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NOT FOR SALE
www.amcham.org.eg/bmonthly
OCTOBER 2019
OPEN FOR
TOURISM
The government’s attempts to revive
tourism and address the needs of the
private sector.
ALSO INSIDE
SUSTAINABLE FASHION
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Tatweer Misr, an Egyptian real estate developer established in 2014, has carved its footprint
and positioned itself in the challenging Egyptian real estate industry. This year the company is
celebrating 5 years of excellence, distinction and success. During their relatively short period, they
managed to achieve what they aspired to as delivering value, sustainability and innovative concepts
that are integrated to create value for lifestyle.
Their second driver of success is holding massive expertise, Tatweer
innovation lies at the heart of Tatweer Misr was able to acknowledge the
Misr’s DNA. There is a dominant belief most recent market trends early on
that it’s the unique language through and adopt them in different methods
which they communicate with prospect in all its projects. Moreover, they
stakeholders in all their day to day introduced new and diversified ideas
operations, they believe that they have to the Egyptian real estate sector.
a role towards translating their vision These ideas were clearly reflected in
into architectural excellence while their latest project, Bloomfields, the
building remarkable communities to first college town in Egypt and the
Since its launch, Tatweer Misr has meet today the needs of tomorrow. Middle East which includes the first of
been developing unique projects that In 2016, Tatweer Misr launched their its kind entrepreneurial hub “GEN@
transform the destinations in which coastal project Fouka Bay which was Bloomfields”. Bloomfields is master
they are located; each of their projects sold during the same year. Regardless planned in a way that makes it ever-
is clearly distinctive of its surroundings. of the economic challenges that the evolving based on its inhabitants and
Since the company’s launch, they Egyptian market has witnessed in expectedly, its technologies will remain
have worked on 3 different projects, the past few years, Tatweer Misr still up-to-date, differentiating it from any
each with a different persona: first is managed to deliver almost half of other project for the next 25 years.
their flagship project IL Monte Galala, the first phase of the project before
located on the Galala Mountain in Ain its contractual delivery date. This
Al Sokhna, their second project Fouka all ties back to their strong sense of
Bay, located in the North Coast in Ras El responsibility and keeping up to the
Hekmah and their third is Bloomfields, promises they made to their clients.
located in the heart of Mostakbal City.
Looking back at the reasons behind
the massive success they have
achieved since 2014, we see their core
values that differentiates them in the
market. Tatweer Misr believes in the
importance of teamwork which is not Lastly, in summer 2019 Tatweer Misr
only limited to internal departments started delivering the first phase of
rather, it includes all their external Fouka Bay, homeowners were handed
partners. Such partnerships play a over their units fully furnished and ready
dominant role at Tatweer Misr, whether to move. The beach was fully furnished
it is their local or international partners, Tatweer Misr is always a few steps and equipped with activities and the
every member had a role leading to ahead of the market with the delivery clubhouse was operating under the
units delivery at exceptional standards. of exceptional quality in all their management of a high-end F&B partner
Most prominently is their partnership projects. To be able to maintain world- for all homeowners and their guests to
with Mona Hussein Design House class quality, Tatweer Misr relies on enjoy. True, the past five years marked a
which allowed homeowners to choose partnerships with local and international great success for Tatweer Misr, but this
furnishing based on pre-agreed upon suppliers as well as service providers is the beginning of a series of successful
packages tailored to satisfy every taste. including till date their partnerships events. By Q1 2020, Tatweer Misr will
This enables homeowners to move with Schneider Electric, Orange, Kerten have more reasons to celebrate as they
hassle-free. Hospitality and many others. deliver the first phase of their flagship
As a relatively young company, yet project IL Monte Galala.
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F: 00. 202.33.76.7777OCTOBER 2019
VOLUME 36 | ISSUE 10
Inside
18 Editor�s Note
20 Viewpoint
The Newsroom
22 In Brief
A thumbnail view of the top
monthly news.
24 Cover Story
Reviving tourism
A look at government efforts to
revive tourism, and what the private
sector needs.
40 In Depth
Making sustainability stylish
Rising Egyptian stylists are using
sustainable methods to make
their garments.
44 Investor Focus
�Brand� it and they will come
The Chamber
52 Events
56 Exclusive Offers
60 Media Lite
An irreverent glance
at the press
© Copyright Business Monthly 2018. All rights reserved. No part of this magazine may be reproduced without the prior written consent of the editor.
The opinions expressed in Business Monthly do not necessarily reflect the views of the American Chamber of Commerce in Egypt.
16• Business Monthly - OCTOBER 2019ELEGANT ‘BELLE EPOQUE’ AND A
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CAIROMARRIOTTHOTEL.COM
ARABIC.MARRIOTT.COM/CAIEGEditor’s Note
Director of Publications & Research
Khaled F. Sewelam
Taking Care
Senior Editor
Jacob Wirtschafter
Contributing Editors
T
his month our reporter Adam Skaria explores how four Egyptian clothing Tamer Hafez
Kate Durham
designers are building companies based on the belief that both the planet
and the marketplace are demanding a rethink of fashion that values sus- Consulting Editor
tainability as well as style. Bertil G. Peterson
This is not just a feel-good trend. Textile and apparel already constitute 30 percent of Writers
industrial production in the country, and the government aims to quadruple the sector�s Ola Noureldin
exports by 2025. Adam Skaria
Improved quality in domestic manufacturing has led Egyptians to cut their Senior Art Director
purchases of imported textiles by more than 50 percent in recent years. Nessim N. Hanna
Clothing and its related industries also currently employ about one-third of the
country�s industrial workforce, and the latest government figures show exports Senior Graphic Designer
Emy Emile
worth $1.756 billion from January to July 2019.
However, the growth in the sector comes at an environmental cost. Graphic Designer
With an estimated 15 million pairs of jeans produced monthly, Egypt�s denim industry Verina Maher
uses roughly the same amount of water for each garment that the average citizen needs per Advertising & Business Development Director
day for consumption and hygiene. Amany Kassem
Therefore, it is vital that companies like Cairo-headquartered Eurotex are
employing electronically monitored and controlled water flow, laser, and ozone- Advertising Coordinator
Lamia Seleit
friendly technologies to reduce water consumption in garment manufacturing.
