Egypt, new dimensions, new frontiers

Mr. Elhamy El-Zayat, Chairman and CEO of Emeco travel

Egypt -

"Over 25 years of commitment to excellence"

Interview with:

Mr. Elhamy El-Zayat,
Chairman & CEO

May 10th, 2000
Could you give us an overview of Emeco Travel since its origins, which I am given to understand were related to Pan-Am?

This was quite sometime ago, back in 1976. We started off as General Sales Agent, or GSA, for Pan Am. We were responsible for the distribution of Pan Am services in Egypt, and legal representation with the Government on its behalf.

Subsequently we became the GSA for American Airlines, Air France, Cathay Pacific, Korean Air, Air Malta and many others. We are now the GSA for five carriers, as we have dropped some and taken on others. This is not to say that we are restricted to selling tickets for just these five airlines however. We sell a huge range of tickets.

I understand that you have offices abroad?

Domestically we have fourteen offices, in Cairo, Ismailia, Alexandria, Luxor and Cairo and other cities too. Abroad we have sales offices for inbound traffic to Egypt. These are in Paris, London, Rome, Milan, New York, Minneapolis and Sydney.

At Forbes magazine we are always looking for the important financial figures by which the performance of a company can be gauged. We also understand that EMECO made over 90 million L. E. last year. This is a great success, is it not?

Well, not as great as it may sound as we have losses from previous years to cover. But yes, things are certainly looking up, and the beginning of this year is looking excellent.

We are more profitable than most other companies because we have focused on the creation of events. In short we do the specialist things that other groups do not do. The down side of this is that our expenses are very high, because we have to have better human resources than the rest of the market.

The gross yield is the highest in Egypt in this field. In terms of producing income per passenger, if I bring in 30,000 tourists the GOP is higher than another company that is bringing in 100,000 tourists. However, our expenses are large because we offer a higher quality service, and to do this we have to send our employees abroad for training and exposure to other cultures. Learning how to handle special groups takes some considerable time and expenditure.

You were involved in organizing the Jean-Michel Jarre concert at the Pyramids for the Millennium, as well as many other performances in Egypt. Could you tell us a little bit about these?

The first one was in 1979, Frank Sinatra singing in front of the Sphinx. He has not sung in any other Arab country, before or since, and I was able to convince him to come and sing in aid of Mrs. Sadat's charity, free of charge. It was outstanding, but it took a lot of effort because there just was not the infrastructure in place for a big event like this. We had to reduce the lighting level in whole surrounding area, as well as installing generators, just to get the required amount of lighting for the show. We served dinner for 850 people there, which is also a huge feat of logistics.

The date 26th September 1979 is stuck in my memory for two reasons, firstly it was my wedding anniversary, and secondly it was the date that Frank Sinatra sang at the pyramids. This however is pure coincidence, I didn't plan it that way, although I told my wife I had!

What other memorable moments have you engineered?

We have done concerts in the Karnak temple, for Jane Fonda and 250 guests media representatives. This was when the UN Population Conference was here and we orchestrated everything for 16,500 people. This was done in parallel with a concert from the Cairo Philharmonic Orchestra. It was a very prestigious event with many high profile guests. We have done several things like this, catering for very diverse groups from all over the world. Recently we organized a concert for Dany Brilliant, at the Hatshepsut temple in February. It was the first rain Luxor had seen for ten years on the day of the show. People were beginning to panic, and the technicians were seriously worried. We had an alternative venue, but obviously we were reluctant to use it. I told them that the rain would stop in time, and thankfully, it did.

One of the big revenue earners for the tourist trade is the corporate and conference trade. How are you building this trade, and positioning your company at the forefront of this business?

We are determined to be a major player in this field. We host a lot of conferences, on behalf of conference organizers in the US, France, Canada, Australia and so on. We do not deal directly with the conference client, unless they choose to get in contact with us. We get our trade from other businesses. This is a good thing as these organizations have new clients all the time, and this is what we need, as each company is unlikely to have several conferences in Egypt.

Many companies are getting in touch with us directly now, in an effort to cut out the middleman, and naturally we take this business, but generally we are happier relying on conference organizers in the US for our trade. Part of the reason for this is that the conference trade has some huge potential pitfalls, and it is best to organize events with people who are aware of these, and can avoid them.

You mentioned the infrastructure issue. As the number of tourists is increasing, is the infrastructure keeping pace with this, as H. E. the Minister of Tourism has suggested to us?

Yes, I believe it is. The new approach of the government is based on the private sector. The new airports are built under BOT schemes and these are a lot quicker than Government schemes, for example the 6th of October Bridge was started over thirty years ago, and it was only finished last year, saying that however, it is a huge highway. On the other hand, the Kuwaiti entrepreneur, Al Khorafi, responsible for the Marsa Alam Airport, built it in a year and a half. While the Government is still discussing the new terminal for Cairo Airport, entrepreneurs have actually got on and built their airports. This is why we are hopeful that the infrastructure will improve.

