Tourism in the Economy

4. COUNTRY PROFILES: TOURISM TRENDS AND POLICIES – EGYPT

Egypt

Tourism in the economy Tourism’s contribution to Egypt’s GDP stood at 5.3% in 2010, a slight decline on the 5.5% registered in 2009 according to the Tourism Satellite Accounts. The global financial crisis as well as recent political and social unrest have affected Egypt’s tourism sector adversely (Box 4.25). Tourism has been the fastest growing sector in Egypt's GDP, estimated to contribute 11.3% of GDP in 2009-10 when considering both the direct and indirect effects. International tourist inflows to Egypt reached 14.7 million visitors in 2010 – 17.6% above 2009 figures and representing an annual average rate of growth of 14.2% in the five years from 2006. These visitors generated a total of EGP 70.25 billion (USD 12.5 billion according to exchange rate USD 1 = EGP 5.62) in revenues, representing around 20.4% of current account receipts, and 49.2% of all services export receipts. Travel receipts also constituted the second largest item in export earnings after petroleum.

Box 4.25. Recent political and social unrest and its impact on tourism The tourism sector welcomed 2011 with a strong start, and at the same time witnessed the rise of the pro-democracy movements against the then government, culminating in the 25 January revolution. Swift regime change brought about political unrest and uncertainty, slowing economic activities, all of which had a negative effect on the tourism industry. Tourism was obliged to struggle through the most severe crisis ever witnessed by the sector. In comparison to 2010, recent tourism figures showed that in both Q1 and Q2 of 2011, the number of tourists decreased by at least 40%, resulting in a fall of USD 3.6 billion in tourism revenues on the first half of 2010. The decrease, however, diminished as the months passed, falling by 80% in February, 60% in March, 35% in April, 40% in May, 28% in June, and 26% in July. 2011 ended with a decline of 33% in the number of tourists and 29.6% in terms of revenues compared to 2010. While political change has brought short-run challenges; medium-term gains are likely to improve with the enforcement of a more equitable legal and regulatory framework that will promote political stability, attract investment, and facilitate more rapid economic growth in a sustainable way. Opportunities in tourism will also grow as the government continues to give full support to private sector initiatives and is seeking to preserve a positive climate for foreign investment. It is the current government’s policy to ensure Egypt’s presence in all major international tourism fairs, and to work closely with stakeholders, foreign partners, and international organisations to promote further growth in the tourism sector. For example, Egypt co-operated with the UNWTO in hosting the International Tourism Day on 27 September 2011 in Aswan.

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The recorded numbers of international tourist nights rose to 147.4 million in 2010, 16.5% more than in 2009. Over 75% of Egypt's inbound tourists came from Europe (and 50% from five countries – Russian Federation, UK, Germany, Italy and France), and with the majority arriving by air transport (89.8%). Recreational tourism continues to dominate, accounting for approximately 93.2% of all international visits. Tourism also accounted for 7.8% of total investments in services and 2% of total investment. In 2009-10 tourism investments amounted to EGP 4.4 billion, of which 92.2% was undertaken by the private sector. According to the 2009 Tourism Satellite Account (TSA) tables, there are 1.4 million full-time workers serving the tourism industry directly and indirectly, 12.6% of total employment. Outbound tourism also witnessed an increase in the number of departures, reaching 1.4 million in 2010, 17% more than the previous year.

Tourism organisation The Egyptian Ministry of Tourism is the national body for tourism policy (Figure 4.43). It is responsible for establishing a coherent legal and regulatory framework in the context of a sustainable tourism development strategy. Both the Egyptian Tourism Authority (ETA) and the Tourism Development Authority (TDA) fall under the jurisdiction of the ministry. The ministry is assisted by five directorates working alongside the above-mentioned authorities under the administrative authority of the Egyptian Tourism Federation (ETF). The ministry is viewed as a regulator and facilitator of tourism activities as well as an advocate of “good governance”, especially in public-owned tourism establishments.

