Exchange rate boost for Egypt tourism

Exchange rate liberalisation in Egypt has revitalised the tourism sector, drawing greater foreign and Arab investments by offering opportunities to leverage currency fluctuations and potentially higher returns.

Factors like improved infrastructure, currency devaluation, enhanced security, and the easing of pandemic restrictions have collectively contributed to the sector's resurgence, making it an increasingly attractive prospect for both investors and tourists.

Growing Attraction of Egypt's Tourism Sector for Foreign and Arab Investors

The Egyptian tourism sector has become increasingly enticing for both foreign and Arab investors, primarily fueled by the decision to float the Egyptian pound against the US dollar. 

This strategic move has unlocked the sector's potential to harness currency fluctuations, domestic tourism, and future investment opportunities. 

Foreign and Arab investors are drawn to the prospect of benefiting from favourable exchange rates, making investments in Egypt's tourism industry more appealing and potentially lucrative.

Recovery of Egypt's Tourism Sector in 2021

Egypt's tourism sector exhibited a notable resurgence after grappling with severe setbacks caused by the COVID-19 pandemic and the Russian-Ukrainian conflict. Tourist arrivals experienced a remarkable year-on-year growth of 117.5%, reaching a total of 8 million visitors. 

This marked recovery followed a sharp decline of 71.8% in 2020, attributed to stringent pandemic-related travel restrictions. The rebound in 2021 signified a positive shift in the industry's fortunes, offering renewed hope for its revival.

Emaar Properties' Expanding Investments in Egypt's Tourism Sector

The chairman of Emaar Properties, has expressed his optimistic outlook on Egypt's tourism sector, recognizing its significant growth potential. 

Emaar's commitment to doubling its investments in the sector, raising the stakes, underscores its confidence in Egypt's tourism prospects. 

Notably, Egypt has emerged as Emaar's third-largest market, trailing only the UAE and India, with the expectation that it will ascend to the position of the second-largest market in the near future. 

Emaar's substantial investments reflect the belief in the abundant opportunities that Egypt's tourism industry has to offer, solidifying its commitment to contributing to the sector's growth and development.

• Emaar Misr's Ambitious Hotel Development Plans

Emaar Misr, a subsidiary of the prominent Emaar Properties, has unveiled ambitious plans for Egypt's tourism sector. The company aims to undertake a substantial project involving the development of ten hotels, totaling approximately 3,000 rooms, strategically situated in Egypt's North Coast region.

Rove Al Marjan Island 2024

This endeavour represents a considerable investment commitment amounting to EGP 26.3 billion. Emaar Misr's ambitious hotel development initiative underscores its commitment to enhancing the country's hospitality infrastructure and capitalising on the burgeoning tourism opportunities in Egypt.

Positive Projections for Egypt's Tourism Revenues

Encouraging forecasts from the Fitch Solutions Research Unit paint a promising picture for Egypt's tourism sector. It anticipates a continued upswing in tourist arrivals, projecting an impressive 11.6% year-on-year increase, resulting in 13.1 million visitors for the year 2023, compared to 11.7 million in 2022. 

• High Demand from Foreign Investors in Egypt's Tourism Sector

Recognizing the significant potential of Egypt's tourism sector, the non-executive chairman of Prime Holding Company for Financial Investments, highlights a noticeable surge in interest from foreign investors. 

This heightened enthusiasm from international investors underscores the industry's increasing attractiveness and potential for substantial growth in the coming years. Egypt's burgeoning tourism sector has become a focal point for foreign investment, reflecting the sector's resilience and appeal on a global scale.

• Booming Hotel Occupancy Rates

The tourism industry in Egypt has witnessed a surge in hotel occupancy rates, driven by various factors. Notably, currency devaluation has made the country more cost-effective for tourists, while improved infrastructure has enhanced the overall visitor experience. 

These combined factors have led to rising hotel occupancy rates, with destinations like Hurghada and Cairo experiencing particularly high levels of occupancy, further solidifying Egypt's position as an attractive tourism hub.

• Positive Impact on Companies in the Tourism Sector

Egypt's flourishing tourism sector has generated positive ripple effects on companies operating within or affiliated with the industry. This growth, surpassing 118% and 5.4%, respectively, has been attributed to the recovery of tourism to pre-pandemic levels and an increase in room prices. 

These trends underscore how the resurgence of Egypt's tourism sector has bolstered the financial performance of companies associated with it, fostering a positive economic ecosystem.

• Orascom Development's Growth and Profitability Projections

Orascom Development Egypt, a prominent player in the country's tourism landscape, anticipates robust growth in its tourism sector revenues. Projections indicate an impressive annual growth rate of 28% over a four-year period. 

Concurrently, the company aims to achieve an average profit margin of 30% during this period. To mitigate the impact of inflationary pressures, Orascom plans to implement strategic measures, including raising real estate selling prices, hotel room rates, and rental prices. 

FAQS

What is exchange rate liberalisation in Egypt?

Exchange rate liberalisation in Egypt refers to the government's decision to allow the Egyptian pound (EGP) to float freely against other currencies, particularly the US dollar. This means that the exchange rate is determined by market forces, rather than being fixed or tightly controlled by the government.

How has exchange rate liberalisation impacted Egypt's tourism sector?

Exchange rate liberalisation has had a positive impact on Egypt's tourism sector. It has made Egypt a more attractive destination for foreign and Arab investors because it allows them to take advantage of currency fluctuations and potentially higher returns on their investments.

Why is exchange rate liberalisation attractive to foreign investors in the tourism sector?

Exchange rate liberalisation can be attractive to foreign investors in the tourism sector for several reasons. It allows them to benefit from a more competitive exchange rate, potentially increasing the value of their investments. 

How has the tourism sector in Egypt performed following exchange rate liberalisation?

Following exchange rate liberalisation, the tourism sector in Egypt started to recover gradually from the impact of the COVID-19 pandemic and other external factors. Tourist arrivals increased significantly, and the sector saw a resurgence in investments and growth.

What are the key factors contributing to the growth of Egypt's tourism sector after exchange rate liberalisation?

Several factors have contributed to the growth of Egypt's tourism sector after exchange rate liberalisation. These include currency devaluation, improved infrastructure, the end of the COVID-19 pandemic, and enhanced security measures, all of which have attracted more tourists and investors.

What is the role of foreign investors like Emaar Properties in Egypt's tourism sector after exchange rate liberalisation?

Foreign investors, such as Emaar Properties, have increased their investments in Egypt's tourism sector after exchange rate liberalisation. They see the potential for significant returns on their investments due to the favourable economic conditions and the country's attractiveness to tourists.