheikh is just one such organisation that is taking this analysis to heart and is planning for a marketing drive at trade fairs in Moscow and the Ukraine. Public relations manager for the hotel Marwa Rakha, said, "I believe this is the wrong time to disappear from the international arena. Besides trade shows, we organise regular press trips, local and international, as well as 'fam' [familiarisation] trips to keep us in the spotlight."
Reducing rates is a measure that many businesses have resorted to in previous crises. However, warns Mustafa El- Guindi of Belle Epoque, which owns two cruiseships operating on Lake Nasser, this is a dangerous solution because "if we cut our rates drastically, it will be incredibly difficult to raise them again when the crisis ends."