Figure 4.43. Egypt: Organisational chart of tourism bodies

Ministry of Tourism

Egyptian Tourism Tourism Development Authority Authority (TDA) (ETA)

Directorate of research Directorate of the Directorate of tourist Directorate of tourist Technical Directorate and planning Minister’s Office companies and bazaars villages and hotels

Egyptian Tourism Egyptian Hotels Egyptian Travel Egyptian Chamber of Egyptian Chamber of Chamber of Diving and Federation Tourist Association Agents Association Tourist Commodities Water Sports (ETF) Establishments

Source: OECD, adapted from Ministry of Tourism, 2012

The TDA works primarily on setting and implementing regulations for tourism projects and investments by assisting with the provision of land and facilitating access to loans for developing infrastructure projects. Seeking to reduce administrative regulations, the TDA is adopting a one-stop shop system in the context of institutional and legislative reform in the sector, and is developing a legal framework for guarantees and investment incentives. In order to ensure the best use of natural resources, achieve sustainability and protect the environment, the TDA is currently delivering the final outcomes of the second

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phase of the “Green Sharm Initiative” project, as well as the “Development of Religious Tourism in the Farma area of North Sinai” project and completing the Strategic Plan for Tourism Development in the New Valley Governorate. The ETA is responsible for promoting inbound and domestic tourism, and operating 32 domestic tourism information offices. It also manages the development and diversification of the tourism product, both regionally and internationally, through 17 international offices, and is working on creating a new Egypt Tourism Brand. In doing so, the ETA is seeking to capture and communicate the diversity of Egyptian tourism via global campaigns. ETA assists travel agents and tourism establishments by supplying them with marketing and technical themes related to tourism promotion. The ETF is the union of elected industry members from the private sector, and is composed of five tourism industry business associations: the Egyptian Hotels Association, the Travel Agents’ Association, the Chamber of Tourist Establishments, the Egyptian Chamber of Tourist Commodities and the Egyptian Chamber of Diving and Water Sports. It works closely with the Ministry of Tourism in areas related to tourism planning, and managing the Tourism Workforce Skills Development Project. To safeguard and advance the interests of the Egyptian tourism industry within the ministry’s global sustainable development strategy, and according to law, the ETF’s views must be considered before any legislative measures are presented for ratification by the Egyptian Parliament. The successful collaboration between the Ministry of Tourism and the ETF establishes a good model of public/private partnership.

Tourism budget The general budget for tourism promotion and branding is around USD 60-65 million a year, directed mainly at promotional campaigns and external activities. This fund is managed by the Tourism Fund Unit at the ministry. External governmental agencies carry out monitoring and evaluation procedures on the fund to ensure a transparent process of good governance.

Tourism-related policies and programmes Tourism targets and development initiatives Egypt's Sustainable Tourism Strategy 2020 targets 25 million international arrivals and a 30% increase in tourism revenues. Currently, average tourism expenditure amounts to USD 85 per night. The sustainable tourism strategy aims at reaching USD 110 per night in 2020. This represents a growth rate of 30% approximately. To reach this objective, the value of tourism to Egypt, as a consequence, will need to grow at a faster rate than its volume to achieve high and sustainable economic growth, poverty alleviation, the attenuation of income disparities, the creation of productive jobs, and increased gender equality. The government of Egypt has taken steps to create a favourable legislative and regulatory environment and to encourage investment in the tourism sector. It has also modernised its supporting infrastructure to reflect Egypt's commitments to GATS and to the liberalisation of the tourism sector. A set of objectives has been developed that seek to ensure an appropriate institutional framework, safety, security and easy access to tourism locations, expansion of the product base, provision of the necessary infrastructure and

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superstructure, improvements to the quality of services, and promotion of the tourism product.

Education and training Several international and domestic educational and training programmes have been implemented to raise the quality of the hospitality industry. Among these is the Egypt Tourism Workforce Development Project which seeks to: ● Ensure a mobile training approach in touristic governorates. The importance of this approach is that touristic regions are dispersed across the country, so instead of moving to training centres, the trainers target their audience in specific geographical regions to facilitate the training process.; ● improve staff skills and provide better levels of service and food safety; ● provide a vocational training programme in line with international best practice; ● create a Human Resources Development Unit in charge of training a large number of employees, in short durations with minimum cost according to international standards and helping the educational system to respond to market needs; and ● introduce a programme to improve supervisory and managerial skills within hotels and restaurants; this programme is being delivered in 12 tourism governorates by mobile regional hospitality master trainers. The Egyptian Tourism Federation (ETF) is co-operating with the Ministry of Tourism in developing a qualified labour force able to exploit the tourism industry's employment opportunities through three main pivots: ● wider implementation of professional qualification programmes for workers in tourist governorates; ● providing a series of institutions and professional training centres in the main tourist areas, especially in the South Sinai and Red Sea; and ● through the Ministerial intervention in tourism training within the universities, schools and institutions. It is believed that these programmes will both narrow the skills gaps in the tourism labour market and tourism-related sectors, and also create direct and indirect job opportunities and raise social welfare.