Meanwhile, upstart fashion brands like Saqhoute carve out a niche for themselves by Circulation Coordinator
banking exclusively on eco-friendly materials. Ashraqat Helmy
Meanwhile, as he reported on the new hospitality criteria for Egyptian hotels rolled out Photographers
this year by the tourism ministry, Tamer Hafez found a new urgency in sustainable business Said Abdelmessih
practices.
Conscious efforts like the ones led by Tourism Minister Rania Al-Mashat are not only Production Supervisor
Hany Elias
leading to the reduction of water and energy use at Egypt�s hotels, they�ve also helped the
country to jump nine places in the World Economic Forum�s Travel and Tourism Market Watch Analyst
Competitiveness Index, released just last month. Amr Hussein Elalfy
The WEF placed Egypt first in the Middle East and North Africa region in the field of Chamber News Contacts
environmental sustainability. Nada Abdalla, Azza Sherif,
We at Business Monthly will continue to report on these steps of how both the private Susanne Winkler
and public sectors are taking care of Egypt�s land and its brand.
JACOB DANIEL WIRTSCHAFTER
SENIOR EDITOR
JWirtschafter@amcham.org.eg
U.S. address: 1615 H Street, NW • Washington, D.C. 20062
Please forward your comments or suggestions to the Egypt editorial office:
Business Monthly
American Chamber of Commerce in Egypt
33 Soliman Abaza Street, Dokki 12311 • Cairo • Egypt
Tel: (20-2) 3338-1050 • Fax: (20-2) 3338-0850
E-mail: publications@amcham.org.eg
www.amcham.org.eg/bmonthly
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@BusinessMonthlyEg @BusinessMonthly @BusinessMonthly
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Viewpoint
Transforming the economy is a
journey and never a destination…
O
ver the last few years, it has become customary for the U.S. Chamber of
Commerce�s U.S.-Egypt Business Council �USEBC�, in partnership with
AmCham Egypt and the Egypt-U.S. Business Council, to organize a business
roundtable dinner honoring President Abdel Fatah Al-Sisi on the sidelines of
the annual United Nations General Assembly in New York. This year�s roundtable, hosted
by John Christmann, CEO and president of Apache Corporation and president of the
USEBC, was attended by 30 distinguished business leaders and executives representing some
of the leading U.S. companies in various sectors, who are currently operating, planning to
grow their business and investments, or interested in working in Egypt.
During the dinner, Al-Sisi and his delegation�which included the ministers of foreign
affairs, investment and international cooperation, petroleum and mineral resources, social
solidarity, and health and population�had an extensive discussion about the strategic
partnership and bilateral economic relationship between the U.S. and Egypt. The president
shared the recent developments taking place in Egypt as well as the various opportunities
and potential in the Egyptian market, supported by a stable, inviting and promising business
and investment environment. He also addressed a variety of issues including, but not limited
to, the government�s determination to continue the country�s much-needed economic
reform program and its plan to get additional technical support from the IMF to help Egypt
achieve its structural reforms and enhance growth. Al-Sisi highlighted the progress made on
a number of key issues including social inclusion, oil and gas, healthcare and security. The
feedback from the representatives of corporate America was upbeat and optimistic, with
several companies sharing specific plans and discussions about opportunities to invest in a
variety of sectors including power, water and others.
Also in September, a mini-Doorknock mission was conducted in New York and
Washington D.C., with visits to U.S. Congress members, think tanks, international financial
organizations and others. During these meetings, the overall sentiment was positive and
encouraging regarding Egypt�s progressing economic reforms, which was by far the focus of
the discussions.
Having said all that, it is important to realize that transforming an economy is a journey
and never a destination. Compared to a few years back, Egypt has successfully managed to
put itself on a positive trajectory, but challenges still remain. Looking forward, Egypt must
find a way to turn the country�s macroeconomic improvements into prosperity for its people,
provide a platform for sustainable economic growth, create more employment
opportunities, push to further curb bureaucracy and red-tape, and boost foreign direct
investment, which is still relatively modest except in the oil and gas sector.
So, in a nutshell, the vibes are good, more work lies ahead and the reform journey
continues.
Next month, another viewpoint…
SHERIF KAMEL
President, AmCham Egypt
20• Business Monthly - OCTOBER 2019Everywhere
can be a work
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charging station.
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IN BRIEF
Inflation and interest rates update
Egypt�s inflation eased in August to its lowest level since the and non-alcoholic beverages �6.9 percent versus 9.0 percent
start of 2013, paving the way for what could be the second in July� and housing and utilities �8.2 percent versus 9.8
biggest push to cut interest rates across emerging markets. percent� while it advanced faster for transport �8.9 percent
Egypt�s annual urban consumer price inflation rate versus 8.7 percent�.
declined to 7.5 percent in August, the state-run CAPMAS By the second quarter of 2020, the inflation rate in Egypt
statistics agency said. The July pace was 8.7 percent. is forecast to stand at 7.5 percent and is projected to trend
The Central Bank of Egypt �CBE� showed that annual around 9 percent by the end of 2020.
core inflation, which strips out volatile and regulated items, The depth of easing in Egypt could be second only to Tur-
fell to 4.9 percent in August from 5.9 percent in July. Core key this year and next, according to BNP Paribas SA.
prices saw mild deflation, falling to -0.4 percent compared The CBE cut rates for the second month in a row, after in-
to 0.1 percent growth in July. Inflation was widely expected flation fell further. The overnight deposit and lending rates
to rise in the summer months after the government raised were cut by 100 basis points to 13.25 percent and 14.25 per-
fuel prices by between 16-30 percent in July. cent, respectively. The CBE cut rates by 150 basis points on
A favorable base effect is being touted by analysts to ex- its last Monetary Policy Committee meeting on August 22.
plain the unexpected figures. The �trajectory is for inflation to continue coming down
Egypt is approaching the end of an IMF-backed economic in the second half of the year and for the Central Bank to
reform program that during 2017 saw the annual inflation continue to use that as a window to ease rates,� said
rate rise to 33 percent. The country hiked domestic fuel Jean-Michel Saliba, a London-based economist with Bank
prices in July as part of the terms of the agreement. of America Merrill Lynch.
