VZCZCXYZ0000
PP RUEHWEB

DE RUEHEG #2247/01 3401420
ZNR UUUUU ZZH
P 061420Z DEC 09
FM AMEMBASSY CAIRO
TO SECSTATE WASHDC PRIORITY 4387

UNCLAS CAIRO 002247 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR NEA/ELA 
 
E.O. 12958: N/A 
TAGS: ECON EAID PREL EG
 
SUBJECT: EGYPTIAN TOURISM INDUSTRY REFLECTS ON DIFFICULT YEAR AND 
LOOKS AHEAD TO 2010 
 
Sensitive but Unclassified.  Please handle accordingly. 
 
1.(SBU) Key Points: 
 
--Tourism arrivals and revenues decreased by 5.4% and 6.4% 
respectively through the first eight months of 2009. 
 
--Industry officials are cautiously optimistic that they have 
successfully weathered the global economic recession, health crises, 
and early start of Ramadan that contributed to these declines. 
 
--Increased tourism growth is projected to come from a stronger 
commitment to attracting Central and Eastern European tourists, 
targeting new markets in India and China, and reshaping Egypt's 
image as a low-budget destination. 
 
¶2. (U) Econoffs met with Ahmed El-Nahas, chairman of the Egyptian 
Tourism Federation (ETF), on December 2 to discuss the challenges 
faced by the tourism industry this year.  ETF is the industry's 
dominant lobbying body and represents five tourism business 
associations. It is closely affiliated with the Ministry of Tourism 
(MoT). 
 
------------------------------------------- 
Revenue and Tourist Arrivals Shrink in 2009 
------------------------------------------- 
 
¶3. (SBU) ETF and MoT project a moderate decline in the number of 
tourist visits and revenues for 2009, two key industry benchmarks, 
after steady increases in both areas over the last three years. 
Through the first eight months of 2009, tourist arrivals decreased 
by 5.4%.  ETF predicts the country will receive slightly more than 
12 million visitors this year, down from 12.8 in 2008 but still 
ahead of the 11.1 million visitors seen in 2007.  American tourist 
arrivals also fell during the same period this year.  After reaching 
a three year high in 2008 with more than 319,000 Americans visitors, 
a 17% increase over the previous year, the number of Americans 
arriving in Egypt this year will drop by an estimated 5%. 
 
¶4. (SBU) El-Nahas told us that tourist revenue was expected to be 
down 6-7% in 2009.  Egypt generated USD 10.9 billion in 2008, a 23% 
increase over the previous year. Tourism and related industries are 
estimated to account more than 11% of the country's GDP. 
 
--------------------------------------- 
BUT A DECLINE CAN STILL BE A GOOD THING 
--------------------------------------- 
 
¶5. (SBU) Citing the many problems the tourism industry has faced, 
El-Nahas nonetheless characterized 2009 as an "excellent" year.  The 
global economic recession, avian and swine flu concerns, and the 
beginning of Ramadan in mid-August led the industry to initially 
forecast a 20% decline in tourism arrivals, revenue, and the number 
of days spent in-country by visitors this year.  The fact that the 
industry had witnessed "only minimal" declines in these areas was 
cause for optimism. 
 
¶6. (SBU) El-Nahas did not provide any definitive reason for the 
limited downturn, but highlighted improved domestic airline service 
as one possible cause.  Egypt Air purchased 12 new airplanes from 
Brazil in the last couple of years and dedicated them solely to 
significantly increasing the number of flights traveling from Cairo 
to resort areas along the Red Sea coast.  Simon Kitchen, an 
economist at EFG-Hermes - a leading regional bank - offered a more 
compelling explanation.  European visitors, who form more than 70% 
of the foreign tourism market, have avoided more expensive tourism 
options this year - such as traveling to the Caribbean Islands - and 
have instead traveled to closer and more affordable options such as 
Turkey and Egypt.  Many of these tourists can completely bypass 
Cairo and fly directly to desired "luxury" destinations such as 
Hurghada and Marsa Allam. 
 
--------------------- 
Looking Ahead to 2010 
--------------------- 
 
¶6. (SBU) Whether or not the Egyptian tourism industry can get growth 
back on track is without a doubt the "biggest question," facing the 
industry in 2010, El-Nahas stated. The MoT has already established a 
goal of attracting 14 million tourists by 2011.  El-Nahas revealed 
several strategies the industry will be pursuing in the next few 
years. The MoT is planning new advertising campaigns in India and 
China, which Egypt sees as untapped markets with the greatest 
opportunities for growth.  It will also focus on continuing to 
attract Central and Eastern European tourists (primarily Russians), 
which generated more than 26% of all tourists arrivals through the 
first eight months of 2009.  Egypt will also attempt to re-shape its 
image as a budget destination and instead present itself as a 
vacation spot with multiple high-end options to appeal to wealthy 
 
Arab tourists who spend the greatest amount on hotels and 
restaurants. El-Nahas joked that medical tourism is "not an option 
since people would just die" in Egyptian hospitals and facilities, 
but told us that establishing "wellness centers and spas" near 
existing cultural destinations could help increase the appeal to 
wealthier tourist. 
 
¶7. (SBU) Comment: El-Nahas, a former Hilton hotels executive for 45 
years, was surprisingly upbeat both about this year and future 
tourism prospects. However, despite the aggressive industry 
marketing plans, near term success may depend on factors beyond its 
control. Continued weakness in the economies of most of the 
countries of origin for Egyptian tourism would almost certainly 
weaken demand into 2010. The strengthening of the Egyptian currency 
versus the currencies of other tourist destinations in the region 
may also make it harder to compete for price-conscious customers. 
That said, when the global economy does turn around, Egypt's tourism 
sector appears well-positioned to profit and continue its strong 
expansion. 
 
Tueller