Pilot Red Sea project to generate EGP3bn ($428m) for the government
Egypt is keen to attract Arab investors to help revitalise its beleaguered tourism industry.
Arab investment in Egypt stands at 9 per cent of foreign investment in the North African country, and the minister of tourism Hisham Zaazou tells MEED that this proportion should at least double.
It should be 20 per cent, he says, speaking in Dubai during a visit to attend a travel and tourism conference held in the emirate.
The countrys tourism sector has struggled since the 2011 revolution, last years removal of former president Mohamed Mursi and the ensuing political and social instability.
Just 9.5 million tourists visited Egypt last year generating an income of $5.8bn, which is far lower than figures recorded in the preceding years. In 2010, 14.73 million tourists visited the country.
Despite this fall-off in volumes, Zaazou says that the original target to increase arrivals to 25 million tourists by 2020 remains in place. The 2020 plan also envisages the sector contributing an income of $25bn to the government.
For the first time since 2011, Egypt is attempting to attract new investment into the sector via a pilot tourism project along the Red Sea coast. The project involves the tendering of five pieces of land at Ain Sokhna and Ras Sedr to be developed into specific tourism projects, including marinas, resorts and a medical centre.
The land comes with no infrastructure, with the responsibility of the project lying with the developer.
A total of 50 companies submitted bids for the project, with five Egyptian companies awarded contracts by the Egyptian Tourism Authority in early May.
The government has provided the land to the developers on deferred payment terms, offering them a three-year grace period with repayment made over the subsequent seven years.
Zaazou says that the project will generate at least EGP3bn in revenues for the government. He expects that if the project proves successful, it will help draw in investment from the wider region.
When a citizen itself is investing in its own country this is a good sign and will attract more Arab investors, he says.
He adds that he has hired an investment expert from within the government to advise the tourism ministry about how to attract further investment.
Following the pilot project, Zaazou aims to issue tenders for land along the Mediterranean coast before the end of the year.
The revival of Egypts sector is vital for the countrys ailing economy. In 2010 it generated $12.5bn, which was more than double the income generated by the Suez Canal.
Concerns surrounding security are the main challenges facing the sector. A number of countries have placed travel warnings on the country, due to the increased threat of terrorism, although the Red Sea resorts are exempt from these.
Zaazou says the government is tackling these safety issues. We have hiked up our security measures in all our tourist areas. We are doing it in a three-pronged approach, one with the ministry of tourism itself, one with the ministry of interior and the ministry of defence in the case of Sinai, all working harmoniously together to ensure these areas are quite secure and safe.
If you exclude Cairo, the rest is under control.
The ministry also launched a new advertising campaign in May called Wahashtouna or we miss you, specifically targeting potential tourists in Arab countries.
Egypt is looking to increase the number of flights to and from the Gulf. In May, it launched direct flights from Saudi Arabia and Kuwait to Hurghada. It is also close to finalising agreements with UAE-based airlines to launch flights to Sharm El Sheikh and Hurghada and Aswan.