In August, price increases slowed significantly for food At press time, inflation was 7.5 percent.
Egypt’s annual urban consumer
price inflation rate declined to 7.5
IMF percent in August
EGP
2017 2020
By Q2 2020, inflation rate
Annual inflation rate rose to 33% is forecast to stand at 7.5%
22• Business Monthly - OCTOBER 2019In Brief
Currency appreciation rally
Egypt�s foreign exchange reserves rose to $44.97 billion by the EGP reached an all-time high of 19.8 in December 2016 and a
end of August, from 44.92 billion dollars in July, the Central record low of 3.3 in September 1992.
Bank of Egypt �CBE� said in a statement. The Egyptian Pound is expected to trade at 16.37 by the end
The increase in Egypt�s forex reserves from last month of this quarter, according to Trading Economics global macro
amounted to $53 million. models and analysts� expectations. Looking forward, the EGP
The country has been undergoing a strict three-year eco- is expected to trade at 16.48 in 12 months time.
nomic reform program since late 2016, starting with local cur- By press time, 1 USD traded at 16.27 EGP.
rency floatation to contain dollar shortage followed by austerity
measures, energy subsidy cuts, and tax increases.
The EGP�s liberalization in November 2016 was crucial in ad- Egypt’s foreign exchange reserves
justing the currency�s overvaluation and eliminating severe for- rose to $44.97 billion by the
eign currency �FX� shortages weakening the entire economy. end of August, from 44.92
Until 2018�s end, the EGP�s value remained relatively stable, billion dollars in July, in-
trading between EGP 17.8-18.3 to the USD compared to EGP creasing by $53
8.88 pre-float. The currency began an appreciation rally in 2019, million. In April, the
EGP
peaking at EGP 17.35 in April and averaging EGP 16.82 between USD-EGP hit
E GP
the period covering March through September. The EGP out- its highest
performed most currencies in 2019, Bloomberg says, citing the record in be-
USD-EGP 52-weeks range of 16.29 to 17.99. tween March
Bloomberg ranked the EGP as the second-best performing and September,
currency in 2019 following the Russian RUB, which gained 9.5 trading at 17.345.
percent in the first seven months of the year and outperformed
Bloomberg ranked the EGP as the
the Thai Baht �5.3 percent� and the Philippine Peso �2.8 percent�.
second-best performing currency in
The USD-EGP decreased 0.24 percent to 16.33 on September
2019 following the Russian RUB.
15 from 16.37 in the previous trading session. Historically, the
Egypt’s installed capacity of renewables rise 38 percent in FY18/19
Egypt�s installed capacity of renewable energy rose 38 percent ISES, the government has set renewable energy targets of 20
by the end of fiscal year 2018/19 reaching 1.24 GW, compared percent of the electricity mix by 2022 and 42 percent by 2035.
to 890 MW at the end of 2016, Chairperson of the New and The average growth rate for renewable energy in the primary
Renewable Energy Authority Mohamed El-Khayat said. energy supply reaches 7.3 percent.
The electric power produced by the NREA�s renewable The contribution of renewable energy resources to primary
energy plants increased to about 3.76 billion kWh during the energy production stood at 4 percent in FY 2009/10, mainly
FY2018/19 compared to about 2.82 billion kWh in 2017/18, for from hydro �3 percent� and wind �1 percent�. Their contribution
an increase of 33 percent, El-Khayat added. is expected to reach a total of 8 percent by FY 2021/22 and 14
Egypt�s economic development hinges on the energy sector, percent by FY 2034/35.
which represents 13.1 percent of the overall gross domestic pro- The total installed capacity of renewable energy sources is ex-
duct �GDP�. To meet burgeoning energy demand, the govern- pected to reach 19.2 GW by 2021/22 and increase to 49.5 GW
ment has pursued an energy diversification strategy, known as and 62.6 GW in year 2029/30 and 2034/35, respectively.
the Integrated Sustainable Energy Strategy �ISES� to ensure the Due to declining costs for renewable power technologies,
continuous security and stability of the country�s energy supply increased adaptation is expected to result in a reduction in
until 2035. total energy costs of $900 million annually in 2030, equiv-
This strategy involves stepping up the development of renew- alent to a cost reduction of $7 per megawatt-hour. Ad-
able energy and energy efficiency, in part through vigorous re- ditionally, reductions in external costs from air pollution will
habilitation and maintenance programs in the power sector. bring immense social and health benefits worth as much as
To date, the country�s total installed capacity of renewables $4.7 billion annually in 2030. Investment in renewable
amounts to 3.7 gigawatts �GW�, including 2.8 GW of hydro- energy capacity over the period would have to be raised
power and around 0.9 GW of solar and wind power, according from $2.5 billion per year to $6.5 billion per year with
to Egypt�s 2018 Renewable Energy Outlook. As specified in the accelerated deployment of renewables.
Business Monthly - OCTOBER 2019 •23Cover Story
Restoring Egypt’s tourism sector from the sector. These incoming funds
also help preserve the country�s history,
culture and heritage.�
A
century and a half after Khedive at a press event in September. He sees Even at the worst of the tourism
Ismail Pasha hosted European the project as a crown jewel of a tourism slump, the government stepped up
royalty and financiers to cele- industry returned to its place as a corner- investment in the industry. The new
brate the opening of the Suez Canal, stone of the nation�s economy. museum will cost nearly $1 billion to
Egypt�s leadership is preparing gala Tourism accounts for around 3 percent build, compared to $23.3 billion for the
events to showcase the Grand Egyptian of Egypt�s GDP according to the Central New Suez Canal.
