Tourism Overview

Official data show that foreign tourist arrivals totalled almost 11.1mn in 2007, representing a marked 22% year-on-year (y-o-y) increase. (Previous data recorded 9.8mn arrivals in the fiscal year 2006/07). This is the strongest growth rate in foreign arrivals since 2004. Latest official reports indicate further buoyant growth in international tourist arrivals in H108. Russian arrivals, in particular, have been partly responsible for the growth – as in recent years – with the ministry anticipating some 2.0mn Russian visitors to Egypt in 2008, an increase of around one third on the previous year.

Source Markets

Although a relatively new market, Russia became the largest source country in 2007, with over 1.5mn visitors to Egypt (around 14% of total arrivals), a massive annual increase of 52%. Factors behind this increase include the strength of the Russian economy and a substantial increase in business tourism. The second most important source market was Germany with 1.09mn visitors, up a strong 12.4% y-o-y. The
UK, which ranked as the top country for visitors to Egypt in 2006, was demoted to third place with around 1.06mn arrivals, an increase of just 2.1% y-o-y. Italy and France, meanwhile, were the next largest source markets, providing about 983,300 and 464,200 visitors respectively. The number of arrivals from both of these countries was up a buoyant 25% y-o-y. As regards the source regions for incoming tourists, European visitors accounted for the majority of arrivals (7.7mn, increasing nearly 27% y-o-y), with the relative importance of the region increasing to almost 70% (of the total) from 67% in the previous year. Interestingly, the number of arrivals from Arab countries increased just 2% y-o-y to near 2mn visitors, while the proportion attributed to these countries dropped from 21.2% in 2006 to 17.7% in 2007.

Hospitality

In 2007, official data show that the total number of tourist nights increased a very strong 24.8% y-o-y to almost 111.5mn – the most favourable outturn for the hospitality sector (in terms of growth rates) since 2004. The average length of stay during the period was 9.3 nights. The number of nights by arrivals from
Europe totalled about 72.2mn, which was up an impressive 31.4% compared with 2006. The rise in both visitor arrivals and average nights has seen tourist nights almost quadruple between 2001 and 2007.

Forecast Scenario

In line with new data, BMI has edged up the forecast growth rate for foreign tourist arrivals in 2008 to 18%, with a total of some 13mn arrivals. However, we expect growth in foreign visitors to slow relatively sharply in 2009 but pick-up in the following year. This is largely due to weaker economic conditions expected in key source markets, especially the eurozone, Russia and the UK. Additionally, the forecast strength of the Egyptian pound against the US dollar and, more importantly, the euro, could dampen tourist arrival growth.