Three terrifying scenarios for Egypt’s tourist industry

A study by the National Planning Institute expected that tourist traffic to Egypt would decrease by 100 per cent if the corona outbreak continues until the end of December. The study of the National Planning Institute, “The Repercussions of the Coronavirus Crisis on the Egyptian Tourism Sector,” was published by the institute, which is affiliated with the planning ministry, on its website. According to the study, the number of tourists increased during the past year to reach 13 million tourists, an increase of 15 per cent, and tourism revenue increased to $12.6 billion last year. The tourism sector contributes to creating many direct and indirect job opportunities, and the number of workers in the tourism sector is estimated at about 3 million workers, which represents about 10 per cent of the total workforce, according to the study.

The study developed more than one scenario about the impact of the COVID-19 pandemic on tourism in Egypt:

1. The first scenario 

This scenario depends on the resumption of economic activity, reduction of the embargo, opening of borders between countries, and the start of foreign flights, expected to resume in mid-June or early July. According to the study, all of this does not mean the resumption of tourism activity directly and quickly, but it will be confined to businessmen and visits of relatives and families.

The study expects that the number of tourists in Egypt will not exceed 10 per cent during the period from July to next September, which means that the losses of the tourism sector will reach 90 per cent during this period. The study assumes the stability of the statistics of 2019, which recorded 13 million tourists, with an average of one million tourists per month. Therefore, during the third quarter of the year, the number of tourists will not exceed 300,000. The study also assumes that during this scenario tourism revenues will hit $300 million in the third quarter, or $100 million per month. And the loss will be exacerbated during the fourth quarter of this year, to be estimated at about 75 per cent, meaning that the numbers of tourists coming to Egypt during this period will not exceed 25 per cent, or about 750,000 tourists.

According to the study, tourism revenues will not exceed 25 per cent or about $750,000 in Q4 of 2020. The study estimates the number of tourists in the current year at about 3.45 million tourists, down 73.5 per cent from 2019, while revenue will reach $3.45 billion, down 72.6 per cent from 2019.

2. The second scenario

This scenario depends on the resumption of normal life as well as tourism activity during the last quarter of this year, with the presence of coronavirus in most countries of the world. This scenario indicates that the losses of the Egyptian tourism sector will reach 75 per cent. The study predicts that the number of tourists in 2020 will reach 3.15 million, a decrease of 75.8 per cent from 2019.

3. The third scenario

The study considers this scenario to be the worst if the coronavirus outbreak continues to be severe until the end of December 2020, which means a 100 per cent decrease in tourism traffic. According to the study, this scenario means that the number of tourists and tourism revenue will be zero during the second, third and fourth quarter of 2020, and this means that the tourism sector in Egypt will experience a significant loss for nine and a half months from mid-March to December of 2020. The study says that tourism activity will be limited to what it recorded in the first quarter of 2020, which is estimated at 2.4 million tourists and revenues estimated at about $2.4 billion.

According to the study, the decrease in the number of tourists, and hence tourism revenues, will lead to a decrease in foreign exchange resources and hence a deficit in the balance of payments and a negative impact on the size of the domestic product. The study said that these effects will reduce the growth of output during the current fiscal year without reaching the country’s targets by achieving a growth rate of 5.8 per cent at the end of the year. The study added that the government has taken many measures to help the tourism sector recover quickly once this crisis is over. The study suggested several solutions to mitigate the effects of the crisis on the tourism sector, including tour guides preparing videos about archaeological sites and uploading them onto promotional platforms for tourists in Egypt.

The study suggests finding alternative opportunities to operate tourism transportation using services such as Uber Bus and Swivel. It also proposes creating an electronic platform for selling heritage products and traditional crafts. The study said that the government issued many measures and decisions to reduce the impact of corona on the tourism sector, but more efforts are required to maintain the strength of the tourism sector.

The government has taken several measures to support the tourism sector and its related sectors, including the provision of a support loan to the aviation sector, the central bank’s decision to provide financing for tourist and hotel establishments, and a six-month delay in loan installments. The procedures also included postponing the payment of the real estate tax on tourist establishments for a period of three months, and issuing subsidies to employees of tourism companies and their employees.

The study said that the current crisis of tourism requires good management and maintenance of workers in this sector in all their categories, support for corporate liquidity, and a review of taxes, fees, and regulations. The study called for including tourism in national and regional economic emergency packages and establishing mechanisms and strategies for managing tourism crises.