Museum. Bank of Egypt. In 2010, tourist arrivals While the museum is �exhibit A� for
Authorities have moved nearly 50,000 topped 14.5 million, but by the end of last state efforts to make Egypt a more
Pharaonic artifacts to the 120-acre facili- year they were 10.8 million. That, howev- attractive destination, structural reforms
ty scheduled to open in late 2020 and er, was a marked improvement from include new legislation to help unlock
hope 4 million visitors a year will flock to 2016, when only 5.5 million foreigners vis-
the country�s full tourism potential.
the nation�s latest attraction. ited the country.
�Tourism is now the fastest-growing eco-
The state estimates a direct return on The social and political upheaval that
nomic sector in Egypt, and its potential
investment of $840 million, including began in 2011 led to a sharp drop in
to attract foreign currency is the highest,
nearly 6,000 new jobs in construction, tourism revenue from its pre-revolution
fastest and easiest,� Madbouly said at a
transportation and manufacturing with high of $12.5 billion in 2010 to $3.8 billion
press conference in July.
the museum becoming the prime eco- in 2016. Last year, however, revenue
nomic growth engine for the Giza recovered to $11.4 billion.
Plateau. �Tourism has long been vital to Egypt�s
In recovery
�Millions across the world will see the economy,� said Madbouly. �It�s not only Despite its importance, the tourism
opening of the Grand Egyptian Museum, about foreign currency inflows, which fix sector still operates under a law passed
so we are preparing for the ceremony,� government finances. It is also about the in 1973. �It is an ancient law,� says
said Prime Minister Mostafa Madbouly millions of Egyptians who make a living Yousry Abdel Wahab, deputy chair-
man of Saudi Arabia-based Al-Tayyar
24• Business Monthly - OCTOBER 2019Cover Story
RevivingTourism
The government has been working hard to set favorable policies to make Egypt a
tourist-friendly destination as well as reforming the sector after decades of negligence.
That work has been paying off, with tourist arrivals nearly reaching pre-2011 levels.
Hotels investors, however, are concerned that Egypt could suffer a shortage of hotel
rooms if visitors continue to increase at the current pace.
By Tamer Hafez
Travel Group Holdings. �We now face Tourism Reform Program �E-TRP� higher posts,� Al-Mashat said at the
a lot of new, ever-changing threats due announced in December. �In the past, AmCham event. �The success of
to the rise of e-tourism, which opens the ministry was solving problems ad tourism requires people and hardware,
the door to informal businesses.� hoc, rather than creating a strong base which is infrastructure.�
Over the years, only minor changes for tourism to become sustainable,�
have occurred in Egypt�s tourism envi- Al-Mashat said during an AmCham State investment
ronment to make it more tourist- luncheon in December. �E-TRP is our For the current fiscal year, the govern-
friendly, especially historical sites. �I long-term strategy to make tourism ment allocated EGP 1.4 billion for E-
don�t think anything has changed sustainable.� TRP. That will pay for upgrading
since I first came to Egypt in 2008,� According to Al-Mashat, the plan is Terminal 2 at Hurghada International
Sylvia Ramar, a Ukrainian tourist, based on the U.N.�s Sustainable Airport at a cost of EGP 486 million.
wrote in an email. She has visited Development Goals. She stressed that During a July 31 press event, Civil
Egypt every other year since 2008. making tourism sustainable would allow Aviation Minister Younis Al-Masry
�We still have to take a hotel car or the sector to continue to perform well, highlighted a new 4-kilometer runway,
bus to move around, especially if we even if there is significant disruption in better administrative facilities and
are in Cairo or Alexandria. There is the region. �My overarching objective is security upgrades. �Our expansion plan
still no hop-on, hop-off service. Also, for at least one individual in every aims to double capacity to more than
we are still using cash almost every- Egyptian household to work directly or 7.5 million tourists a year,� he said.
where. All these things make our holi- indirectly in tourism,� she says. At the same event, Al-Mashat point-
day a bit inconvenient.� E-TRP has four pillars: institutional ed to ongoing upgrades at all of Egypt�s
and legislative reforms, promotion airports. �It is common for tourists to
Reform plan and marketing, infrastructure and arrive and depart directly to and from
According to Tourism Minister Rania tourism development, as well as catch- beachside resorts,� she said. �That is
Al-Mashat, the government is under- ing up with global tourism trends. why all airports need to meet interna-
taking structural reforms in the sector, �The first step is to restructure the tional standards.� Last month, the
such as the project known as Egypt�s ministry to move skilled juniors to Civil Aviation Ministry announced
Business Monthly - OCTOBER 2019 • 25Cover Story
construction of Terminal 4 at Cairo the Giza governorate is working with �Tourists will likely visit Egypt if they
International Airport to boost capacity several ministries to develop a dedicat- find online services and an abundance
to 30 million arrivals a year. ed zone for hotel facilities and con- of facilitations to make their movement
Other infrastructure upgrades nect the museum with the Pyramids and holiday planning easy.� An online
include increasing the capacity and via an EGP 500 million walkway. presence could also influence decisions
size of the highway system, according Meanwhile, the nearby International on when to travel if the government
to Saad. �There is a particular focus on Sphinx Airport, which opened in uses digital channels to promote annual
upgrading roads and diversifying the January 2019, promises tourists direct, events. �That elevates the status of any
transportation network in the western traffic-free access to the museum. tourist destination,� says Shaer.
part of the North Coast,� he says. Al-Mashat also highlighted her min-
�The plan is to make it more tourist- Standalone efforts istry�s work on creating a scoring system
friendly.� Currently, the area is visited The government has also been for tourist sites that allows visitors to
mostly by locals during the summer. automating various services that target rate and comment on hotels, facilities,
�We want more foreigners, all year tourists, starting with the 2017 launch services and their overall experience.
round,� says Serag el Din Saad, head of of an online visa system covering 46 However, Shaer points out that
the Tourism Development Authority. countries. Other digital services behind those automated services there
He adds that plans are afoot to include reserving train tickets on the must be an �army� of employees with the
make it easier for tourists to visit Egyptian National Railways website. technical and language skills required to
cities such as Aswan, Luxor, Sharm el There also are mobile phone applica- interact with foreigners online.
