Egypt is a country in crisis.
Egypt is an investment opportunity about to go big.
Egypt is at the heart of the Arab Spring.
Egypt is an outlier.
Depending on whom you ask, any and all of these statements true. What is undeniable, though, is that since the 2011 uprisings that brought down long-time strong man Hosni Mubarak, the Egyptian economy has experienced a series of dramatic ups and downs. This has been felt most acutely in the tourism sector, long an engine for growth and stability in the country. With over 25 years in the tourism industry, Amr Badr would know.
Mr. Badr is the Regional Managing Director of Abercrombie & Kent for Egypt and the Middle East, an upscale tourism operator based in Cairo since 1982. He has studied at Cairo University, Cornell University, and Stanford. In addition to Abercrombie and Kent, Mr. Badr sits on several philanthropic boards, including Seeds for Peace, People to People International, and Tomorrow’s Youth Organization. I spoke to Mr. Badr by phone to discuss the challenges facing Egypt’s critical tourism industry, what policies could help re-boot the country’s economy, and the impact of upcoming elections.
Georgetown Public Policy Review: From the post-9/11 lull to the fall of former-President Mubarak, you have weathered quite a few storms working in the Egyptian tourism industry. How does the current situation compare to challenges over the last ten to fifteen years?
Amr Badr: There is no doubt that this is certainly the most complicated crisis we’ve had since the beginning of major tourism in Egypt, from the early 1970s onwards. Egypt has had a lot of ups and downs, several regional incidents here and there, but this lull is somewhat longer because the domestic aspect of it is overtaking international promotion. The industry at the moment is surviving. There are even parts of it that are doing reasonably ok—especially if you look at the Red Sea and the Sinai Peninsula, Sharm El-Sheikh in particular—and while places are not running at full capacity, they are running better than people’s expectations.
We’re looking at occupancies of 50 to 60 percent, with much smaller average per-night rates and overall lower yields, which has an impact on GDP as a whole. We have the “classic tourism” spots—Cairo and upper Egypt—which are suffering compared to the resorts at the Red Sea. The classic tourism spots have seen a decline of almost 70 percent because they depend much more on the Anglo and Western European market and a much more mobile clientele. The Red Sea resorts typically appeal to Eastern European and Russian clients, whose objective is to come, enjoy the beach, get good service, and have it all packaged at one rate. The people going to the Red Sea are staying in one, all-inclusive hotel, and don’t really have an impact on the outside culture—they aren’t really coming for that culture.
GPPR: Government data show that tourism revenue was down in the first quarter of 2014. What does Egypt offer now that it did not three years ago?
AB: The only thing that one can say is that today we offer a truly unique experience. The sites are not crowded. A tourist told me recently that he went to the pyramids and they were “all mine, mine all mine…no one was there but me!” That is a new experience and one that people don’t forget. It’s actually more enjoyable. In the past, you’d have 50,000 to 60,000 people with you.
So, you have no crowds. You have great prices. And actually the experience is more engaging. Today, Egyptians are much more inclined to speak and engage visitors. To talk about their experiences, hopes, and fears. It is a more interactive, vibrant experience than in the past.
GPPR: Working in tourism in Egypt and elsewhere is often a route to a comfortable middle class life. Has the perception of tourism changed at all during the post-2011 economic downturn? Are young people still entering the industry?
AB: Tourism is the largest employment market in the country. Egypt is targeting six to seven million jobs in tourism, and we’ve almost reached four million. Every politician, every leader has to understand the impact of tourism and the means to support the industry. Tourism is basically the country’s road to recovery and to job growth.
About a week ago, General Sisi met with 50 or 60 travel leaders in Egypt. His opponent candidate [Hamdeen Sabahi] also met with leaders in the industry. It is clear that every party in the country understands that tourism is a major part of the economic recovery and that they need to support it, and perhaps even rely on it. Everyone understands that building a manufacturing base or developing a strong industrial sector will take time. On the other hand, Egypt already has a strong tourism sector. The sphinxes are there, the pyramids are there, the Nile is there. You can jump-start that business. What you need is a more stable situation. With that, you need better promotion and awareness of the situation and what the country can offer. Every sector in Egypt is a problem. Tourism is a solution.
GPPR: What impact, if any, do you think the election at the end of May will have? Will it affect the industry?
AB: Absolutely. We believe that we’ve been in a transition for a long time. When former president Mubarak stepped down, tourism numbers collapsed completely. The numbers began to pick up slightly after that, but it was a transition. We were waiting to see the election process completed and the engine to start. When Morsi took office, that was seen at the very beginning as a possible road to calm and stability, but then quickly, of course, resulted in a poor performance, and it was clear that we were going through another transition. Within a year, he was ousted, and so now we’re going through another transition.
Hopefully, once a president takes office now, it will send a message of stability, productivity, and focus. We believe that the impact of this stability on tourism will begin to be felt by the last quarter of 2014. 2015 is viewed as the recovery year, and 2016 is viewed as business back to normal. Those are the expectations of many business travel leaders in Egypt.
GPPR: Egypt’s tourism minister, Hisham Zaazou, recently said he wanted to attract 25 million tourists by 2020, double the number of tourists in 2010. Do you see that as a realistic goal?
AB: I think 2020 is a great goal. For us, 2014 and 2015 are our focus. It would be difficult to plan that far ahead, but certainly we should be able to hit 20 to 25 million. I think one of the points that came out of the recent meeting with General Sisi is that he recognizes that infrastructure development, vocational and skills training upgrades, creative promotion, and services will be the way to grow the industry. We should be in the top ten destinations. Every leader, I believe, thinks that is where we are going.
GPPR: What is the biggest challenge you face right now as a leader in the tourism industry?
AB: The biggest challenge to the industry today is perception. Things on the ground are fine. We just had a group of 80 Americans visit about a month ago, and the feedback from this group was absolutely a smashing success. Those who have visited since 2011 have come home wonderfully happy, but there is a perception barrier that we need to break. The biggest threat is the destination perception abroad. This is not to say that we do not need to focus on stability and security on the ground.
Tourism is very, very strategically important. Every leader understands this and that the country needs to support its growth. This might mean changing strategies and how the product is currently marketed, maybe eliminate the over-budgeted side of things. The beauty of it is that this is something everyone agrees on: tourism matters. For the economy, for the industry, and for the country’s stability, it matters.
Jacob Patterson-Stein is a second year Master of International Development Policy student. Prior to attending McCourt, Jacob worked for Thomson Reuters in Washington D.C., the More than Me Foundation in Liberia, and in a rural public school in South Korea. He spent summer 2013 working for the Support for Economic Analysis Development in Indonesia (SEADI) project in Jakarta.
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