Enhancing competitiveness Egypt ranked 75th in the 2011 World Economic Forum’s Travel and Tourism Competitiveness Report (64th in 2009). Competitiveness gaps were mainly recorded in areas related to infrastructure investment, human resource development and environmental regulations. The government is taking short- and long-term corrective action to enhance the country’s competitiveness. For example, in response to an identified gap in tourism human resources development, the ministry has been working with the ETF and industry stakeholders to develop training programmes to improve the skills of all workers in the tourism industry, including middle and upper management. Parallel actions have been taken through, for example, an agreement with New York’s Cornell University School of Hotel Administration, to provide e-Cornell online education courses. The Ministry of Tourism also initiated co-operation with the Ministry of Education in the development of technical education in hotel and tourism.

OECD TOURISM TRENDS AND POLICIES 2012 © OECD 2012 359 4. COUNTRY PROFILES: TOURISM TRENDS AND POLICIES – EGYPT

Multiple human resource development programmes are being implemented to leverage the skills of workers in the tourism and hospitality sector in various regional locations to ensure proper outreach. New programmes initiated in 2010 included: trends of modern management, food and beverage management, front office management and the development of communication skills in English for hotel managers In relation to the environment, enhancing eco-lodge facilities, raising awareness of the need to reduce pollution, applying cleanliness standards and enforcing environmental regulations are some of the priority actions taken by the ministry to enhance the competitiveness of tourism in Egypt. The Ministry of Tourism is currently co-operating with the Ministry of Environment to enforce environmental laws and regulations for all tourist facilities and activities. Although the Egyptian tourism sector has seen positive progress in recent years, the full value of the tourism industry still remains to be exploited. The shortage of an adequately qualified workforce, an underdeveloped transport network and infrastructure, impediments in the structural and institutional framework, the breaching of environmental regulations, and the high cost of doing business for SMEs, are some of the current problems facing the development of a sustainable tourism industry in Egypt. These issues will require continuous effort on behalf of the government to remove obstacles to success, accommodate global challenges and improve competitiveness.

Statistics and research Given the importance of the tourism sector in the Egyptian economy, the Ministry of Tourism established in 2008 a Tourism Satellite Account Unit in order to collect information of all tourism and related services activities and to measure the real contribution of tourism in the economy. The publication of Egypt’s first Tourism Satellite Account (TSA) in 2011 was based on 2009 surveys to cover and compile (Tables 1-7 and 10). The Egypt TSA report was updated during 2011 with final outcomes and analysis of results of the year 2010 in addition to a comparison between 2009 and 2010.

Statistical profile

Table 4.254. Egypt: Domestic overnight tourism

Units 2006 2007 2008 2009 2010

Number of overnight stays Millions ...... 17.6 18.2 Number of nights spent Millions 89.3 111.5 129.2 126.5 147.4

Source: Ministry of Tourism, Tourism Satellite Account. 1 2 http://dx.doi.org/10.1787/888932633529

360 OECD TOURISM TRENDS AND POLICIES 2012 © OECD 2012 4. COUNTRY PROFILES: TOURISM TRENDS AND POLICIES – EGYPT

Table 4.255. Egypt: Inbound tourism – International arrivals and receipts

Units 2006 2007 2008 2009 2010

Total international arrivals Millions 8.64 11.1 12.8 12.5 14.7 Top 5 markets Russian Federation Thousands 998 1517 1825 2 035 2856 United Kingdom Thousands 1 034 1055 1202 1 347 1456 Germany Thousands 966 1086 1203 1 202 1329 Italy Thousands 786 983 1073 1 048 1144 France Thousands 372 464 587 551 599 International travel receipts1 Billion EGP 41.0 45.7 58.3 58.1 65.1 International passenger transport receipts1 Billion EGP 28.1 35.5 40.5 41.4 40.6

1. Fiscal year ended June. Source: Ministry of Finance. 1 2 http://dx.doi.org/10.1787/888932633548

Table 4.256. Egypt: Outbound Tourism – International departures and expenditure

Units 2006 2007 2008 2009 2010

Number of tourism trips Millions ...... 1.2 1.4 International travel expenditure1 Billion EGP 9.1 10.6 15.9 15.0 13.0 International passenger transport expenditure1 Billion EGP 6.8 7.2 8.8 8.3 6.7

1. Fiscal year ended June. Source: Ministry of Tourism, Tourism Satellite Account, Ministry of Finance. 1 2 http://dx.doi.org/10.1787/888932633567

