Egypt Tourism Report Q3 2012

The Egypt Tourism Report looks at the prospects for the tourism sector through to 2016, while considering important issues facing the sector in the short term. Assuming outbreaks of large-scale unrest gradually decrease in frequency, after the political unrest that rocked Egypt last year, a strong recovery in the sector is anticipated in 2012, partly due to the impact of the low base effects following the collapse of tourism in 2011.

The report analyses the major source markets, which are predominantly European, highlighting the risks associated with an economic downturn in the eurozone. However, tourism from the Middle East has been more resilient, as reflected in hospitality sector data.

In 2011, foreign tourist arrivals fell by almost exactly a third compared with 2010. The damaging effects on foreign tourism resulting from resurgent political unrest at the end of 2011 were evident in data for December, with total arrivals down by 33% year-on-year (y-o-y), while visitors from Europe fell by a substantial 36%. The most recent data, for Janaury 2012, are also poor, with total tourist arrivals down by nearly 29% y-o-y and visitors from Europe falling by over 33% compared with January 2011. Arrivals from the Middle East, in contrast, recorded a healthy 21% y-o-y increase.

In the hospitality sector there was a nearly 23% y-o-y fall in total tourism nights in 2011. During Q411, total nights remained negative year-on-year but growth in nights by Middle Eastern tourists was positive in each month, with average growth surprisingly strong at 37% y-o-y in Q411. Data for January 2012 show a similar picture, with total tourist nights down by around 15% y-o-y. European tourist nights fell by over 18%, while nights by Middle Eastern tourists rose by over 19%. Over the last quarter BMI has revised the following forecasts and views:

BMI has raised the growth forecast for foreign visitor arrivals to around 24% y-o-y in 2012 from 15%, largely as a result of recent very strong growth in arrivals from the Middle East. For the remainder of the forecast period, growth forecasts have also been been revised up slightly.

In the key source region for inbound tourism, the eurozone, BMI has lowered its eurozone 2013 growth forecast to 1.0% from 1.2%, but the region is in for a protracted period of slow, painful internal restructuring characterised by weak economic activity. For Russia, an important source market, the growth forecast for 2013 was revised down to 3.5%.

Some weakness in the recovery of the tourism sector is likely to occur during the presidential elections in May-June 2012.

At the end of March, a code-share agreement between the national flag carrier EgyptAir and Air Canada came into effect on routes between Egypt and Canada via London and Frankfurt. The agreement should encourage tourism from North America to Egypt.