By: Eman Ibrahim

Translated By: Wael Hossam El Din

The ongoing Russia-Ukraine war has resulted in a significant acceleration of global inflation rates, affecting numerous economic sectors. As a result, both investors and individuals have been compelled to curtail spending and seek alternatives amid the continuous rise in prices.

Moreover, the tourism sector has recently seen a resurgence, particularly in Egypt, which suffered greatly over the past two years due to the COVID-19 pandemic.

The devaluation of the Egyptian pound has made prices for tourism programs and facilities more attractive internationally, aligning with the global trend towards dipping consumption and spending. Furthermore, significant improvements have been made to tourist facilities, including developing new cities such as New Alamein City, which has turned out to be a major attractive destination on the global tourism map.

Invest-Gate surveyed Investment experts to delve deeper into the tourism sector’s benefits from the inflation crisis, highlighting the most attractive places for domestic and international tourism, in addition to what the sector needs to continue its recovery in the future.

How Did Tourism Benefit from Inflation?

Bassem Halaqa, Head of the Tourism Syndicate, stated that Egypt is seen among the top five global tourist destinations, with tourism being considered an export commodity. Halaqa noted that the devaluation of the Egyptian pound has made tourism programs and facilities more attractive internationally, as they have become less expensive than their counterparts in the Middle East. This is particularly evident in the high demand wave for tourism in Egypt in the first half of 2023.

It is anticipated that with the continuation of current tourism rates, Egypt will attract 15 mn foreign tourists by the end of the year, surpassing the previous record of 14 mn tourists in 2010.

Minister of Tourism and Antiquities Ahmed Issa previously announced that Egypt had already hosted 7 mn tourists in the first half of 2023, with a target of receiving 8 mn tourists during the year’s second half. This figure is expected to hike to around 18 and 20 mn tourists next year.

According to a government source’s statements to Asharq Newspaper, the average occupancy rate in Egyptian hotels reached 80% in the first half of the year, compared to 65% during the same period in 2022. These figures take into consideration that the hotel capacity in Egypt is around 220,000 rooms, with the Red Sea and the South Sinai regions accounting for about 130,000.

Karim Mohsen, a Board Member of the Tourism Chamber, attributed the noticeable increase in demand for tourist facilities in Egypt during the current season to the country’s reopening after implementing social distancing measures due to the pandemic for the past two years.

Also, Mohsen attributed the tourism sector’s benefits from inflation to various factors, including the historical allure of Egypt, global promotional efforts by the Ministry of Tourism (e.g., the mummy parade, opening of the largest museum, the Kebash Road), the announcement of new archaeological discoveries, and the country’s recent security stability. These combined efforts have contributed to the sector’s positive performance amidst the challenges posed by inflation.

Alaa El-Ghamry, another member of the Tourism Chamber, stated that global inflation rates have not affected tourism in Egypt but have turned it into an attractive destination due to the devaluation of the local currency. Therefore, Egypt has become a less expensive destination for foreign tourists than many cities worldwide. For instance, tourists can live in cities like Hurghada and Sharm El-Sheikh for around $600 a week.

Regarding domestic tourism, El-Ghamry explained that prices and inflation rates had pushed the public towards less expensive beaches, such as Ismailia and Alexandria, and others have even reduced their vacation period or opted for a day trip.

Egypt’s Top Destinations

Halaqa stated that the North Coast, Marsa Matrouh, and Alexandria are among the most popular cities for domestic tourism during the current season. Meanwhile, foreign tourists prefer the Red Sea cities such as Sharm El-Sheikh and Hurghada, as well as South Sinai, which is generally known for its diving tourism.

“Luxor and Aswan have also seen high occupancy rates even with the rising temperatures during this summer season, thanks to direct flights for foreign tourists coming from the Red Sea cities, which helped to reduce distances for tourists and increase their interest in cities that are full of Pharaonic monuments and are on the tourist programs map for foreigners,” Halaqa added.

Egypt’s tourist attractions and facilities are diverse and suitable for all tastes, which is why they receive broad attention, in addition to the state’s events that help increase demand, such as the New Alamein City festival, which has been successful, as it is an important presentation for the city and its facilities in the tourism field.

Furthermore, Karim Mohsen stated that Luxor, Aswan, and Cairo witnessed significant demand in the past period, with expectations of continued demand in the coming winter season. These cities are followed by Hurghada and Marsa Alam. However, Sharm El-Sheikh has seen less demand, and Marsa Matrouh attracts more foreign tourism, meanwhile, Alamein City attracts Arab tourism more than European one.

El-Ghamry explained that the Red Sea cities still lead in attracting incoming tourism to Egypt, as they have many attractions, such as diving tourism, and a high preference of a large proportion of tourists for hotel rooms.

Are There Demands for Continued Recovery?

Mohsen revealed that tourism companies might have financial demands in the coming period, despite the recovery of their operational activities, due to the high cost of their assets, including transportation and hefty import expenditures. Therefore, they need financial support through the government’s initiatives that could help them expand their activities and meet demand.

El-Ghamry stated that though demand witnessed significant development, additional measures need to be taken to achieve higher growth rates, such as increasing the number of hotel rooms and opening beaches to be full cities that do not only contain hotels suitable exclusively for foreign tourists.

He mentioned that Egypt has great potential and advantages. However, more hotel rooms may be needed to target more tourists as well as to create awareness of how tourists should be dealt with and managed.

Moreover, opportunities for local and foreign investment in the hospitality sector need to be available, to cope with the noticeable development in the country’s infrastructure in the previous period, as tourism is the main source of foreign exchange inflows.

El-Ghamry called for following the model of Al-Alamein City, which many Arab businessmen are racing to invest in, as well as many other tourist cities. He emphasized that approaches to building developments must be considered, pointing out that a tourist who comes to the country for a week would not prefer to live in residential complexes in the coastal city, but rather would opt for staying in hotels that will add more luxury to his experience, such as Ain Sokhna City, which needs to increase the number of hotels to attract more tourists.

He also mentioned that the North Coast turned from a coastal city to an investment tool for many citizens who have bought places and re-leased them again during the summer season. Therefore, increasing demand and expansion in those cities drive the economic wheel at multiple levels.

The experts surveyed by Invest-Gate agreed that the depreciation of the Egyptian pound and the global inflation levels supported the historic demand witnessed in Egypt’s tourism during 2023.

Meanwhile, they called for implementing some measures to continue the momentum, such as increasing the number of hotel rooms and exerting more efforts by the state to promote Egyptian cities globally.