The huge influx of tourists that we are presently experiencing was not anticipated. It is difficult to know what comes first sometimes, airports, which require huge investment programmes, or hotel rooms which really pull in the money. Obviously, both are needed in the end, whichever way round it happens. El Gouna landing strip is an interesting example here. The entrepreneur responsible saw the huge number of hotels that were going up, and decided that an airport was going to be needed, and a landing strip in his land to service the travel requirements of his hotels, villas and condominium guests.. This was really the first example of well coordinated, parallel development here in Egypt. This is not to say that there are no longer bottlenecks, there clearly are. Thankfully we are becoming professional at finding ways around these, and making sure that the tourists themselves are unaware of the problems.
The Government had undertaken a major change in policy, and has started a huge road building programme. Tourists from the Western world want the freedom to move around out from their resorts, and a good road network is really the only way of achieving this. There are more and more independent travelers, and these have different needs from the traditional package tourist. There is the new ring road and the Twenty Sixth of July Corridor and the Maadi Overpass, all make access to the Pyramids much easier than it was before, which has helped a great deal, and we need more schemes like these.

Major improvement are happening. Earlier today I was speaking to a Spanish journalist who was here four years ago, and she was amazed at how much things have changed in such a short period of time. I suppose that the full force of change is not apparent to people like myself who live here, as we see the changes happening very gradually.

What is your opinion on the Open Skies policy?

I believe in a free market. You have to have access, and access to Egypt is by air. Most of the internal transport in Egypt is over the weekend, and it is not feasible for the national carrier to cope with all of this traffic, as they have no use for these planes on the remaining week days. I am in favour of controlled open skies, because if we look at the liberalization of internal air travel in the United States of America, they started off with 75 carriers, of which only 35 are left. The idea was to increase the number of carriers which could operate, and reduce the costs for the travelers, and in the end the exact opposite happened. Many people are predicting that this is what is going to happen in Egypt, in the long term.

I am in favour of bilateral and reciprocal agreements, if we are going to have open skies, why not have engineer it so it is double sided? I am generally in favour of open skies however, as without this development the hotels at Hurghada and Sharm El Sheikh would have had to close, and the tourist industry would suffer generally, because the number of charter flights coming in is exceeding our widest dreams.

Looking at EMECO specifically, we understand that you are looking to expand and undertake a joint venture. Who are you looking at as potential partners, and what are you hoping to achieve?

It is all about cost rationalization. We are taking things step by step, very carefully. As the Alitalia / KLM merger collapse has demonstrated, the potential difficulties are huge. A good marriage requires a long engagement, you have to get to know each other first. Value for money is the name of the game these days, and to this end we have to rationalize our expenditure, it is as simple as that. If we do not, we will lose our customers.

We are starting with transportation, developing, for instance, a joint fleet of buses with other similar organizations. In this way we can share the costs of maintenance and storage and so on. The second objective is to reach more customers. This is happening a great deal abroad, and the Germans are leading the way, purchasing companies such as Havas of France in order to reach more clients. The Mediterranean countries are lagging behind in this respect.

To reach more customers we need to form a partnership with a foreign company that has a good client base. This will not happen overnight however. There is a lot of potential for unexpected circumstances leaving you high and dry, if you rush into a merger too fast. Saying that however, we are looking to buy into other companies to secure business for ongoing concerns. Once we have a small conglomerate, we will also be more attractive to the larger companies.

Would you be looking to Western Europe?

Yes, absolutely. We already have an agreement up an running with a New Zealand based company, and we are negotiating in Australia at the moment, but Western Europe is next.

Could you give us an idea of your existing shareholdings in other companies?

Not all of them are related to the tourism industry, however. We are building a hotel in Hurghada, and we have completed one in Sharm El Sheikh. We are building two Nile cruisers as well, and these form the basis of our tourism related interests. We are also involved in a Company called Bio-Line which imports French skin care and hydrotherapy goods into Egypt. We are expanding in this direction.

Unfortunately, people are not as health conscious here as they could be, so Soyurt, our soya bean yoghurt, which is very popular in Europe, has not really taken off here yet. Soyurt is a 100% Cholesterol free.

In which areas of these companies would you be looking to attract foreign investment into?

Sardines ! Because not only do you have a captive audience here in Egypt, but Sardines are cholesterol free. Not only this, but eventually we could export the powder to Israel as a substitute for milk, because it is kosher. It is a very versatile food and a good investment for the future. We always give any business proposal careful attention and analyze them well.

As Vice Chairman of NEHRA, you are very involved in the restoration of monuments here in Egypt. Could you tell us a little bit about this?

Yes, I believe that this is very important. Regardless of religious orientation, all these monuments need to be restored. The Holy Family spent a great deal of time here in Egypt, and this is something that we should really celebrate.

It is a hard work to look for donations, but our Chairman Mounir Ghabbour is very active in this, and I have a lot of respect for what he has done.

You are renovating your offices at the moment and clearly moving on up to greater things. Where do you see EMECO travel in five to ten years?

To be or not to be! We hope to be the biggest, but we do not want to grow just for the sake of growth, we want to maintain quality, and we can use our size to increase our quality and reliability. We must make sure that we change with the demands of the client, which are constantly changing. The trouble with the tourist industry is that you cannot really test a service before it is seen by your clients. The service is provided and consumed at the same time, and there is no time to iron out mistakes. By the time that the tourists go home, it is too late to rectify problems.

It is a very rewarding industry to be involved in, as when things go well, and it all ends up as you envisioned it, there is a massive sense of satisfaction. Possibly the greatest moment of my career so far has been hearing Frank Sinatra sing, as his finale at the Pyramids, "My Way".

Why? Because that's how I like to think I did it. My way.

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© World INvestment NEws, 2000.
This is the electronic edition of the special country report on Egypt published in Forbes Global Magazine.
August 7th 2000 Issue.
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