Egypt Tourism
As the site of one of the oldest civilizations, Egypt held many
unique attractions for tourists. In addition, the country has some
of the finest beaches on the Mediterranean, modern cities, an
attractive climate, moderate prices for services, and a reputation
for hospitality to foreign visitors.
Whereas tourism was not an exogenous resource to the extent
that oil or remittances were, it had been affected by politics and
external developments in which Egypt had little say. The number of
tourists reached a peak of 578,734 in 1966 before the June 1967
War. The number dropped sharply for several years afterward and
then began to rebound. The figure in 1972 was 541,000, and it
increased steadily thereafter. The only exception was in 1986 when
the number fell to about 1.3 million from about 1.5 million in the
preceding year. The decrease was attributed to the hijacking of the
Italian liner, the Achille Lauro, toward the end of 1985;
security police riots in Cairo in February 1986; and the United
States air raid on Libya in April 1986. The growth rate in numbers
of tourists arriving in Egypt between 1975 and 1985 was a
respec;
table 6.7 percent per annum. In 1988 the minister of tourism
anticipated that about 2 million tourists would visit Egypt that
year.
The nationality composition of tourists fluctuated. The main
groups were Arabs and OECD nationals. Between 1975 and 1980, the
major increase came from OECD countries. Sadat's separate peace
accord with Israel discouraged Arabs from spending time in Egypt.
Between 1980 and 1984, the annual growth rate of tourists from both
groups was approximately the same, 5.5 percent. Since 1978 the
number of Arabs has averaged 80 percent of the number of OECD
citizens.
Tourism earnings were difficult to trace because earnings
fluctuated while the number of tourists kept rising. Economic and
statistical reasons accounted for these difficulties. After 1982,
income from EgyptAir, the national airline, was moved to nonfactor
services, causing tourist receipts to seem lower in 1983 and 1985
than they were in 1979. Furthermore, the increase in the number of
average tourist nights spent in the country did not necessarily
correspond to the number of visitors. The value of the Egyptian
pound also continued to depreciate, dropping by about 30 percent
against the dollar in 1986 and adding another discrepancy to the
accounts. Finally, tourists preferred to exchange their money in
the free market, with its higher exchange rate, rather than in the
official market. As a result, the records did not reflect actual
income, which was believed to be much higher. Tourism income had
risen fairly steadily, and was forecast to reach about £E1.17
billion in 1988, placing it next to the Suez Canal as a source of
foreign exchange, or fourth among exogenous resources.
In the 1980s, the government initiated various measures to
attract tourists and encourage them to use official exchange
channels. It intensified marketing efforts and added tourist
offices to its diplomatic missions in key countries. Tourist sites
were developed in such places as the Sinai Desert. Since 1985 the
minister of tourism had sought to privatize hotel management and to
improve EgyptAir services. Encouraged by both the potential rise in
tourism and privatization, several foreign companies won large
contracts to build new and varied types of tourist centers. For
example, in 1990 an Algerian investment group was completing a
US$120-million development project on 1.2 million square meters at
Al Ghardaqah on the Red Sea. In the late 1980s, applications for
permits to establish floating hotels on the Nile surged.
To lure tourists into exchanging their foreign currency through
its banks, the government lowered the official tourist value of the
Egyptian pound vis-à-vis the United States dollar. For example, the
tourist rate rose from £E0.83 = US$1 to £E1.12 to the United States
dollar in March 1984. In January 1985 it went to a flexible rate
that stood at £E1.25 to the United States dollar in the first half
of 1986. Analysts generally thought that the tourist sector, given
appropriate policies and incentives, could sustain rapid growth.
In sum, although petroleum, remittances, the Suez Canal, and
tourism were crucial resources to Egypt's economy and balance of
payments, their long-term potential was limited. Oil prices
fluctuated, and Egypt could deplete its exportable oil within
twenty to thirty years. The growth of remittances and Suez Canal
revenues was likely to be moderate, and although tourism could
achieve high growth rates, it had a ceiling. Economists, therefore,
stressed that sustained economic growth and development required
the expansion and increasing productivity of the country's own
commodity-producing sectors, especially industry and agriculture.
Data as of December 1990
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