Protests deal heavy blow to Egypt's tourism sector

Offering some of the most famous attractions in the world, Egypt's tourism sector is a vital pillar in the country's economy. Egypt received over 15 million tourists in 2010, generating about $12 billion in revenue. Tourism employs some 2 million Egyptians, or one in 10 of the workforce, and accounts for 11% of total gross domestic product, according to the Egyptian Tourism Ministry.

However, the turmoil wrought by the popular unrest in Cairo has wreaked havoc on tourism throughout most of the country. 'The tourism profile for the whole of Egypt is under freeze at the moment due to the ongoing situation there,' said Sunil D'Souza, Country Manager UAE & Oman, Kanoo Travel. 'Most of our corporate clients have rescheduled until they get a clearer picture of the ground situation there. In our holiday department, we don't have any travel packages currently booked and whatever we had booked has been postponed or cancelled.'

Egypt tourism sector loses over $1bn

The slowdown comes at the worst possible time for the sector as winter is the height of the tourist season in the country. Egypt's Vice-President Omar Suleiman said in a recent interview on state television that the country's tourism sector had lost at least $1 billion since January 25 and that a million tourists had fled the country in the wake of the protests.

In a new report Credit Agricole says Egypt's economy has already lost over $3.1 billon as tourism revenues have suffered. 'Tourism is the first industry being impacted,' John Sfakianakis, chief economist at the Riyadh-based Banque Saudi Fransi-Credit Agricole Group, said in the report. 'Prolonged political uncertainty and perceived violence could have a destructive impact on tourism earnings this year. Tourism receipts could easily retract to pre-2004 levels of less than $5.5 billion.'

For the moment, hotels are doing their best to ensure the safety of their guests while hoping that conditions on the ground improve. 'We are monitoring the situation closely and assisting our hotels to keep communication channels open and ensure we can get supplies to the hotels,' Jeff Strachan, Vice President Sales & Marketing - Middle East & Africa Continent for Marriott International told AMEInfo.com. 'The challenge is different at each hotel location.'

'In addition we are also working with companies who had meetings and business planned for Cairo in the next few days and weeks to assist them with alternative options around the region.'

Long-term industry impact unclear

The big question is whether this crisis will have a long-term impact on the industry. Egypt has successfully recovered from other crises, such as when 58 tourists and four Egyptians were killed near a temple in Luxor in 1997. Tourism declined briefly but rebounded within a few months.

D'Souza is confident that the country's tourism sector will remain resilient and achieve a quick recovery. 'We are hopeful that things will get back to normalcy in the next one or two weeks,' he said.

Other analysts are more sombre about the mid- to long-term impact of the crisis. 'These protests show that the country is exposed to regional sensitivities and to the instability that plagued Tunisia,' Euromonitor International said in a new report. 'With the uncertainty looming over Egypt, international travel companies may start to hold back in terms of activity in the country, and recognize that there is a degree of uncertainty and more risk associated to this country than there was before the Jasmine Revolution in Tunisia.

'Egypt could therefore see a strong decline in tourism incoming flows and receipts from Europe and the West compared to the past.'