Pyramid selling: Egypt wants to get tourism back on its feet

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• New Grand Egyptian Museum to showcase country’s artefacts
• Part of government economic plan to place tourism centre stage
• IMF estimates tourism has fallen to 12% of GDP from 40%

The Grand Egyptian Museum, a $1 billion mega-project close to the Giza pyramids, will open to the public next month.

The opening, which coincides with the COP27 climate change conference in the resort town of Sharm el-Sheikh, is an opportunity to focus attention on a tourism industry that has been blighted by terrorism, conflict and pandemics in recent years. 

Under the Egypt Vision 2030 plan, tourism should be a core component of economic growth.

The sector once accounted for 40 percent of the country’s GDP, but the IMF estimates this has now fallen to 12 percent, and that’s before the impact of the coronavirus pandemic is taken into account.

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Given that tourism represents about 25 percent of exports of goods and services, and is a major generator of foreign currency, Egypt’s minister of tourism and antiquities Ahmed Issa needs to recapture the sector’s former brio. 

He’s preparing to launch a long-term strategy for Egyptian tourism in early 2023 that will provide a differentiated offering – and one that will aim to hike arrivals by 25 to 30 percent each year. 

The government is backing this up with hard cash, committing EGP50bn ($2.5bn) to finance the renovation of hotels and boost salaries, according to the Egyptian Cabinet Information and Decision Support Centre.  

Issa can point to recent improvements in numbers. According to the national statistics agency CAPMAS, Egypt saw an 85.4 percent increase in tourist arrivals in the first half of 2022 in year-on-year terms, with 4.9 million visitors recorded in the six months. 

Figures from real estate agency JLL show Cairo’s hotel sector saw a doubling in occupancy rates to 60 percent in the first five months of 2022. 

That will help to shore up confidence levels after a turbulent couple of years. Tourism performed well in the wake of the post-pandemic bounceback, as restrictions eased, Callee Davis, an economist at Oxford Economics Africa, told AGBI. 

“What really supported the industry last year was Russia’s decision to resume direct flights to the Red Sea, which returned tourism flows to almost pre-pandemic levels. But the war has clearly had an impact on Russian tourism,” she said. 

Despite optimistic forecasts about boosting arrivals, there are obstacles to overcome.  

Ministry of Tourism and Antiquities

“You have got high inflation in European countries, and the cost of living crisis is weighing on European travel – and that’s the very area they want to target, in the wake of reduced Russian tourism. The Chinese economic slowdown also has implications for plans to target the Chinese market,” said Davies. 

Russian tourist flows had only recently recovered from the bombing of the Metrojet charter plane over Sinai in October 2015. 

CAPMAS figures show that Eastern European arrivals accounted for 50.6 percent of all visits to Egypt in 2021, followed by the Middle East with 18.9 percent, Western Europe at 16.4 percent, and Africa at 7.1 percent.  

“They’re trying to pave the way for Russian tourism to come back,” said David Butter, associate fellow at Chatham House’s Middle East-North Africa programme. 

“They’ve had flights from Sochi to Cairo operating since April 2022, and more recently Aeroflot said it would resume flights to Sharm el-Sheikh and Hurghada.”

Yet even if Russian numbers do revive, Egypt will have to deal with Russians’ reduced spending power – a side-effect of the crippling international sanctions imposed on the country.  

That means reaching out to other markets. The Ministry of Tourism and Antiquities plans to target North American and European tourists, with a greater emphasis on cultural tourism. 

If the authorities can sustain the level of improvement seen in the first half of 2022, Egypt stands a chance of reviving its tourism sector. 

Oxford Economics envisages tourism receipts returning to pre-pandemic levels by 2024 and then growing by an average of 5 to 10 percent per annum over the medium term.  

But after the turbulence of recent years, Minister Issa won’t be taking anything for granted.  

Top tourism projects 

Grand Egyptian Museum
The $1bn project 168,000sq m with capacity for 4.8 million annual visitors. 

Sphinx International Airport expansion
Completed this year, the airport close to Giza now covers 24,000sq m.

Entertainment District, New Administrative Capital
A $20bn megaproject in eastern Cairo will host a range of hospitality, leisure and sports facilities. 

Renovation of Shepheard Hotel, Cairo
By 2024, the historic hotel on the Nile will feature 188 rooms and 88 suites. 

Yacht marina, Suez Canal
Plans call for a hotel and a 850m tourist boardwalk on a 25,000sq m site with capacity for 65 yachts. A second marina in Port Said will have a 75-yacht capacity.

Great Transfiguration Project, South Sinai
The area surrounding St Catherine’s monastery will be turned into a destination for mountain, medical and environmental tourism.