Tourism rebound brings spot of light to lessen gloom for Egypt

Reuters/Mohamed Abd El Ghany

• Cop27 and World Cup helped boost vital sector in fourth quarter
• Government has sought to enhance investment climate, analyst says
• Travel industry forecast to return to pre-pandemic level by 2024

Egyptian tourism performed strongly in the final quarter of 2022 – and this could have “a multiplier effect” for the country’s economy, analysts have said.

Hotel occupancy in Cairo has continued to rebound despite Egypt’s economic challenges, according to the latest report by real estate consultancy JLL. The average occupancy rate for January to November stood at 64 percent, up 16 percentage points on the same period in 2021.

Over the same period, average daily room rates jumped by 66 percent to $152 and revenue per available room rose by almost 122 percent to $97.

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Ayman Sami, country head for Egypt at JLL, said the Egyptian government’s efforts to enhance the investment climate in tourism had been reflected in the sector’s Q4 growth.

Egypt, which hosted Cop27 at Sharm el-Sheikh and offered incentives to football fans planning to attend World Cup matches in Qatar during the fourth quarter, recorded increased spending in foreign currencies by inbound tourists, helping to sustain activity levels in the sector, he said.

“Tourism is a key pillar of Egypt’s economy and an infrastructural boost in the leisure and travel industry will have a multiplier effect across all sectors of the economy. This could drive the much-needed foreign direct investments into the country and stimulate growth overall,” added Sami.

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Egypt is aiming to attract 30 million tourists a year by 2028 and also plans to increase the number of airline seats to the country by three-fold. As a result, “opportunities abound” for international hospitality brands to enter the market, he said. 

Tourism, which accounts for about 12 percent of Egypt’s gross domestic product, suffered during the pandemic. Travel restrictions and lockdowns wiped $17.6 billion from the Egyptian economy in 2020, according to the World Travel and Tourism Council.

Oxford Economics is forecasting that tourism receipts will return to pre-pandemic levels by 2024 and then grow by an average of 5 to 10 percent per annum over the medium term. 

It is hoped that visitor numbers will be boosted by the landmark Grand Egyptian Museum in Giza, which is now scheduled to open to the public this year, and the series of archeological discoveries at Saqqara.

Chinese tourists are set to make a comeback this year, after the lifting of travel restrictions. China’s Ministry of Culture and Tourism announced last week that travel agencies would resume group tours to 20 countries including Egypt from February 6.

EgyptAir is also planning to resume operations to China with seven flights to Guangzhou, three flights to Beijing and three flights to Hangzhou set to start in March, according to local media.

Ahmed Issa, Egypt’s tourism minister, said in November that the country needed to portray itself in a different way to attract visitors and had invested in building infrastructure since 2015.

Around 200 keys were added in Cairo in 2022, taking its total hotel stock to approximately 28,000 keys. Another 900 hotel rooms should be completed this year, according to the JLL report on Egypt.

Figures released last year by hospitality advisory firm W Hospitality Group and the Africa Hospitality Investment Forum underlined Egypt’s position as the dominant player in Africa’s hotel sector.

A total of 80,300 rooms in 447 hotels, across 42 African countries, are currently in the pipeline for development. Of these, 21,281 rooms in 85 hotels are planned in Egypt. Around a third of these rooms are currently under construction.

The Q4 tourism growth is a bright spot in a mostly gloomy outlook for Egypt. The country, suffering under a currency crunch that has been exacerbated by the war in Ukraine, recently launched a programme of reforms as part of a $3 billion IMF deal.

Spending cuts are planned and partial privatisations to drum up funds are being considered in sectors including industry, agriculture and telecoms.

The country has long struggled to attract foreign direct investment outside its energy sector and the state has continued to play a dominant role in the economy.

The Egyptian pound has lost nearly half its value since March 2021 after being allowed to devalue in jumps. Inflation accelerated to 21.3 percent in December, its highest level for five years.