Sheikh and Hurghada. �We are plan- tions for the railways and post office, On the regulatory side, Al-Mashat
ning it down to how many languages and a tourist guide app developed by issued a directive in October 2018 to
would be on road signs based on the the Egyptian Tourism Authority. unify the financial support the state
most popular nationalities visiting �That digitization strategy is the per- gives to regular airline companies and
each city,� explains Saad. fect way to attract tourists,� says one-off incoming flights. It also
In addition to Tutankhamun�s new Hossam el Shaer, a board member of decrees that the state must provide
home at the Grand Egyptian Museum, the Egyptian Tourism Federation. that �subsidy� to both airline and
26• Business Monthly - OCTOBER 2019Cover Story
travel agents. Additionally, every six Though few details of the draft law
Next step
months the ministry will increase sup- have been released, one highlight is that
The new legislation, however, may not
port to airlines and agents that tourism-related businesses will deal with
be enough to push tourism to the next
increase the number of trips to Egypt a sector-specific one-stop shop.
level. �The most important thing
during that period. Many experts praised the plan for
about the new law is it must license
That program, however, will last such a facility. �To operate in Egypt, we
more companies on the ground,� says
only until April of next year. After need to get different licenses compared
Abdel Wahab. �It can take years to
that, the government will revert to its to other industries. They include
build a hotel, for example. Therefore,
old incentives program that prioritizes approvals from the army and security
the solution is to approve as many
regular flights over one-offs with sub- agencies, among other national and
sidy money going to travel agencies. municipal government agencies,� says touristic investments as possible for
Abou Ali. �That is why we need the one- each one to attract tourists in the short
Fresh start stop shop more than industrial and real term, while at the same time building
Standalone attempts by the state to fix estate investors,�. long-term sustainable capacity.�
specific aspects of the tourism environ- The proposed new law would also The success of government endeav-
ment are not likely to make a recogniz- regulate online-only enterprises, such as ors to increase the number of tourists
able improvement. Accordingly, the Airbnb, that target tourists. Such regu- could affect the rest of the economy by
government is replacing the 1973 lation might include licensing fees and improving overall investor sentiment
tourism law. taxes. �That is a new threat for us,� says toward Egypt. �Tourism booms
It sent an initial draft law to Abdel Wahab of Al-Tayyar Travel Group because tourists talk favorably about
Parliament in February 2018 that is Holdings. �We are not just competing the country. That will create positive
pending approval. �It is time we have a with real-world informal companies. vibes about Egypt and may attract
new law after 46 years,� says Kamel They are only on the internet, where investors in general,� said Madbouly.
Abou Ali, founder of Pickalbatros they have access to more people, but �We have come a long way. But the
Group, which owns 16 hotels and water- regulating them is nearly impossible road toward realizing Egypt�s full
parks in Hurghada and Sharm el Sheikh. under the current legal framework.� tourism potential is even longer.�
Business Monthly - OCTOBER 2019 • 27Cover Story
Fully booked is below the standards of foreign
tourists.�
EGP 228.3 billion �$14 billion� by the
end of 2018, according to a report by
A
Government investment in hotels has Colliers. The plan is to add $4.2 billion
hmad Hafez, 37, the front desk
been chugging along at a relaxed pace rel- in new hotel investments this year.
manager at a well-known
ative to other projects, such as the New That is 25 percent more than what the
Sharm el Sheikh resort, has
Administrative Capital. Likewise, private government injected into the sector
noticed a new pattern in his booking
developers are taking their time when it the previous year. By 2022, the govern-
system since the start of year: Room
comes to expanding investments mainly ment wants to add 55,121 hotel rooms
occupancy rises dramatically for a few
due to insufficient communication with in 67 locations nationwide.
days, only to drop significantly in sub-
the government regarding their short- The Holding Company for Tourism
sequent weeks. �It seems that every
and long-term plans. �Regarding commu- and Hotels �HOTAC� is the govern-
time there is an event in the city, occu-
nication with the Ministry �of Tourism�, ment-owned company established in
pancy rises dramatically,� he says, �then
I think it could be better,� says General 1991 with a mandate to attract interna-
returns to below-average afterward.�
Hossam el Helw, chairman of Safa Manager Ibrahim Nashaat of Holiday tional chains to manage historic and
Tours, on the other hand, has seen Inn Cairo City Stars. purpose-built facilities. It owns 6,000
high occupancy rates throughout the �It is good that you have more rooms in 24 hotels out of more than
year, especially in Alexandria. �There tourists wanting to visit Egypt,� says 108,000 hotel rooms in the country,
is a definite lack of �decent� hotel Helw. �However, where would they according to CEIC Data�s 2016 report.
rooms for tourists from Europe,� he stay if there aren�t enough suitable The Egyptian General Co. for
says. �In Alexandria, for example, we hotel rooms.� Tourism & Hotels �EGOTH� is a
need four times the number of rooms wholly owned subsidiary of HOTAC
we have now.� A balanced industry tasked with attracting hotel chains to
That has been a prevailing trend The hotel business in Egypt is a mix of manage state-owned facilities with
across most other governorates. government, domestic and interna- infrastructure that meets internation-
�When we find rooms, they are likely tional investments. al standards. One example is Khedive
too costly,� says Helw, �or the property State investments in hotels reached Ismail Palace in Zamalek, which is
28• Business Monthly - OCTOBER 2019Cover Story
now the Cairo Marriott Hotel. than 90 percent of Egypt�s hotel chains that manage these facilities are
Another is Mena House, adjacent to rooms. Private developers buy an exist- not on the Egyptian stock exchange,
the Giza Pyramids, which Marriott ing property to convert to a hotel or therefore they are not obliged to dis-
also manages for EGOTH. build one from scratch. They would close financial details.
