CAIRO - 28 September 2018: I am very lucky to be able to travel regularly for work, as well as for breaks, across the Middle East and North Africa and in Europe. As an investment banker, one of our functions is to always look for solutions for our clients, with most of our focus within Egypt.
Egypt’s economy has begun to turn around but we still need new solutions and efficient implementation of these solutions and ideas to optimize economic growth and especially to increase the number of new jobs being created to help young people enter the job market.
One sector which has felt the full force of the uncertainty over the last few years in Egypt has been tourism, which once accounted for the largest number of workers in any one sector in the country. However, over the last year, there has been a very solid recovery in tourism with some hotels at near 100% occupancy for the first time since 2010.
The question to ask is, can Egypt do more to boost tourism and gain both an increase in tourist numbers and in terms of spending from each tourist? Additionally, we should all also ask, can Egypt attract totally different visitors and follow and learn from what Dubai has done to deepen the mix of visitors annually, to maximize revenues and offer different services and attractions to ensure year-round visitors.
Dubai is one of the most striking cities globally, not just in the Middle East and North Africa, and in terms of tourism (and business activity) it is almost always busy throughout the year, even able to continuously fill its hotels in the heat of the summer.
This is due to Dubai being a multiple-option destination. This includes direct holidays to Dubai and the UAE and also transit holidays (from travellers using Emirates Airlines en route to other destinations who stop in Dubai for short breaks to or from their final destinations), as well as business travellers and for the very many, almost daily, large conferences which are able to attract visitors from around the world.
For Egypt to succeed in transforming the overall tourism sector, it will have to take an exceptionally serious look at all of its product offerings. From my own experience, I think that many businesses in the tourism sector have been too complacent, including hotels, restaurants and the retail sector.
Dubai and many other countries in the region operate an exceptional hotel sector, where standards are maintained to very good levels, but it is more than this. In my view, the tourism sector has relied on visitors to the Nile Valley and the Red Sea developments without looking at what else could be done to add to attractions and win new visitors and have all visitors to Egypt spend more whilst they are here.
I was invited recently to take part in a working dinner with several overseas visitors on one of the boats on the River Nile in Cairo. We had around 15 minutes of discussion before the boat left its mooring and the band started playing some Bob Marley music and other hits and some Egyptian songs.
The volume level of the speakers was possibly ear-damaging for an extended period and meant that our discussion was not really possible in the confined space of the boat. The food arrived and despite main courses costing between LE 550 ($30) to LE 850 ($47) before taxes, the quality of the dinner was dire (when at these prices it should have been nothing less than superb).
The dinner was of little more than a standard seen in an average café and in my case my dinner was left almost untouched. The entertainment that evening continued and we had a whirling dervish with lights and then a belly dancer, which, it was clear, some of the few foreigners on the boat did seem to enjoy.
In the end, my group had to go outside on the narrow deck to continue the conversation until we moored again.
My criticism could be taken as just me being too demanding in terms of the standards I expect and I could accept that criticism. However, the point of the story is to highlight that this was both a very expensive and thoroughly disappointing evening, let down by very poor food and entertainment that is replicated in a similar form in just about every hotel in Egypt putting on a “show” for tourists.
For me, at least, that evening’s example showed (in addition to other venues in Cairo and the Red Sea hotels) that Egypt could do much, much better to differentiate its product offering to international and domestic travellers and to encourage repeat visitors.
What I would suggest is that hotels and other venues learn from successful hotels in other international markets such as Dubai, New York, Barcelona, Istanbul and Paris, amongst others, as to what tourists want to see and experience.
It is good to have local culture and it should be at the core of the product offering, but there are many different ways in which that can be presented to visitors, without resorting to the same repackaged show in many venues.
Egypt has an exceptional history upon which to draw for entertainment, but Egypt also has many singers, actors, artists and writers who need new venues to highlight their talents. I would recommend that hotels could be at the center of highlighting this talent.
In Lebanon, for example, from May to September, there are many international and local festivals. Some, like the Bekaa Festival, have been around for decades and are set within magnificent, ancient ruins and are well known, while others, like the Byblos Festival, have been attracting younger audiences to see international singers.
Most Lebanese festivals, however, are based around local artists and events, to stimulate the local environment, with some festivals based around food, helping to highlight the local cuisine. Egypt has some festivals, such as the superb DCaf Festival, and the Cairo International Film Festival, but given Egypt’s size and diversity, there is, surely, a market for many more events to promote and highlight different facets of the wider culture, old and new.