Table 4.257. Egypt: Enterprises in tourism

Units 2006 2007 2008 2009 2010

Hotels, of which: Establishments 1 309 1370 1 490 1458 1 473 Hotels and tourist villages Establishments 1 029 1084 1 209 1171 1 180 Floating hotels Establishments 280 286 281 287 293 Restaurants, cafeterias and night clubs Establishments 1 148 1172 1 182 1201 1 034 Tour operators/guides Establishments 9 920 14 048 14 486 12 931 16 000 Travel agencies Establishments 1 334 1406 1 410 1576 1 861 Diving centres Establishments 157 275 355 358 361

Sources: Central Agency for Public Mobilisation and Statistics (CAPMAS), Ministry of Tourism. 1 2 http://dx.doi.org/10.1787/888932633586

OECD TOURISM TRENDS AND POLICIES 2012 © OECD 2012 361 4. COUNTRY PROFILES: TOURISM TRENDS AND POLICIES – EGYPT

Table 4.258. Egypt: Employment in tourism

Employees Self employed Total number 2009 Units of full-time Male Female Total Male Female Total employees

Characteristic tourism industries Accommodation services for visitors Thousands 122.8 8.5 131.3 0.4 .. 0.4 131.7 Accommodation services associated with all types of vacation home ownership Thousands 7.4 0.9 8.3 3.6 .. 3.6 11.9 Food and beverage serving services Thousands 177.8 2.7 180.5 80.2 5.1 85.3 265.8 Railway passenger serving services Thousands 66.2 3 69.2 ...... 69.2 Road passenger transport services Thousands 393.5 0.5 394 295.2 .. 295.2 689.2 Water passenger transport services Thousands 21.8 2.4 24.2 0.7 .. 0.7 24.9 Air passenger transport services Thousands 24.5 8.2 32.7 ...... 32.7 Transport equipment rental services Thousands 1.1 .. 1.1 1.7 .. 1.7 2.8 Travel agencies and other reservation services Thousands 56.3 10.1 66.4 5.7 0.4 6.1 72.5 Cultural services Thousands 6.9 2.3 9.2 1.9 0.2 2.1 11.3 Sports and recreational services Thousands 8.5 0.3 8.8 9.2 .. 9.2 18 Retail trade of country specific tourism characteristic goods Thousands 4.5 0.5 5 3 .. 3 8 Country specific tourism industries Thousands 16.2 1.1 17.3 1 0.2 1.2 18.5 Total (direct employment) Thousands 907.5 40.5 948 402.6 5.9 408.5 1 356.5

Source: Ministry of Tourism, Tourism Satellite Account. 1 2 http://dx.doi.org/10.1787/888932633605

Table 4.259. Egypt: Tourism in the national economy

Domestic tourism Inbound tourism Tourism GDP in % of 2009 Units Tourism GDP consumption consumption total GDP

Accomodation services Million EGP 1 812 15 609 18 696 68.6 Food and beverage serving services Million EGP 3 154 13 502 4034 33.6 Travel agency, tour operator and tourist guide services Million EGP 430 5087 3953 66.8 Cultural services Million EGP 83 5336 3068 66 Recreation and other entertainment services Million EGP 442 5538 3317 42.9 Other services1 Million EGP 10 929 23 685 23 888 2.3 Goods2 Million EGP 79 6086 4690 100 Total Million EGP 16 929 74 842 61 646 5.5

1. This item includes other services and goods as well. 2. This item refers to Egyptian specific tourism characteristic goods. Source: Ministry of Tourism, Tourism Satellite Account. 1 2 http://dx.doi.org/10.1787/888932633624

Table 4.260. Egypt: Other economic indicators

Units 2006 2007 2008 2009 2010

Domestic tourism consumption in % of final consumption Percentage ...... 16.3 141 Government tourism revenues2 Million USD 7.6 9.5 11 10.8 12.5 Tourism economy employment as % of total employment Percentage 13.1 12.7 13 12.6 12.8 Tourism GDP in % of GDP Percentage 6.7 6.3 6.6 5.5 5.3

1. Preliminary figure. 2. Inbound tourism only. Source: Ministry of Finance. 1 2 http://dx.doi.org/10.1787/888932633643

Access the complete publication at: https://doi.org/10.1787/tour-2012-en

Please cite this chapter as:

OECD (2012), “Egypt”, in OECD Tourism Trends and Policies 2012, OECD Publishing, Paris.

DOI: https://doi.org/10.1787/tour-2012-47-en

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