 New era in tourism
With some of the world’s greatest archeological treasures --from the pyramids of Giza to the temples of Luxor and Abu Simbel
– Egypt is in the major leagues as a travel destination. Tourism is Egypt’s second largest source of foreign exchange, but contributed only $3.7 billion or 4 % of GDP to the economy in 1997-98. The tourist season was devastated after Islamic fundamentalists killed 58 tourists at a temple in Luxor in November 1997. As a result, hotel occupancies plummeted all over the country. "It was traumatic," says Ulrich Huth , general manager of the Cairo Marriott Hote l. Nevertheless because the Marriott’s clientele is not only tourist but business oriented, occupancy began to recover within a matter of months. Ministry of Tourism figures show tourism is gradually recovering. By the winter of 2000, Egypt’s tourism revenues are expected to return to normal, according to many people involved in the industry. As Huth says : " In Egypt you can always can come back."
But even at its peak level the year before the Luxor incident, Egypt still only receives about 4 million tourists per year and the industry is clearly not as developed as it could be. The government is offering incentives to investors, such as low rental costs for land in designated tourism zones and the right to import equipment are reduced customs duties. Although Egypt has traditionally relied on its archeology to attract tourists, the country has a wide range of other attractions and is now diversifying. To increase capacity, private developers have embarked on massive hotel building projects all over Egypt – along the Red Sea beaches, in the south Sinai desert, along the Nile and in some of the western desert oases where tourists can take safaris.
According to Tourism Minister Mamdouh El Beltagy 812 new projects are now under construction. They will increase hotel capacity from 78,000 rooms today to 200,000 rooms within 5 years. Foreign investment is involved in about 25 % of the projects. Beltagy says tourism is a leading sector in terms of privatization. He says investors in tourism development projects are encouraged to take over all of the development, including infrastructure work. They are given the land at a cost of $1 per square meter to be paid in ten years and in certain remote areas are offered 10 year tax exemptions. In addition, import taxes on goods needed for the tourism properties, such as computers or wood for furniture, are fixed at 5 %. Laws guarantee against nationalization or confiscation of properties, and there are no restrictions on transfer of ownership.
Adel Rady , head of the Tourism Development Authority, thinks that although Egypt is endowed with extraordinary natural resources, much more investment is needed to make other areas of Egypt accessible to tourists. "All these resources need to be polished and properly shown and marketed. We have to develop natural parks and theme parks to attract people. There have to be more roads, more airports and marinas. We have Nile cruises but we still need yachting in the Red Sea and the Mediterranean Sea. Eco-tourists would not like to come to high towers in the city, but rather to lodges within nature and we have to provide these accommodations for them." Ahmed El Nahas, President of Hilton International for the Middle East and Africa simply says "There is much more to do". Hilton has a total of ten hotels in the country with 3 in Cairo only.
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Rady believes in particular that the southern parts of the Red Sea coastline should be attractive to American investors. The 1,000 kilometer stretch of coast is dotted with areas designated as national parks and although several major developments have been built in the last few years, much of the area is untouched by development. Across the Red Sea lies Saudi Arabia, which, Rady notes is unlikely to open its coastline to tourism development because of cultural and religious barriers.
The private sector has been active in investing in tourism since 1993. Most of Egypt’s best known hotels are still owned by the government, but are managed by operators such as Marriott , Hilton, Intercontinental and other worldwide chains. Ulrich Huth, the Cairo Marriott general manager, says having the government as a landlord is fine, but further liberalizing of trade would help tourism. Indeed customs and freight fees are so high on imported goods that hotels have to charge $30 for a bottle of American wine that would cost $3 in the United States.
The Cairo Marriott is a unique hotel in the Middle East and in the company’s chain. It was once the Al Gezira Palace built by Khedive Ismail for France’s Empress Eugenie, the wife of Napoleon 3rd, who was to participate in the inauguration of the Suez Canal in 1969. It was also meant to be the venue for the performance of Verdi’s Opera Aida. Marriott has also two luxurious resorts on the shores of the Read Sea, in Hurghada and Sharm El Sheikh.
Literally dozens of new hotels have already opened in Egypt in the past couple of years, most in Sinai, Red Sea and Luxor areas. The Conrad International Hotel chain, a wholly owned subsidiary of Hilton Hotels Corp., is one of the few to open a new hotel in Cairo. General manager Mark Elawadi says Conrad International is a 10 percent equity partner in the investment with an investment of about
$15 million. He says 5 star hotels in Cairo can normally expect occupancies of 80 %.
Another leading hotel operator is the Hussein Salem Group, the Egyptian partner of Mövenpick hotels. The group started about 10 years ago when Jolie Ville was owned by Mövenpick. Today the group owns Jolie Ville, which is the managing company for Salem’s three hotels - two in Sharm El Sheikh in the south Sinai Read Sea coast and one in Luxor. Mövenpick gives Jolie Ville advice on all aspects of managing a 5 star hotel. One of its hotels is a
350 room casino resort located on Naama Bay and the other, which opened in November 1998, is a luxurious golf resort complex on Om Merykha Bay. The resort, which is built 1.2 million square meters, includes among other features conference halls, lakes, a 18-hole golf course and a theme park. In the coming year, chairman Hussein Salem says he plans on "organizing and cementing the success that we achieved to go to something better and bigger." He remarks "our target is always to look for new investments in order to have full integration and a better management center. We have to start looking for different hotels in different parts of the world but we have to first complete the golden triangle in Egypt." He aims to market his Sharm El Sheikh golf resort internationally. "The golf course was a challenge in the desert and we managed to build a luxurious resort in 22 months". Dreams do come true in Egypt, he says. As a matter of fact Hussein Salem’s message to any foreign investor is to
"come and visit Egypt, and see for yourself the wonderful progress of our country, the hospitality of the Egyptians, and the ongoing hard work to build a brighter and promising future". |
EGYPT