On a recent visit to Amman, I experienced the city in a new light. Over the last decade there has been a major investment in its hotel stock and Amman now boasts some of the best hotels in the region—the physical buildings, restaurants, their facilities and the exceptionally good training—better, in my opinion, than I have experienced in Dubai or Beirut. One of the factors, I think, which is missed by Egypt’s hospitality sector is to train staff to international standards.
I know that some of Egypt’s hoteliers will be annoyed at this, but any visit to Amman’s international brand-name hotels will highlight my points. Cairo and the Red Sea hotels have to up their game as other centers invest more heavily in upgrading their hotels and facilities and improve their staff training. If Egypt does this, then the average cost per night for tourists can also increase and attract new tourists.
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London as a tourist center is the second most-visited city globally after Hong Kong, receiving over 17 million tourists annually, while the whole of the UK receives over 33 million tourists a year. Whilst not having anything remotely like the unique sites of the Pyramids and the temples of Upper Egypt (excepting Stonehenge), the UK is able to attract very high numbers of people due to its multiple tourism options and the depth of those options, from museums and public buildings to parks, to theater and art galleries, shopping and dining and an exceptionally varied nightlife for young visitors in particular.
Egypt received 6.6 million tourists in 2017, down from 6.9 million in 2016, with the forecast for the current year that several million more tourists will visit, which is set to transform the sector—at last. The increase in tourism is not only beneficial for the inflows of foreign currency but also for employment. Revenue from tourism in 2016 was $3.8 billion, while it rose to $4.4 billion in 2017.
By comparison, Lebanon received 1.69 tourists in 2016 and 1.86 million in 2017, but saw tourist revenues of $6.86 billion in 2016 and $6.82 million in 2017—a reflection of longer tourist stays and by the return of extended Lebanese families on foreign passports staying for longer than the average tourists.
The comparison is, to a degree, not fair as each country can classify visitor numbers differently, but it is useful to highlight the fact that longer-stay visitors can be more beneficial for the economy and that it is not just about absolute numbers of visitors.
One issue which could be looked at by the tourism authorities and real estate developers is to create more holiday apartments in the main tourist destinations on the Red Sea (and also on the Mediterranean coast) for tourists, to offer the facilities for longer stays since this product is not currently offered to international visitors. Clearly, however, to attract more visitors, other product offerings are needed for the long term beyond the developments in themselves.
In 2016, after several years of much lower visitor numbers, employment in the tourism sector in Egypt slipped to under 800,000 workers but the number has now increased to over 1.3 million which is exactly what the economy needs, to help people feel that the economy has turned the corner.
However, for the tourism sector to grow and to add many more new jobs, the tourism authorities and tourism companies in Egypt should think seriously about what can be done to broaden the sector and attract a greater number of people who may not otherwise visit Egypt.
Earlier I noted that Dubai is able to host many international conferences which attract hundreds of visitors. Dubai is lucky in that it has the facilities to host several major conferences simultaneously and have those visitors spend in its many shopping malls, its many very good restaurants and stay for a holiday by the beach.
Frankly, Egypt cannot offer all of these attractions in one place, but the lesson from Dubai is to try to create further attractions which are of a much higher standard which could then be sold at a higher price, particularly in dining.
Egypt should learn from Lebanon and look at developing local and international festivals to add depth to the experiences for both Egyptians and tourists.
The lessons from Amman include the upgrading of Egypt’s hotel facilities and the improvement of staff training, which would allow for higher charges, as well as improving the customer experience and encourage repeat visits.
Given the size of Egypt and its climate, there is also scope to develop extreme sports—including parachuting, paragliding and mountaineering, amongst others—opening up a new tourism market, which has, so far, been missed.
Finally, Egypt’s wonderful ancient sites are, by nature, limited physically. Too many tourists can damage the very thing that they are coming to see and which need to be protected for the long term.
The reconstruction of the tomb of Tutankhamun is a superb example of what can be done to allow tourists to experience the tomb in a wonderful copy, without damaging the original.
New technology will allow other new experiences for Egyptian and foreign visitors alike, to experience the wonders of ancient Egypt almost in a 3D experience.
The new Grand Egyptian Museum being constructed near the Pyramids in Giza will, when it is opened, be world class and its addition to the tourism sector in Egypt will attract very many new visitors to Cairo.
It is my hope that these tourists will also be able to have additional experiences in Egypt which will encourage them to visit again to see more of Egypt and also help encourage others to visit, based on these experiences.
Angus Blair is CEO of Pharos Holding for Financial Investments and has been helping define and add a creative thinking touch to the investment, business and economic strategy of the Middle East and North Africa for well over 20 years. As one of the region’s leading analysts and researchers, he has been developing businesses in and for the MENA region and has won a number of awards and recognitions, including being named Global Finance magazine’s “Emerging Markets Superstar.”