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					PART II
THE TOURISM SECTOR IN EGYPT: MARKET DEVELOPMENTS
Egypt has a tourism market share of approximately 25% in the Middle East region and                     Tourism is the highest single export
around 1% of the global tourism market. Tourism is the highest single export earner                    earner in the Egyptian economy with
                                                                                                          ITR reaching $5.3 billion in 2004.
in the Egyptian economy. Tourism receipts reached $5,260 million in value in 2004,
accounting for 22% of Egypt’s total exports of goods and services. If only exports of
services are considered, then this share rises to 39%.15 In addition, tourism is a major
contributor to the economy (directly and indirectly) in terms of its significant per-
centage of GDP and employment, amounting to 11.5% and 15%, respectively.
Approximately 17% of total capital investment in Egypt is in the tourism sector.16

In 2004, the travel and tourism sector in Egypt is estimated to have generated $12.8
billion in economic activity, both directly and indirectly. This ranks the Egyptian trav-
el and tourism market 45th globally. Egypt jumps to 28th place if travel and tourism
performance is measured by the value of export earnings instead. The sector is thus
fairing well globally, with most indicators ranked among the top 50 countries. The
sector’s performance stands out much better on a regional scale. In terms of growth in
demand for tourism in 2004, the country ranked 14th globally and is the second high-
est in the region, after Tunisia. This signifies the high growth potential of tourism in
Egypt.17

                                                   TABLE II.1
                 COMPARISON OF EGYPT’S TRAVEL & TOURISM SECTOR WITH REGIONAL COMPETITORS (2004)




Source: Constructed from WTTC, Egypt: Travel & Tourism Forging Ahead, 2004.

Egypt has been affected to various degrees by all of the major international develop-
ments over the past three years, both positively and negatively. The net impact, how-
ever, has been positive. Consequently, the Egyptian tourism market grew by 10% over
the three-year period 2000 – 2003.18 This is 10 times the world’s growth compared to
only 3 times higher during the preceding three-years (1997 – 2000). Despite its high
share of 20% of ITA to the Middle East, Egypt experienced below average regional

15
     The Economist Intelligence Unit, Country Report – Egypt 2003, August 2004, p. 31.
16
     El-Zayat, Elhamy, Chairman, Egyptian Tourism Federation (ETF), Chairman and CEO, EMECO
     Travel, Interview, February 2005.
17
     WTTC, The 2004 Travel and Tourism Economic Research "Egypt Travel and Tourism Forging
     Ahead", 2004, p. 4.
18
     Ministry of Tourism, The Central Department of Information and Decision Support System, Tourism
     in Figures, 2003, p. 15.




                                                                                                               AmCham BSAC 2005                8
2. M ARKET S EGMENTATION : D EVELOPMENTS                                      IN   D EMAND
These developments involve the changing demand of the various tourism generating
markets for Egypt as a whole and for its various tourist destinations, the variations of
the reasons to visit the country, and the shifting modes of travel.

2.1 G ROWTH PATTERNS                  OF   T OURISM G ENERATING M ARKETS

The European market still constitutes the majority share of 70% of ITA in 2003, of                                             Western and Southern Europe is the
which the lion’s share goes to Western and Southern Europe (54%). The Arab region                                               top tourism generating region for
                                                                                                                                 Egypt accounting for 54% of ITA.
as well still maintains its position as the second largest tourism generating market to
Egypt, but with a higher share than in 2000. The Asia/Pacific region climbs one notch
to replace the Americas as a tourism-generating destination and occupies third place
compared to its position in 2000.
                                               FIGURE II.4
                                     ITA BY GENERATING REGION (2003)




Source: Constructed from figures of Ministry of Tourism, The Central Department of Information and Decision Support System,
Tourism in Figures, 2003, p. 10.



It is worth noting that the pattern of growth of the tourism generating destinations dur-
ing 2000 – 2003 compared to its respective growth during 1997 – 2000 differs from
one region to another. Extended positive and even faster growth was realized coming
from Eastern Europe and the Arab countries compared to the growth achieved during
1997 –2000, in which Eastern Europe recorded more than double the average annual
growth rate, while the Arab countries registered 11 times higher growth. Africa shows
an increase in demand of 5.6% compared to the negative growth realized during 1997
– 2000. The negative downward slope of growth experienced by the remaining
regions emphasizes the "trade-down" effect and the negative impact of international
events on the Egyptian tourism sector.

This growth pattern is also reflected in the tourist nights as demonstrated in Figure II.6                                      Italy is the top tourism generating
below, in which the impact was much higher for the upward sloping markets and                                                 market for Egypt accounting for 17%
                                                                                                                                                             of ITA.
lower for the regions that experienced negative growth rates in terms of their ITA.

As for the top 15 generating markets, Italy is the top tourism generating market for
Egypt accounting for 17% of ITA, followed by Germany with a 15% market share.
The U.S. market share has fallen – since the 9/11 attacks – reaching only 2.7% in
2003.



                                                                                                                                      AmCham BSAC 2005                 12

				
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