EGYPT: Tourism Industry Braces for Fallout

By Adam Morrow Reprint | | Print |

Adam Morrow

CAIRO, Jul 27 2005 (IPS) - The local tourism industry is scrambling to assess the economic fallout in the wake of the triple bomb attacks that wrecked the Red Sea resort city of Sharm El-Sheikh July 23, killing more than 80 people including a number of foreign tourists.

With tourism Egypt’s number one foreign exchange earner, the attacks are certain to have serious consequences for Egypt’s economy. "We can’t underestimate the hard impact of the incident on the industry, particularly on tourism in the Red Sea area," Hisham Zaazou, director-general of the Egyptian Federation of Chambers of Tourism told IPS.

The attacks by as yet unknown assailants have had an immediate effect on hotel occupancy. "We’re getting some new reservations, but right now there are more people leaving than coming," said Khaled Kandil, area director of business development at the multinational hotel-chain Accor. "It’s too early to judge what the long-term effects will be."

Gamal Youssri, head of the Sharm El-Sheikh International Airport, told the local press that some 18,000 foreign tourists had left the country in the first two days after the attacks. Industry insiders, speaking on Egyptian television, put the number at about 5 percent of the total.

One sales and marketing director at a multinational hotel chain confirmed this figure, estimating cancellation rates at destinations in Sinai – including Taba, Nuweiba and Dahab, as well as Sharm – at between 5 and 10 percent. He was quick to add, however, that tourist venues outside of Sinai had been largely unaffected. "Some tourists departed early, others went to different locations in Egypt. But for areas outside of Sinai, cancellations have been minimal."

But Zaazou cited a considerably higher cancellation rate. He said that while most tourists already in Egypt chose to stay on after the incident, the number of incoming vacationers had fallen precariously. "The problem is with new arrivals, which now stand at 10 percent of what they were," he said. "This means a cancellation rate of some 90 percent – a tragic decrease, but a normal reaction to what happened."

Hala Khatib, spokesperson for the ministry of tourism, conceded that the tourism sector would be adversely affected, although she expressed confidence that the impact – especially on the money-spinning Red Sea resort destinations – would be temporary. "In the short term, we’ll be affected," Khatib told IPS. "Recovery will take some time, but I don’t expect it to take too long."

Egyptians working in Sharm, meanwhile, expressed dismay about the prospect of business losses, even if temporary. While the Ministry of Manpower and Immigration vowed that none of the Egyptians working in the vicinity – estimated at about 110,000 – would lose their jobs, witnesses at the scene reported seeing numbers of discouraged workers and shop-owners leaving the area en masse.

"I think this is the end of the future of tourism in Egypt and in Sharm El-Sheikh," said Hatem Gamal, owner of an electronics shop in Sharm. "We’re taking our things and leaving, because we know it’s going to be dead here."

The incident was also quickly reflected on the stock exchange which fell on the Sunday morning following the attacks, though it rebounded slightly in the afternoon trading session.

"Investors realise that this is the reality of our times, especially after the London bombings," read a daily stock report by local investment house HC Brokerage. "It’s happening everywhere, and they’re coming to terms with that."

But in an indication of the effect on tourism stocks in particular, the number one loser was local powerhouse Orascom Hotels & Development, the share price of which nosedived by almost 15 percent.

But while the bombings are sure to bruise one of Egypt’s most lucrative cash cows, sector players were quick to downplay comparisons to the last major attack on foreigners in 1997, when 58 vacationers at Luxor’s Hatshepsut temple were massacred, gutting the tourism industry.

Hoteliers still refer to the ‘ayam Luxor’ – the "Luxor days" – as the calamity to which all others are compared. They painfully recall the flood of cancellations that came in its wake. "It was the worst thing to happen to the tourism industry in the last ten years," said Mohamed Ghamrawy, former president of the Touring Club travel agency.

The Sharm attacks will not result in the same damage to the industry as the Luxor bloodbath brough, Kandil says. "I don’t think we’ll see the same reactions this time. In Luxor, a lot of foreigners from the same country (Japan and Switzerland) died, and it took a lot to get those markets back. This wasn’t the case in Sharm, where only about eight foreigners of assorted nationalities were killed."

Khatib, too, stressed the dissimilarity between the attacks, especially within the wider context of a rising preponderance of terrorism worldwide. "This is not Luxor – it’s completely different. Eight years have passed since the Luxor attack and much has changed in the world," she said, citing acts of terrorism in New York and London. "These days, people aren’t willing to give up their freedom of movement – people aren’t going to just stay at home."

Zaazou largely agreed with this assessment. "At the time of the Luxor attack, there weren’t many similar incidents in other countries," he said. "But now, even countries like the U.S., Britain and Spain are experiencing terrorism. The international traveler has a different feeling than he did in 1997. He is more resilient than he was before. This international background has to be taken into consideration."

In the interim, though, industry players are making efforts at damage control. Kandil expressed fears that the vital Italian market, which brings the largest share of visitors to Sinai would suffer, especially after the Italian foreign ministry issued travel warnings against visiting Egypt.

New strategies aim to offset the decline by concentrating on the Russian, Arab Israeli and local Egyptian markets. "We’ll probably start promoting our destinations in these markets shortly," he said. Kandil added that hoteliers, in anticipation of mid-term recovery, are hoping to avoid the rate-slashing frenzy that followed the Luxor attack.

Zaazou also expressed worries about the Red Sea’s biggest customer base. "The Italian market was hit hard," he said, adding that a number of joint public-private sector meetings were being convened to devise incentives aimed at luring back spooked markets. "We’re looking for other markets and steps aimed at encouraging recovery."

Zaazou says that at least one major Italian tour operator that had cancelled its Egypt tours had been wooed back by the promise of compensation, to be paid out by the government and the private sector, for any empty seats aboard its charter flights resulting from cancellations. He also said that tourism minister Ahmed Maghrabi had petitioned the prime minister for permission to allow charter flights direct access to Sharm El-Sheikh International Airport, effective immediately.

Alongside the sector’s efforts at damage control, the government has also beefed up security measures considerably, and is "reviewing all of the security programmes in the area," said Zaazou.