Despite several challenges witnessed in the past years, Egypt’s tourism sector managed to navigate choppy waters and started to bounce back. Invest-Gate interviews Christopher Lund, associate director at Colliers International MENA, to discuss his insights on the tourism market in Egypt and his future outlook.
Where does Egypt stand on the world tourism map?
Egypt has everything in terms of tourism infrastructure; hotels, tourism destinations, and airports.
In the past six years, the country had been through a number of ups and downs. However, 2017 was a year of combating the consequences of the EGP devaluation; hotels did fairly well and achieved higher occupancy rates compared to previous years. Tour operators and travel agents also started to feel that it is safe again to bring tourists to Egypt’s resort destinations.
Are we moving forward to top in the world ranking?
Egypt is a big tourism destination; 2010 has witnessed 14.7 mn tourists, which is a sizeable figure. Currently, the country has started to recover and is already on the path to regain its position.
Developers and hotel operators should diversify their portfolios even more. The country also should not only rely on Europeans–who usually represent a high percentage of tourists- and should instead aim to diversify the risk. The country should actively target the Middle Eastern travelers and GCC tourists who would love to visit Alexandria and Cairo. China and India are also huge tourism source markets that should be targeted.
Generally, Egypt’s resort destinations are very attractive to Europeans due to affordability, available facilities, and perfect weather, a combination that is not easily available in Europe. It is a question of time for the tourism to come back as long as there are no more incidents. The positive outlook for the market today is the best since before 2011.
Do you think Egypt has become a good competitor in the tourism sector especially following the EGP devaluation?
Egypt has always been a great competitor because it is a more affordable destination for tourists to visit. There are big projects with entertainment facilities in attractive destinations that offer a good value for money such as Sharm El Sheikh, Hurghada, El Gouna, Soma Bay, and Sahl Hashish. If you compare other international destinations that compete with Sharm El Sheikh, you will find them generally more expensive and the facilities within are not that great.
Do we need more hotels in Egypt?
If we look at the big picture, the occupancy rates now in Sharm El Sheikh and Hurghada are not very high so that tells us that Egypt does not need more hotels. But I think it is all about what kind of hotels that need to be added. Cairo, Alexandria, Hurghada, or Sharm El Sheikh lack mid-scale segment hotels (three- and four-star branded hotels); the trend in the region is going more and more towards affordable tourism.
How do you see the sector’s performance nowadays especially after Egypt’s efforts to promote tourism?
In the next two years, we expect the online visa program to be introduced and this kind of change will normally have big implications. For example, when the UAE introduced Visa on Arrival for Chinese visitors, the following year saw an increase in Chinese tourists by 41%.
Regulators of the tourism industry need to always try -within what makes sense- to make travel and accessibility to Egypt easier and facilitate anything to do with the visa process for all nationalities.
What is your forecast on Egypt’s real estate market and economy in general?
My outlook is positive but the question is about the timing. I believe 2018 will be the year of transformation and getting things to function normally especially after Russia and Italy resumed flights to Egypt, preparing for the sharp rise in tourism in 2019-2020.
As for hotels in specific, the occupancy is expected to further increase in 2018.
Egypt’s efforts are expected to further increase the number of tourists in the coming years, and this will fuel demand for hotels.