With its pharaonic treasures, dramatic coastlines and desert oases, Egypt offers some of the richest travel experiences anywhere in the world. But four years of social and political instability have badly damaged the tourism industry, with many small hotels and tour operators forced out of business as visitor numbers have failed to recover. Rooms rates have been slashed, occupancy has slumped and revenues have shrunk.

Rebuilding the industry is a priority for the government, as tourism is an important pillar of the economy. In 2010, a record year for the sector, tourism-related activities generated 15 per cent of Egypt’s foreign exchange earnings, at a rate of about $1bn a month, double the contribution made by the Suez Canal. That year, the sector accounted for more than 10 per cent of GDP and officially some 3 million Egyptians relied on it (directly and indirectly) for employment; this was about 13 per cent of the entire workforce. If the black market economy was included the numbers would be even greater.

Russian influx

A tentative rebound was seen last year thanks to a 25 per cent jump in the number of Russians visiting Egypt. The Russian currency lost more than 50 per cent of its value during the year, making many destinations too expensive and prompting holidaymakers to take advantage of the low rates at Red Sea resorts. They helped to lift visitor numbers to 10 million in 2014 and contributed to a $1.6bn rise in tourism income to $7.5bn. However, this is 40 per cent lower than the amount Egypt earned from the sector in 2010, when 14.7 million people visited. The market still has a long way to recover, especially the traditional tourism hotspots of Luxor and Aswan.

According to STR Global, the average occupancy in Egyptian hotels was 47.6 per cent in December, while average revenue per available room (Revpar) was £E295.32 ($38.7). This compares with occupancy of 67.1 per cent and Revpar of £E381.90 in December 2010, the month before the revolution.

The Ministry of Tourism, under the leadership of Hisham Zaazou, has been working tirelessly to restore confidence in Egypt as a holiday destination, conducting marketing campaigns and roadshows around the world. Measures have been taken to boost the number of visitors from certain markets, such as the recent temporary lifting of the visa entrance fee for Russian tourists.

Tourism officials are hoping for a 20 per cent rise in visitor numbers in 2015, but the market remains fragile. A similar recovery was snuffed out in 2013 by the unrest that followed the removal of Mohamed Mursi as president. While the political scene in Egypt is now settling down, a new threat has emerged in the form of Islamist terrorism and this will pose the biggest challenge to the industry in the months ahead.

It is hoped the March economic development conference will not just provide a boost to hotel occupancy in the Sharm el-Sheikh area, but will also result in an injection of capital into the tourism sector.

Integrated projects

The Ministry of Tourism is expected to seek support for five integrated tourism development projects during the summit, worth a combined £E5.2bn.

Previous tenders for five plots of land at Ain Sokhna and Ras Sedr, to be developed into specific tourism projects, drew strong interest from investors. The government 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.

The projects will include a £E1.1bn resort in Hurghada, a £E318m resort on the north coast and two others in Marsa Alam, worth £E1.2bn and £E663m respectively. A sports resort in south Safaga was also announced, worth £E2bn in investment.

Further support will be sought for a $1bn tourism assistance fund set up in June 2014 by the Federation of Chambers of Tourism to support the industry, rescuing troubled hotel projects and tourism companies.

Egypt’s long-term tourism plan is for visitor numbers to reach 30 million by 2020 and for revenues to hit $25bn.