Egypt’s tourism industry is currently witnessing a lot of achievements and challenges. Its most notable achievement is its revenue hike by 28.2% during last the Fiscal Year (FY), recording $12.6bn, compared to only $9.8bn in FY 2017-2018, according to the Central Bank of Egypt’s (CBE) balance of payment.
In addition, the UK lifted its ban on Sharm El Sheikh late October after nearly a four-year suspension of flights to Egypt’s Sharm El-Sheikh. The sector also updated its hospitality criteria for Egyptian hotels that has not been updated since 2006 and adopted the Egypt Tourism Reform Program (ETRP) that all the world praise. All that lead international institutions to acknowledge the improvements witnessed in Egypt’s security infrastructure.
On the other hand, Egypt’s tourism sector has some concerns about the British tourism movement in Egypt due to the collapse of travel agency Thomas Cook. Besides, investors have concerns over the customs draft law, the fees imposed on the hotels, the hotels debt to the electricity, water, insurance, and the current investment law.
In light of all these challenges and achievements, Daily News Egypt interviewed, Chairperson of the Egyptian Hotel Association (EHA) Maged Fawzy.
Could we figure out Egypt’s current hotel room capacity? Are there any expansion plans in that regard?
Egypt’s current capacity is 205,000 rooms, and we are targeting to add another 8,000 by the beginning of 2020.
I want to mention that Egypt has about 100,000 rooms under construction, but only 8,000 will be completed and added by the beginning of 2020.
What is the investment value of these new rooms and in what areas will it be opened?
The investment value of these rooms is worth $800m and will be opened in Marsa Allam, Cairo, and Hurghada.
In your opinion, what are the destinations that are in need of larger hotel rooms capacity?
I think Cairo, Luxor, and Aswan need more hotels.
It’s known that EL-Alamein and Ain Sokhna depend more on domestic tourism, what is your plan to promote these places for international tourism?
We receive foreign tourists in El-Alamein in the summer season, but the state is cooperating with the private sector to operate hotels throughout the year, not only in the seasons, nut also through improving the infrastructure and implementing new airports.
Are there areas in Egypt that are suffering from lack of tourists?
Yes, I think Taba and Nuweiba due to the decrease in Russian and British travel, in addition to the events in North Sinai. Now, after the British government removed the ban, and as North Sinai is now more stable and safer, I think tourists will return again to Taba and Nuweiba gradually.
Tell us more about the EHA’s policy to limit hotels’ decline in prices for competitive advantage (burn in prices), does it plan to set a minimum price level? Or will it set an indicative price policy?
We adopted a policy to raise the minimum level of hotel prices, which is not a mandatory pricing policy, but it aims to raise the efficiency of the tourism product. This is through updating the hospitality criteria for Egyptian hotels, the application of high rates of hygiene and occupational safety, in addition to continuous inspection of hotels in order to abide or comply with the procedures.
The continuous inspection will cost the hotel which will be reflected in the higher quality the hotel provides as well as higher prices to compensate the expenses.
Moreover, Egyptian hotels will compete in global markets based on their international classification as we complete the new Egyptian hospitality criteria in coordination with the United Nation’s World Tourism Organisation (UNWTO) and includes environmental, health, and hygiene standards.
Concerning the question of returning back to imposing indicative prices, I think that the experience has proven useless. Implementing the new hospitality criteria, in addition to applying the environmental, health, and hygiene standards will improve services and the touristic product, which will subsequently lead to the increase in prices
How do you control or monitor the hotel’s quality with regards to health, hygiene, and food safety?
The hotel inspection and control sector affiliated to the Ministry of Tourism always sends committees to conduct tours in hotels to ensure occupational safety and health. The latest tour was days ago in Sharm El Sheikh, and the report was good.
Moreover, the EHA has already contracted with Praversk Company to review the hygiene and food safety standards for 103 hotels in Hurghada and El Gouna in October 2018.
The EHA also contracted the Praversk Company to review the health standards for 105 floating hotels operating between Luxor and Aswan. Completing this project, the EHA will contract the company again.
Having said that, the committee or the inspection of the hotels is for consultation, and not for setting penalties against hotels.
What exactly is the inspection committee’s role?
The committee writes its report, sending it to the hotel, then the hotel replies, setting a timetable and deadline for itself to address the problems that were mentioned in
the committee’s report.
Then, after the deadline, the committee visits the hotel again. If the hotel has not met the deadline for solving its problems, it might lose a ranking star. However, if the unresolved problem represents an imminent threat to the life and safety of tourists in the hotel, it may get closed.
On the contrary, if the hotel commits and makes all the required points, the committee awards it with a certificate.
After Thomas Cook’s collapse, a lot of people were having concerns about its partnership with a large number of hotels in Egypt. Was it a partner of a large number of Egyptian Hotels?
Thomas Cook exited all Egyptian hotels three years before it went bankrupt.
Do you think that Thomas Cook’s crisis will force hotels that were heavily dependent on them to decrease their prices for competitive advantage (burn their prices)?
No, I don`t think so. Thomas Cook was working on two major markets, the German and British.
The Germans used to visit the Red Sea, while the British used to visit both the Red Sea and Sharm El Sheikh. With lifting the British flight ban to Sharm El Sheikh, British Tourism will return to South Sinai as a lot of companies are competing to acquire Thomas Cook’s share due to the great demand from the tourists themselves to travel to Egypt. Thus, there will be no gap to force the hotels to burn the prices.
