Egypt must diversify tourist products to spur expenditure, say experts

Daily News Egypt
6 Min Read

CAIRO: The most common way to evaluate the success of a country’s tourism strategy has proven to be determining the annual number of tourists visiting.

According to the Central Agency for Public Mobilization and Statistics (CAPMAS), a total of 6,693,584 foreigners visited Egypt in 2007, a 20 percent increase from 2005.

But the accuracy and reliability of these figures remain questionable for two reasons. The first is that they do not necessarily reflect the inflow of tourists to a country, as every non-Egyptian entering the country – whether an asylum-seeker, expatriate or businessman – is included in this count.

Secondly, these figures ignore foreign spending inside the country – a factor that is no less important than the number of tourists, and yet is sometimes overlooked.

“The tourism revenue of a country is not really measured by the hotel industry fee revenue, but by the money spent in the country, Angus Blair, head of the research department at Beltone Financial told Daily News Egypt.

As popular as the all-inclusive tourist packages offering hotels a guaranteed year-round occupancy are, they may also be a limiting factor for tourist expenditure in the country, according to Blair.

“These packages are all-inclusive in every sense of the word, said Moataz Amin, head of tourism development solutions at Integrated Marketing Solutions (IMS).

“They don’t only offer three meals a day, but also cigarettes, alcohol, food and snacks any time of the day, so basically tourists do not need to spend anything outside their hotel or resort.

Hotels have their reasons for getting into the all-inclusive business. “Almost all hotels rely on yearly contracts that they get through local travel agents who, in turn, negotiate these deals with international tour operators like Thomas Cook or Nickerman, Amin said explained.

“These contracts usually last for one whole year guaranteeing the occupancy of a certain number of rooms per week back-to-back for the entire year, so it’s a guaranteed business – an offer they can’t refuse, he added.

However, not all hotels apply the same standards as they negotiate these contracts. “Five star hotels and big international chains negotiate until they hit a price that they know they cannot go below, Amin explained.

“On the other hand, smaller hotels – or owner’s hotels as we call them in the business – usually do not have a standard minimum price that they should not go below in order to break even. Instead, they usually rely on calculations that they make on a case-by-case basis, he added.

In a bid to avoid such haphazard business behavior, many hotels have in the past five years started hiring what they call revenue managers, who are responsible for making sure the hotel breaks even and maximizing its profit margin, according to Amin.

He said Egypt needs to diversify its tourist products to create more channels for tourist expenditure. “Now, many of our clients are looking into new businesses such as yachting, ecotourism, healthcare, sports tourism and excursions.

“Our product is competitive in the market because it is still relatively cheap and it has to stay that way, but we also need to have better infrastructure for more expensive types of tourism, he added.

The Ministry of Tourism is encouraging investors to open more restaurants and other entertainment establishments instead of focusing solely on building hotels, ministry spokesperson Hala El-Khatib told Daily News Egypt.

“We are offering investors in the entertainment and leisure industries the same incentives we are offering to those who invest in hotels so that we can have more outlets for tourists to spend their money, she said.

El-Khatib, however, does not believe that all-inclusive packages have an impact on tourist spending in venues other than the hotel. “Some tourists are more willing to spend than others regardless of the package they are getting, she explained, “if there a tourist is ready to spend, he will find a lot of outlets to do so.

“We have a lot of outlets for tourist expenditure such as entertainment, outings and souvenirs. She added, “Who goes to Sharm El-Sheikh without going to Buddha Bar? And who comes to Cairo without going shopping in CityStars? Shopping tourism has been booming, and it’s our job to create more and more of these outlets.

According to El-Khatib, the ministry cannot really do anything about the pricing as this is an international business, and there is fierce competition both in terms of prices and quality. “All-inclusive packages are not an Egyptian invention, she said, “They are everywhere.

Another problem that Egypt suffers from is the availability of timely information about what’s happening in the country, according to Blair. “The problem here is that there is no compendium of information about what’s happening he said. “In the Cairo Film Festival, for instance, the schedule was not online until two days before the opening.

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