Egypt Tourism Report Q2 2008

Tourism Overview According to official sources, foreign tourist arrivals totalled 9.8mn in 2007, a relatively buoyant increase of 8% year-on-year (y-o-y). This was in line with BMI's earlier forecast and represents the strongest growth rate since 2004. The tourism sector is likely to have been buoyed by the strength of economic growth in key source markets - particularly the eurozone and the UK - and the weakness of the Egyptian pound against the euro. Moreover, the hospitality sector is likely to have experienced one of most favourable outturns in recent years (in terms of growth rates), with BMI estimating the total number of tourist nights at around 97mn in 2007.

Bird Flu Update Since our last report, the number of deaths and the number of cases of human infection from the H5N1 bird flu virus have increased slightly in Egypt. The total number of human deaths from bird flu in the country is now 19 out of a total of 43 known human infections - the largest number outside of Asia.

Forecast Scenario We remain very optimistic regarding Egypt's economic prospects, following the release of very strong data for FY06/07; we are forecasting only a modest slowdown in 2008. In spite of a worsening global climate, Egypt remains one of the most robust growth stories in the region, and in fact we have revised up our 2008 real GDP growth forecast from 5.9% to 6.7%, on the back of last year's stellar performance.

Ongoing domestic momentum, investor confidence and a solid outlook for exports all bode well, and only the high base effect and cyclical factors will cause the growth rate to slow over the forecast period. We see growth slowing to a still healthy 4.5% in 2012.

BMI expects growth in foreign tourist arrivals to slow somewhat in the short term, largely due to weaker economic conditions in key source markets, particularly the eurozone and the UK. As regards the UK, the global credit crunch has taken its toll on the economy and the key financial services industry, but we expect growth to bounce back in 2009 to 2.1% from 1.7% in 2008 (after an estimated 3.1% last year). The latest core view for the German economy is that real GDP growth is forecast to slow to 2.1% in 2008 following an estimated 2.6% in the previous year. BMI have also revised down growth forecasts for the eurozone economy to 1.6% in 2008 and 2.0% in 2009, from 2.3% and 2.1% respectively. Added to this, the forecast strength of the Egyptian pound against the US dollar and, more importantly, the euro, over the coming years could erode some of the country's competitiveness as a tourist destination.

Hilton Hilton Hotels Corporation (HHC) announced at the end of last year that it anticipates doubling its portfolio in the Middle East and Africa over the next five years. Among the new hotels, Luxor's first Worldwide Resort is scheduled to open in October 2008 in Egypt with the new-look 235-room Hilton Luxor Resort & Spa. This comes in the wake of the re-opening in 2007 of the 400-room Hilton Taba Resort & Nelson Village on Egypt's Sinai coast.

Egypt Tourism Industry SWOT