Regarding the new customs draft law, is there any update?
The law controls the customs. It is being reviewed in Parliament and we are attending the discussion sessions. We are waiting for the law to come out.
Notably, the EHA submitted a memorandum containing a proposal to amend the customs law to the Egyptian Tourism Federation (ETF), demanding amendments related to the hotel system.
Meanwhile, the ETF sent a memorandum to the budget committee of the Egyptian parliament on the customs draft law.
Could we know more details about the memorandum that the ETF has finalised for the fees imposed on hotels?
The ETF has finalised a memorandum on the fees imposed on hotels, which are considered exaggerated by about 21 bodies. They are also seen as a burden on investors who demanded the need for a law on the lisenses of tourist establishments like industrial facilities to pump more investments.
The ETF sent the memorandum to the Minister of Tourism and the Prime Minister and we are currently waiting for their response. I want to ensure that the government supports the sector and will not hesitate to implement the investor demands.
Are there any agreements to schedule hotels’ debts for electricity, insurance, and water?
Yes, we have reached an agreement for the scheduling of the hotels’ debts for electricity, insurance, and water for four years since 2018. The owners of the establishments pay the instalments in addition to monthly obligations.
Many hotels closed during the tourism crisis in Egypt, will they reopen again this year, especially after the return to normal rates of the tourism?
This is not a phenomenon; these hotels were closed due to the tourism recession. With the return and restoration of tourist traffic back to Egypt, hotels reopened.
As evidence, over 20 hotels are going to reopen again this year, and most of them are in South Sinai.
How many hotels benefited up until now from the Central Bank of Egypt`s (CBE) initiative to finance hotels?
About 20 floating and fixed hotels in Luxor, Aswan, South Sinai, and the Red Sea have benefited from the CBE’s initiative, taking loans to replace and renovate their hotels. The EHA is assisting its members to facilitate the issuance of papers required to apply for loans.
What do you think about the participation of Egypt in the World Travel Market (WTM), especially after the return of British tourism to Egypt?
It really was one of the best exhibitions. For the first time, it appears in line with Egypt’s position in tourism, where the exhibition’s Egyptian pavilion witnessed a lot of global demand. Besides, we have not seen tour operators asking for flight incentives, due to the ministry’s commitment to pay them on time. Our new hospitality criteria was highly praised.
The pavilion witnessed a great demand from the world media to meet Egypt`s Minister of Tourism, covering the high demand on the Egyptian pavilion. Many countries came and asked us about our experience in the ETRP and in the hospitality criteria to benefit from our experience.
What about reservations for this winter season?
There is a 30% hike in the winter season’s reservations, compared to last year’s winter season.
How many hotels in Egypt use online booking, and what’s the proportion of total online bookings in Egypt?
All hotels operate with the online booking system complying with intentional trends. However, it is difficult to determine how many bookings are made online.
Is the online booking cheaper than the contracting reservation?
The price of the room booked online varies according to the occupancy rate in the hotel. The online booking is always more expensive than the contracting booking methods.
Which countries prefer to book in Egypt online?
England tops the list, followed by European countries in general, and then Arab countries. Egyptians also prefer online booking.
Among the countries that began to prefer online booking was Italy due to its charter flights with Egypt.
I want to explain that the online booking of the hotels also relates to flight bookings. When booking hotels online, it opens another window to book the flights for customers.
What are the challenges that still face the tourism investment in Egypt?
The sector needs a new law as the current law has been implemented since 1973.
We need a unified lisensing law that addresses the problems of the sector, is attractive for investment, and is not hindering tourism growth
The new investment law did not refer to the tourism sector although the sector is labour-intensive, in remote areas, and affects the national income. It is considered a strategic industry, which accounts for 15% of the GDP.
Did the EHA communicate with the Minister of Investment and International Cooperation to discuss this issue?
Yes, investors met with the minister three months ago and demanded that the investment incentives should be applied to tourist investors. In response, the minister promised to study this matter.
The whole world is currently talking about sustainable tourism, how many hotels in Egypt have been operating with the solar power?
up until now, seven hotels have contracted to operate with solar energy companies across Egypt’s governorates.
Is the cost of operating with solar energy higher?
The initial cost is high, but the return on investments is guaranteed. I think within four or five years, the capital is restored to the investor.
Can you tell us more about the Green Star Programme?
It is an environmental certification programme for hotels interested in green tourism applications. The programme is designed to suit the nature of the climate in Egypt and its topography.
The criteria used for the programme was recognised by the Global Sustainable Tourism Council (GSTC).
The number of hotels that have been certified by the Green Star Programme are 79 hotels in 15 tourist cities, containing approximately 22,000 hotel rooms, equivalent to 10% of the total hotel capacity.
Seven hotels are expected to join before the end of 2019, bringing the total number of participating hotels to 86.
What is EHA’s long term strategy?
We will focus on developing the skills of hospitality employees by organising training sessions covering various areas to improve the level of service in Egypt’s hotel industry, in addition to improving hygiene through the new hospitality criteria.
The EHA allocated EGP12m to train 12,000 workers annually in addition to 8,000 workers trained through the training programme funded by the EU, bringing in 20,000 trainees annually.
So far, seven hotels have contracted to operate with solar energy companies across Egypt governors.
Tourism investors met with Minister Nasr three months ago and demanded to apply the investment incentives to tourism investors, and she promised to study this matter.