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Egypt Tourism Report Q2 2011
Business Monitor International, April 2011, Pages: 63
The Egypt Tourism Report provides industry professionals and strategists, corporate analysts, tourism associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Egypt's tourism industry.
Tourism Overview
After buoyant recovery in tourism in 2010, the political unrest that rocked Egypt in January/February 2011 has undermined our previous favourable outlook for the sector. BMI's expectation is now that foreign tourism will suffer a pronounced decline over the next few months at least. Partly as a consequence, we have revised our real GDP growth forecast for FY2010/11 to 3.2% from 5.1% previously (the country's fiscal year runs from July-June).
Soon after the anti-government protests began on January 25, hotel occupancy rates plummeted in major cities and key holiday destinations in the Red Sea area. Indeed, the government stated that around one million tourists fled Egypt during the course of the protests. It is a promising sign however, that a number of major European travel companies have indicated that package holidays to Egypt may resume in March, after cancellations during the crisis. Industrial action, following the political unrest, has also damaged the tourism sector. Foreign airlines, for example, cancelled flights to Egypt in late February, partly due to strikes by customs officials and maintenance staff at airports.
Recent events have overshadowed the performance of the sector in 2010, with officials stating that foreign tourists totalled close to 15mn. BMI estimates that this represents considerable growth of around 14% year-on-year (y-o-y), boosted by a recovery in key source markets and helped by the decline in the Egyptian pound.
Bird Flu Update
Figures published in February 2011 by the World Health Organization (WHO) show Egypt has confirmed 40 human deaths caused from the H5N1 (bird flu) virus (four new deaths since our previous report), out of 122 (previously 112) known human infections in the country, the largest number outside Asia.
Forecast Scenario:
As with earlier episodes of political unrest in Egypt – albeit of a very different nature (for example, fatal bomb attacks) – tourism numbers have generally recovered relatively quickly. As such, we anticipate a sharp fall in foreign arrivals in H111 y-o-y, with some recovery thereafter. March is also the beginning of an important three-month season for European tourists to Egypt, with arrivals averaging just short of one million each month – nearly 80% of total visitors – in the period March-May 2010. Moderate economic recovery in important source markets should help tourist numbers recover in the latter part of 2011. In the eurozone, our revised economic growth forecasts are 1.6% and 1.9% in 2011 and 2012 respectively, following growth estimated at 1.8% in 2010. Growth in the UK – an important source market is also forecast to edge up in 2011 and 2012, to 2.0% and 2.6% respectively. Although tentative at this stage, we forecast annual growth in foreign arrivals of about 11% in 2011.
Hospitality
At the end of 2010, Hilton Worldwide signed a management agreement with Egyptian engineering company Afak Co. for Touristic Development for the new 330-room Hilton Makadi Resort, which is expected to open in June 2011. An additional 346 rooms will be completed by Q212. The hotel will be Hilton's fourth property in the resort of Hurghada, on the Red Sea, and will bring Hilton's Egyptian portfolio to 17 properties.
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