HOTAC owns six other subsidiaries. then contract with an international
However, only one operates in the hotel hotel chain to manage their properties. State support
industry: El Maamoura Co. for The contract is entirely negotiable, During the difficult years following the
Construction & Tourism Development. with no limitation mandates by the 2011 and 2013 revolutions, the govern-
The rest include entertainment busi- state. The JW Marriott along the Ring ment continued to support some pri-
nesses such as Misr Co. for Sound and Road is in the Mirage City complex, vate and state-owned hotels. �The gov-
Light, and several department stores which Group Ghabbour built and cur- ernment has helped several hotels in
such as Sednaoui, Benzion and Salon rently owns. Renaissance Group man- certain locations that foreign tourists
Vert, among others. ages another smaller hotel in the com- stopped visiting,� says Nashaat. That
The holding company also has plex. Group Ghabbour owns four included hotels on the Red Sea coast
minority shares in four real estate other hotels in Cairo and Hurghada, all and in Sinai, all of which are owned by
development businesses. Three of managed by international chains. private developers. Also, some proper-
them invest in Upper Egypt while one That modus operandi gives interna- ties in Downtown Cairo received gov-
focuses on Alexandria. HOTAC also tional hotel chains the opportunity to ernment help. �The facilitations includ-
has a 12.5 percent stake in The select the best profit model and low- ed deferred payment of debt install-
Egyptian Fund for Financing & ers entry and exit barriers for global ments and utility bills,� says Nashaat.
Investment, which helps raise money brands and property owners. Either A year ago, the government created an
for hotel development during the con- party could end the contract and pay a assistance fund for struggling hotels. The
struction phase. fine or wait for its expiration, then fund can either fully procure hard-hit
However, Nashaat of Holiday Inn seek new partners if they wish to con- facilities, assume management control
claims the private sector dominates tinue their operations in the country. until the return of profitability or par-
the hotel market since they own more Most private hotel developers and tially acquire the property. In the last
Business Monthly - OCTOBER 2019 • 29Cover Story
scenario, the hotel�s management must Alexandria hit 98 percent between New Government push
use the money to pay off liabilities. Year�s celebrations and Coptic HOTAC�s Chairwoman Mervat
Since November 2018, the govern- Christmas. �It is good for properties that Hataba takes a steady approach when
ment has been in negotiations with are achieving 90 percent occupancy,� he it comes to her portfolio of properties.
third-party investors and state-owned says. �For us, not so much.� �We capitalized on the low tourist
banks to increase contributions to the Meanwhile, Cairo and cities that are arrivals in the past couple of years by
assistance fund. almost solely dependent on tourism such renovating the facilities we own,� she
as Hurghada and Sharm el Sheikh face a says, adding that EGP 2 billion was
Rooms in demand different problem. �The number of hotel allocated to upgrade historic hotels.
Many in the hospitality industry say it�s rooms is fine if we are talking about grad- A significant renovation project is
time to double down on hotel invest- ual annual increases,� says Nashaat. under way at the company�s 8,000-
ments. �All international hotel chains are �However, we are hitting the limit of square-meter Aziza Fahmy Palace in
already in Egypt,� says Tewfik El-Kady, room availability when there is a confer- Alexandria. �We have finally cleared
Steigenberger Middle East managing ence or well-publicized event.� He recalls the final legal hurdles with the palace�s
director. �That by itself is a testament to that last year there were several back-to- heirs,� says Hataba. �Now we will start
how much tourists want to visit the back conferences throughout the capital our renovation work. We aim to make
country.� that brought properties to capacity. �In it like the Cairo Marriott Hotel.�
Since the devaluation of the pound in the hotel industry, you can�t invest to However, that will take time as
2016, value-minded travelers brought a meet the demands of a handful of annual HOTAC is still in the design phase of
surge of business to hotel chains as spikes in room occupancy,� he says. the project.
tourist arrivals increased from 2.3 million On the other hand, El-Kady believes In the New Administrative Capital,
at the end of that year to 11.3 million in that locations such as Sharm el Sheikh the company is erecting a purpose-
2018. But now, Helw of Safa Tours strug- and Hurghada have a surplus of rooms. built hotel on a 10,000 square-meter
gles to accommodate budget-conscious �In certain areas, we should stop building site and maintains plots in Sharm el
clients. According to an April 2019 article more hotels �...� to maintain adequate Sheikh�s Ras Gamila quarter. �We are
in Egypt Today, hotel occupancy in rates,� he says. not auctioning or assigning any of
30• Business Monthly - OCTOBER 2019Cover Story
them until tourism stabilizes,� says Thinking outside the city � shops and cafes will be open for
Hataba. �The plan is to contract 50 An investment opportunity for hotel business. He is also optimistic there
percent of those plots to a private developers and international chains is will be more paved roads between the
hotel developer under a 50-year that Egypt�s hotels are only in a hand- Suez Canal and the rest of Sinai to
usufruct agreement. That developer ful of cities, according to Helw. And make excursions more comfortable,
also would be responsible for securing the industry�s horizons widen as the safer and quicker. Additionally, the air-
a hotel-management company.� state builds new towns and roads. port in Ras Sudr, which is under con-
On a regulatory level, the Ministry Ayoub Adly, Remco for Tourism struction, will open up the middle of
of Tourism announced it is working Investment CEO, cites the Suez Canal Sinai to tourists.
with the U.N.�s World Tourism Economic Zone. �I have already sub- Another prime location for hotel
Organization and the Egyptian Hotel mitted a request for a plot in the out- developers and chains is Sheikh Zayed
Association to upgrade hotel classifi- lets district. That location will have and Sixth October City. Such facilities
cation criteria. The last revision was in high foot traffic given that there would mainly cater to businesses. �We
2006. should be many shops selling at factory will manage a property in Sheikh
The changes are unlikely to affect prices,� he says. �I have seen in other Zayed that is currently under con-
existing rankings. Having already seen countries how busy such hotels are.� struction,� says Nashaat. The facility
a draft of the proposed new criteria, Adly aims to cater to shoppers com- overlooks the main highway connect-
Nashaat thinks his Nasr City property ing from other governorates or tourists ing Cairo with Sixth October City and
will keep its five-star rating. who would typically stay one or two sits between two commercial and
New in the classification criteria is nights. Other visitors Adly hopes to business complexes.
