Egypt Pulse

Will Thomas Cook's collapse have long-term impact on Egypt's tourism sector?

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Article Summary
Egypt's tourist industry was just getting back on its feet when Thomas Cook collapsed, producing more uncertainty in the sector.

Egypt’s struggling tourism sector is assessing the impact of the collapse last week of the British travel firm Thomas Cook, which brings some quarter million tourists to the country every year.

Thomas Cook, the world’s oldest travel firm, ran hotels, resorts and airlines for 19 million travelers a year in 16 countries. On Sept. 22, the heavily indebted company met lenders and creditors in London to reach a last-ditch deal to keep the company afloat. The efforts failed, and the company collapsed the next day.

Hundreds of thousands of holidaymakers around the globe were stranded, including 50,000 in Greece, 4,500 in Tunisia and 8,000 in Turkey. Thomas Cook operator Blue Sky Group said that 1,600 tourists were stranded at the Red Sea resort of Hurghada.

In Egypt's tourism sector, many experts believe that the negative impact will be short term, as other agencies — mainly German and British — will quickly fill the gap left by Thomas Cook.

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“The collapse of a leading company like Thomas Cook will inevitably affect tourism to Egypt, but this will be temporary,” Magdi Selim, former under secretary of Egypt’s Ministry of Tourism, told Al-Monitor, referring to the cancelling of 25,000 reservations for April 2020, according to Blue Sky Group.

Thomas Cook brought tourists to the country’s Red Sea resorts of Hurghada and Marsa Alam, said Bassem Halaka, president of the Travel Agents Trade Union.

Halaka said that a short-term slowdown in tourist arrivals from Britain could be expected, especially to Sharm el-Sheikh in southern Sinai, as well as Hurghada and Marsa Alam.

“Thomas Cook used to operate 22 weekly tours to Hurghada," he said. "That has stopped after the company’s bankruptcy.”

Selim explained that while Thomas Cook brought approximately 250,000 tourists to Egypt a year, this market would inevitably be snatched up by other tour agencies.

Halaka agreed, saying that it would take “up to two months” for other operators to supersede Thomas Cook in Egypt. “A number of German and British companies have already started talks with Egyptian companies to fill in the space,” he said, without naming the firms.

“The collapse has caused some confusion here. But the overall impact won’t last for long,” Halaka said, citing a growing demand for vacations along the Red Sea.

In March, Thomas Cook said it would add some 400,000 Chinese and Russian tourists to its booking list for the Red Sea resorts in 2019. The independent daily newspaper, al-Masry al-Youm, quoted the company’s agent in Egypt, Sayed El-Gabry, stating that Thomas Cook operated 104 charter flights monthly to the Red Sea resorts.

Egyptian tourism has suffered serious setback since the 2011 Arab Spring, only to be compounded by the 2016 crash of the Russian Airbus A321 in the Sinai Peninsula that killed 224 people. “Tourism depends on other key factors like the security situation in Egypt and the [Middle East] region as a whole,” Selim said.

Minister of Tourism Rania al-Mashat told Bloomberg that Thomas Cook’s bankruptcy will affect Egypt. Yet she said that Egypt did not solely rely on British tourists, as the country has worked hard to diversify its tourism markets.

Selim agreed, saying that the highest number of tourists came from Russia. “Russian tourists top the list, followed by Germany and Britain,” he said. “France, Italy and Poland follow.”

Mashat estimates that tourism makes up 15% of Egypt's gross domestic product.

The tourism industry is one of Egypt's top hard currency earners along with revenue from the Suez Canal and remittances from expatriate Egyptians. The country’s tourism revenue doubled to $11.4 billion in 2018, compared to $7.6 billion the previous year,aAl-Borsa news portal reported April 7.

Egypt's tourism industry showed signs of recovery in 2017, as the number of tourists rose to 8.3 million, up from 5.4 million in 2016, data from the state-run Central Agency for Public Mobilization and Statistics (CAPMAS) showed. Tourists totaled 9.8 million in 2018, according to a Finance Ministry statement

But this is still below the country’s tourism peak in 2010, with 14.7 million tourists, according to CAPMAS.

The United Nations World Tourism Organization (UNWTO) said in March that Egypt “enjoyed a continued strong rebound, however, with results still pending for the second half of [2019].”

According to UNWTO, roughly half of international arrivals to Egypt, a major coastal and cultural Mediterranean destination, come from Europe.

“Egypt has seen large inbound flows from Germany and other European source markets,” the Madrid-based organization said.

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Found in: Tourism

Ahmed Elleithy is an Egyptian reporter and financial columnist who has been writing for various local and international newspapers and news portals since 2004. 

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