Tourism Overview Following a buoyant 22% year-on-year (y-o-y) increase in foreign tourist arrivals in 2007, the Ministry of Tourism reported that foreign tourists totalled around 12.8mn last year, up a strong 15% y-o-y (slightly weaker than BMI’s earlier forecast). The ministry stated that the most important source markets were Russia, Germany, Italy, Britain, Poland, Ukraine, Libya, France, Saudi Arabia and the US. However, according to early indications, the tourism sector looks increasingly vulnerable in 2009.

Hospitality The most recent reports on hotel bookings at the beginning of this year show a sharp fall compared with the same period in 2008. The Ministry of Tourism is monitoring the situation closely, with measures taken to exempt hotels from paying contributions to the Egyptian tourism promotion authority and reductions in fees paid by charter flights.

Cairo Bomb Blast In an incident that will add to the woes of the tourism sector, four people, at least one of whom was a French tourist, were killed when a bomb ripped through the Khan el-Khalili bazaar in Cairo in February 2009. According to Egyptian police, 11 French, three Germans and several Egyptians were among up to 20 others who were injured. This follows the kidnapping of a group of 11 foreign tourists in September 2008 in Aswan.

Forecast Scenario Largely based on deteriorating economic conditions in key source markets, especially the eurozone, Russia and Eastern Europe, and the UK, BMI now expects relatively sharp negative growth in foreign tourist arrivals this year, with a slight pick-up in 2010 (although this may be overly optimistic).

Furthermore, the recent bombing in Cairo can only exacerbate the downturn in tourism and investment flows to the sector. Added to this background, the forecast strength of the Egyptian pound against the euro and the US dollar, over the short term, will erode some of the country’s competitiveness as a tourist destination.

Nile Hilton Hotel/Nile Ritz-Carlton After 50 years as the Nile Hilton, the hotel will undergo an EGP350mn (US$64mn) renovation before reemerging as the Nile Ritz-Carlton, Cairo – the capital’s first Ritz Carlton. The hotel will operate as an unlabeled hotel for six months from the start of 2009 and then close entirely. The renovations are expected to be completed by 2011 and will include the construction of a new 1,000 seat conference centre. The Ritz-Carlton Hotel Company has been given a 20-year contract on the 431-room hotel, with the possibility of extension.