A detailed plan was unveiled at the Egypt Economic Development Conference at Sharm El Sheikh in mid-March, to revive the tourism sector in Egypt battered by four years of turmoil and instability. The plan is bolstered by a $1 billion sector focused private equity fund underwritten by Cairo Financial Holding.
The uprising that toppled President Hosni Mubarak in 2011 ago hit the economy hard, discouraging investors and tourists and slashing economic growth. Egypt hopes the conference will project an image of stability and help attract back billions of much needed dollars in tourism receipts.
Tourism revenues in the country have dropped by 55 percent over the past four years, but the return of political stability coupled with a focus on developing higher-value added tourism activities, has encouraged the launch of the Papyrus private equity fund to support the development of tourism projects that will have a significant economic impact. Khaled Ramy, who was appointed minister of tourism in a cabinet reshuffle earlier this month noted: “Egypt is privileged to have an amazing dual inheritance of historical monuments without parallel and a beautiful natural environment. In the last few years, political instability has hit the tourism sector hard, but the fundamentals remain and we are confident that within a few years we can not only meet, but exceed our previous highs. Private sector investment is crucial to this recovery ensuring that both our standards and facilities are among the best in the world.”
With year round sunshine, a rich cultural heritage and a unique geographical position, Egypt has the potential to restore its position among prime tourist destinations. The Ministry of Tourism’s objective is to reach pre-crisis tourism revenue by 2016 of $11.6 billion and to set the sector on an upward and fast-growing trend. The government is targeting $15 billion of inflows by 2018.
Specifically the plan involves increasing average spending per stay of leisure travelers, fully exploiting the nation’s potential as a major cultural destination, which currently accounts for only 10 percent of total tourism spending, and boosting business visitors to a benchmark level of peer nations. The government’s strategy to reinvigorate the sector focuses on six main policy actions including stronger marketing, improved accessibility by air to a greater number of Egypt’s tourist hubs, and improving linkages with other destinations.
The strategy also calls for extensive training programmes to boost productivity, increasing tourists’ average spend per night through fostering tourism SME development, and fast-track the development of new projects with simplified approval procedures and an improved land management framework.
In addition to the $1 billion Papyrus Fund, the government announced that it is offering areas of land in prime locations for investment in the tourism sector including a sizeable plot on the Red Sea coast at Marsa Alam; a large land packet of 8.15 million in Gamsha Bay for the development of a leisure complex; and a development opportunity in Sahl Hasheesh as a co-investor with the Egyptian Tourism Development Company (ETDCO). Other opportunities include Egyptian Resorts Company S.A.E. (ERC) which is open to explore potential cooperation with investors or developers on its Waterfront Festival World project, while the Al Kharafi Group is open to a strategic equity investor to develop the 30km² leisure complex at Port Ghalib under a partnership model.