the inclusion of eco-lodges, attract are sailors and cruise-ship pas- Additionally, the new facility is close
dahabeyas, heritage hotels, apartment sengers who have one or two nights for to Sphinx Airport, the Giza Pyramids
hotels and environmental safari shopping or excursions into Sinai. and Grand Egyptian Museum, which
camps. �Overall, that new classifica- The site is currently barren land. will also make the hotel, expected to
tion will be good for business,� says However, Adly hopes that seven years open in 2021, a hot spot for tourists. In
Nashaat. from now � when he opens his hotel coming few years, Nashaat anticipates
Business Monthly - OCTOBER 2019 • 31Cover Story
exponential growth in the number of looking the Red Sea and one in Luxor. enue in dollars transferred to the parent
tourists visiting the Giza Plateau, Chairman Amr Attia of Misr Hotels company dropped significantly. �Our
given how much the government is Co., which owns the facility that Ritz profits have been growing every year in
investing there. Carlton manages in Downtown Cairo, pounds. However, in terms of dollars we
Another location Nashaat finds thinks converting historic buildings to still didn�t reach pre-float levels. That is
attractive for future hotels is the cor- hotels is a viable proposition for both because we can�t charge the same room
porate district surrounding the Al international hospitality chains and rates in dollars as hotels outside Egypt.�
Manara Conference Center in New the government. �I think it is the Another challenge is finding the
Cairo. Tenth of Ramadan City is fastest way to increase the country�s right caliber employees to work in
another prime location. �I was sur- hotel inventory,� he says. �The govern- hospitality. �That is a constant chal-
prised when I heard that a hotel ment needs only to contract a foreign lenge that is getting harder to tackle.
opened there recently,� says Nashaat. company to upgrade the building�s You get fresh graduates with no back-
�However, it makes sense given how infrastructure to meet international ground in hospitality. You train them,
many factories are there, selling hotel standards.� and then they decide if this industry is
nationwide and abroad. That hotel is for them or not,� says Nashaat, of
where buyers and sellers stay as they Challenging times Holiday Inn. �Also, maintaining
do deals with the factories in the city.� Despite those opportunities and Egypt�s hygiene levels is difficult, especially
El-Kady of Steigenberger Middle substantial tourism potential, interna- among low-level staff. You need to
East sees opportunities in the Western tional hotel chains are likely to be cau- have strict checks and procedures.
Desert. �The best destinations to build tious about investing in the country. Those things raise our costs.�
new hotels are in Siwa, El Kharga and For them, the devaluation of the cur- For El Kady, the problems he faces
El Dakhla oases,� he says. rency hurt their business. �Between 2014 include finishing facilities that meet
Steigenberger Middle East currently and 2018, Holiday Inn City Stars has international standards including infra-
manages six properties in Cairo, been meeting and exceeding target rev- structure for guest services, civil defense
Alexandria, Taba, Damietta and Luxor, enues in the local currency,� says and firefighting capabilities, and general
as well as five franchised hotels over- Nashaat. The problem is that the rev- health and safety standards.
32• Business Monthly - OCTOBER 2019Cover Story
Another quandary facing hoteliers is a
price war that some local operators wage
to attract tourists. For them, cutting
Marketing Egypt
F
prices usually attracts enough tourists to
ollowers of Rania Al-Mashat ranked 36 to 70,� according to the
cover their losses. Lower rates, however,
on social media typically are report, and was the �most
compromise hygiene levels and impact
inundated with new posts improved� MENA country since
the quality of food and beverages,
every few hours encouraging foreign- last year.
among other things. �It is a war I would
ers to visit Egypt. The World Travel The efforts are part of the Egypt
never enter,� says Nashaat. and Tourism Council recognized that Tourism Reform Program �E-TRP�,
Also, Egypt should set a seasonally outreach by honoring the tourism which Al-Mashat announced last year.
balanced calendar of well-publicized minister with its Global Champion �Our plan to showcase contemporary
events to create more consistent occu- Award 2019. �This annual award is Egypt involves several dimensions �…�
pancy rates, notes Nashaat. usually granted in appreciation of the a modern digital and competitive pro-
Accordingly, international hotel chains efforts exerted by some countries motion campaign, diversifying rev-
can use those figures when planning facing challenges,� according to a enue streams and increasing the sec-
expansion in Egypt. WTTC statement. �This is the first tor�s resilience abroad,� Al-Mashat
Finally, the government could share time �...� for a country or a minister said at an AmCham event in
more details about its tourism plans. in the Middle East to be granted such December.
That information includes targeted an award.� To reach the program�s full poten-
markets and what types of tourists are In September, the World tial, the government needs to work
priorities. �It would make my life easi- Economic Forum�s Travel and with the private sector more closely.
er if the state does that,� says Helw. Tourism Competitiveness Index According to Moody el Shaer of the
�That way, I would be able to talk to saw Egypt�s ranking jump from 74 Chambers of Tour Operators, an
the right international tour operators to 65 on its list of most attractive industry body, the key is a unified mes-
and offer them the right packages in tourist destinations. �Egypt had the sage involving the public and private
line with the government�s strategies.� best improvement among countries sectors.
Business Monthly - OCTOBER 2019 • 33Cover Story
For Elhamy El Zayat, former head interested. �This is �branding by the United Kingdom last year. �The
of the Egyptian Tourism destination.� It replaces the previ- Egyptian corner had a virtual reality
Federation, marketing Egypt for ous �branding by location,�� she stand where visitors could walk
tourists has long used traditional said. The result of that shift in around several of Egypt�s best-
methods. �There would be casual thinking was that Hermes and known sites.�
adverts on international channels Chanel both used pharaonic sym- The last part of the development
such as CNN. Or a poster of bols and the pyramids to launch a strategy is marketing Egypt�s envi-
Tutankhamun in Times Square in prime jewelry line. ronmental sustainability efforts.
