CAIRO// Egypt's cash-strapped government is counting on a sharp rebound in the tourism sector to offer some solution to the nation's economic woes almost two years after the country's uprising.
Tourism officials have in the last few months engaged in an aggressive media campaign in Europe, the Arabian Gulf and other parts of the Middle East to promote Egypt as a tourist destination.
But businesses relying on tourists visiting the country's famous sites have had to contend with months of political turbulence in the aftermath of the uprising last year.
Last year tourism revenues dropped by almost a third, during the worst episode of political instability the country has seen since the early 1980s when Anwar Sadat, the president, was assassinated.
"It's still very, very quiet," said Magdi Bochra, who manages Elegant Voyage, a Cairo-based tourism company.
Mr Bochra said he was being forced to look for another job to make ends meet. "I have a lot of colleagues either leaving the industry or even leaving the country."
The industry employs about 12 per cent of Egypt's workforce, and is the largest source of foreign currency on average.
At the height of Egypt's tourism boom in 2010, the industry earned US$11.5 billion (Dh42.6bn), before crashing back down again in the proceeding years. The government has worked hard to lift travel bans to Egypt and encourage tourists back to the country.
It has resumed Nile cruises from Cairo to Luxor for the first time in nearly two decades.
Nahed Samir, the vice president of operations and business for Sonesta Middle East, a luxury hotel chain, said the company had benefited from the Nile cruise resumptions with the company's main ships running at 75 per cent to 85 per cent occupancy.
Speaking from one of Sonesta's cruise ships passing through Luxor, she said: "I'm looking around now and I see Australians, Europeans, Americans, business is getting much better for us."
The government has also attempted to change the perception that an Islamist-administration will seek to wipe out Egypt's lucrative tourism industry.
Earlier this month, the country's minister of tourism, Hisham Zaazou, charged with reviving this industry in the new government, said Egyptian beach tourism was here to stay, and any Islamic investment in the sector would complement but not replace resorts that vital to the economy.
Mr Zaazou said Egypt aimed to increase the number of visitors from a projected 12 million this year to about 15 million next year, a number that would equal the number of visitors in 2010.
"Technically this is a very important sector, so he's been doing some really aggressive campaigning for Egypt," said Mohammed Abu Basha, an economist at EFG Hermes. "Of course, his work depends on the state of security or perception of security, and that's really the work of the ministry of interior."
Protests against an anti-Islam video outside the US Embassy in Cairo have not helped, said Mr Abu Basha.
But it appears there is some early success in the ambitious drive to boost tourist numbers, with monthly government statistics showing visits breached 1 million earlier this year for the first time since the uprising.
The number of tourists coming to Egypt in the first half of the year climbed 26.8 per cent to 5.2 million, versus a year earlier, according to the government statistics agency.
That still doesn't meet the 6.9 million visitors that came to Egypt in the first half of 2010, the nation's best year for tourism, but it reflects a significant rise.
Another silver lining has been Egypt's Red Sea resort destinations - a far cry from central Cairo where the country's most precious artefacts in the Egyptian Museum stand side-by-side with burnt-out buildings and crumbling roads.
Hotel operators in resorts such as Sharm El Sheikh report occupancy rates of 80 per cent to 90 per cent, compared with rates of about 45 per cent for hotels in Cairo.
Despite the focus on tourism, economists and analysts say there is still much to be done for Egypt's economy, which cannot rely on just one revenue stream.
"Egypt cannot depend on just one sector no matter how big or profitable the sector is. Egypt is just too big for that," said Mr Abu Basha.
business@thenational.ae
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
UAE currency: the story behind the money in your pockets
Tips for job-seekers
- Do not submit your application through the Easy Apply button on LinkedIn. Employers receive between 600 and 800 replies for each job advert on the platform. If you are the right fit for a job, connect to a relevant person in the company on LinkedIn and send them a direct message.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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