New York,� he says. �That needed Another strategy for Al-Mashat is �Giving a �Green Certification� to
to change, and with Al-Mashat that tailoring social media messages to hotels raises their profile abroad,�
is what is happening.� region-specific platforms. �China has said Al-Mashat. �Those societies pri-
At the heart of Al-Mashat�s strat- its own Facebook, Twitter, and social oritize visiting places that support
egy, E-TRP is �people-to-people� media platforms. Accordingly, we are efforts to protect the environment.�
marketing. �We want to showcase on them with messages Chinese During the AmCham event, Al-
our people, including artists, on the tourists care about,� Al-Mashat said. Mashat highlighted the Grand
international stage,� she said. �With �We are currently targeting Southeast Egyptian Museum as a �marketing
enough interaction between locals Asia as part of our diversification event unto itself.� For her, the plan
and foreigners, you create a strong efforts.� for an extravagant opening ceremo-
relationship between both coun- Another approach is to improve ny will be a type of traditional mar-
tries, regardless of politics. That is how the government and tourism keting approach that the ministry
how you create sustainable businesses present themselves at must not neglect despite newer
tourism.� international exhibitions and strategies.
Accordingly, the Ministry of shows. �The key is not participating
Tourism has focused on specific in every exhibition; It is about what Private view
destinations and activities, target- is different about your stand,� said Some private sector players have con-
ing foreigners most likely to be Al-Mashat, citing a conference in cerns. El Zayat worries about the
34• Business Monthly - OCTOBER 2019Cover Story
plan�s flexibility. �When talking about change in how the Ministry of El Zayat and El Shaer agree about
tourism, the plan must be flexible Tourism operates. �We need to give the importance of going to interna-
enough to change every year or if each tourism destination or �gover- tional exhibitions to showcase Egypt.
there is a major development in the norate� a separate budget with a man- However, Remon Naguib, an interna-
country,� he says. date to increase revenues,� he says. tional marketing professor at the
He, however, is more concerned �They would develop specific mes- Faculty of Tourism and Hotels Helwan
about what�s next. �It must be a logi- sages, the strategies to deliver it and University, warns that exhibitors must
cal and connected step to the work the types of tourists they want.� Luxor not get carried away. �There must be a
that we are doing right now to attract and Aswan, for instance, would attract focus surrounding what the exhibition
culture tourists,� he explains, adding very different tourists from Sharm el wants to highlight,� he says. �We can�t,
that the state must not spend too Sheikh and Hurghada. and shouldn�t, aim to showcase every
much time on historical tourism. Many in the industry say the min- type of tourism Egypt has.�
�The state must promote all types of istry should adopt a similar approach
tourism with close attention to each if when dealing with international travel Next step
it wants to reach the country�s full agencies. �Pick two or three per coun- Looking ahead, it is still unclear what
potential.� try, then task each with attracting a the ministry will do after the dust set-
Two other factors will ultimately certain number of tourists in return tles on the opening of the Grand
dictate the Ministry of Tourism�s core for incentives. Accordingly, the min- Egyptian Museum in 2020 and the
strategies and policies. �One is the istry�s strategies at that time would development of the Giza Plateau.
type and location of tourists; the other dictate the stimulus package,� says El El Shaer believes marketing Egypt�s
is affordability,� says El Zayat. �Those Shaer. �The key to this strategy is to more modern culture would be the
will ultimately determine the types of eliminate any bureaucracy when reim- perfect next step. �I believe that
tourism and hotel investments the bursing those agents. That is because celebrity tourism could have a great
government wants.� those agencies would wield a lot of impact abroad,� says El Shaer. �It is
El Shaer of the Chambers of Tour power over the tourists� decisions the fastest way to build an image for a
Operators hopes to see a fundamental regarding where to travel.� country.� n
Business Monthly - OCTOBER 2019 • 35At a Glance
In Partnership with
Tourism and hotels sector in Egypt
Tourist arrivals
More tourists are coming to Egypt... ...staying longer
Million The average tourist stays for 10.8 nights in
16 13.8 Egypt as per FY 2017/18 figures, up from 7.9
14 11.9 12.2
11.0
12 10.2 9.8 nights in FY 2016/17, yet still below a peak
10 8.0
8
6.9 6.6 of 12.3 nights in FY 2012/13.
6
4 Source: CAPMAS
2
0 ...and spending more
The average tourist spends USD 95.6
per night in Egypt as per FY 2017/18
In FY 2017/18, the number of tourist arrivals to Egypt saw a 48
figures, compared to USD 86 per night in
percent year-on-year improvement reaching 9.8 million
FY 2016/17 and USD 85 per night in FY
tourists, compared to 6.6 million in FY 2016/17, gradually
2009/10.
approaching FY 2009/10 level of 13.8 million tourists.
Source: Central Bank of Egypt (CBE) and CAPMAS Source: Central Bank of Egypt (CBE) and CAPMAS
Tourists’ profiles
Most tourists come from Europe... By transport method
Air: 88% Land: 9.2% Sea: 2.8%
Europe: Middle East: Africa: Asia & the Americas:
59% 22% 7% Pacific: 7% 4% Source: CAPMAS
A change in country of origin dynamics is evident, whereby Reasons for visiting
German tourists currently represent a third of total tourists
in Egypt, as opposed to Russian tourists who represented
around 30 percent in pre-2011 figures. Egypt has also been at-
tracting tourists from non-traditional markets such as Ukraine
�currently the second highest�. Entertainment Conferences or Treatment Culture Other
Source: Central Bank of Egypt (CBE) and CAPMAS (FY 2017/18) and a statement 96.5% education 0.9% 0.8% 0.6% 1.2%
by Chairman of the German-Arab Chamber of Industry and Commerce Source: CAPMAS
Tourism revenues
Tourism revenues (USD bn) 124 percent recovery
USD bn
FY 2017/18 saw a 124 percent recovery in tourism receipts which
14
11.6 recorded $9.8 billion �13 percent of total current account re-
12 10.6
10 9.4 9.8 9.8 9.4 ceipts�, compared to USD 4.4 billion a year earlier and a peak
8 7.4 7.3 of $11.6 billion in FY 2009/10.
6 5.1
4.4
4
3.8 Moreover, tourism receipts improved by 30 percent year-on-
2 year during the first nine months of FY 2018/19 �July to March
0 2018/19� to stand at $9.4 billion. Dcode EFC projects the full
year figure to surpass FY 2009/10 levels.
Source: Central Bank of Egypt (CBE)
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