Wednesday, 8 March 2023

What the tourism sector needs in terms of infrastructure changes, according to industry players

Tourism players have their say about the infrastructure upgrades needed for the industry to take flight: Last week, the Cabinet Information and Decision Support Center (IDSC) held a forum to discuss measures and initiatives to boost the tourism industry, bringing together 16 investors, hotel owners, academics, tourism and aviation companies, and government representatives, according to a cabinet statement. In addition to discussing the government’s ongoing work to develop the sector, the forum saw the participants offer up proposals to attract more tourists and increase efficiency, including traditional and digital infrastructure upgrades.

In case you needed reminding about how vital tourism is for Egypt’s economy: Egypt is looking to invest some USD 30 bn into tourism to grow the sector by 25-30% annually between now and 2028. The government has an ambitious plan to increase tourism by up to 30% every year for the next five years, targeting 30 mn tourists to the country by 2028, more than double the number that visited the country in 2019. The government also wants to more than triple annual tourism revenues over the next three years to USD 30 bn a year, up from almost USD 9 bn last year and USD 11-12 bn currently.

Hotels need upgrading and expansion: The Tourism Ministry is looking to raise the overall capacity of hotels across Egypt, according to the head of the Tourism Ministry’s hotel division Mohamed Amer. There are currently 1,210 establishments with a combined 212.7k rooms in the country, Amer said, without specifying whether the ministry has a target for the number of rooms or hotels, or where this additional capacity is earmarked. The government is also working on improving infrastructure at tourist destinations outside the main metropolitan hubs, including eco-tourism spots such as Siwa. Infrastructure upgrades include raising internet speeds to be on par with international upgrades, Amer said.

We could also benefit from capacity expansions geared towards more diverse travelers, suggested Amr Sedky, head of the Creative Group for Tourism and Hotels. Investors would be keen on building out resorts and establishments for wellness, medical, and cultural tourism, Sedky said, pointing out that there are north of 1.3k sites across the country that can be developed specifically for wellness tourism. Sedky called on the government to develop an investment map for these sites to help guide investment decisions and diversify the country’s tourism industry beyond beach tourism.

However, that capacity expansion can’t go the distance alone: In Marsa Alam, for example, there are several vacant rooms, likely because of how some services are priced, Tarek Shalaby, vice chairman of the Tourism Investors Association in Marsa Alam said. Shalaby called for a more structured framework to address the issue of unregulated pricing.

There’s also consensus that the industry needs to up its digital infrastructure game: Several forum participants proposed various digital platforms to consolidate tourism-related procedures and data, including setting up a single unified electronic platform for tourism through which travelers can book airline tickets, hotels, and other services or activities. This type of platform would streamline the process for tourists and could help the government reel in more revenues, suggested Samia Sami, head of the Central Administration for Tourism Companies. The platform could also help the government crack down on unofficial platforms operating in the industry and redirect revenues to the formal economy, which would also widen the government’s tax base, Sami suggested.

Egypt could also give its medical tourism a boost by creating a digital platform that would link prospective patients from abroad with service providers in Egypt, suggested Dalia Hashem, founder of the Circle Care, which facilitates medical tourism in Egypt.

Digitizing would help create transparency and guide future policy and investment decisions: The Central Bank of Egypt, the tourism and planning ministries, and state census bureau CAPMAS should coordinate more closely to have unified, regularly updated data made available to track the tourism industry’s performance, said Cairo University Center for Economic and Financial Research and Studies Director Adela Ragab. Having this consolidated data would go a long way to guiding policies, including which markets to target for tourism promotion campaigns, Ragab suggested. The Central Bank of Egypt is presently the only state-affiliated entity that publishes official data on tourism revenues.

Some also want to see investment-related infrastructure tacked onto tourism destinations: Along with promoting the development of hotels and other wellness establishments in the country, Sedky suggested setting up business infrastructure in tourism hotspots like Nuweiba, where he believes an economic freezone for SMEs could be an attractive pull for businesses. The government is currently looking at a proposal to set up tourism freezones that would give investors certain privileges, including tax cuts and other exemptions, for a specific period of time to help draw in investor interest, Assistant Tourism Minister for Financial Affairs and Investment Ehab Salem said.

Your top infrastructure stories for the week:

  • More electricity for Jordan? Egypt could increase the capacity of its electricity line with Jordan to up to 3 GW from 550 MW currently.
  • One step closer to Tarboul Industrial City: Real estate developer GV Developments and Qalaa Holdings’ Taqa Arabia have signed an agreement to set up a company to build the infrastructure at the Tarboul Industrial City in Giza
  • Egypt x Copenhagen Infrastructure Partners: Representatives from the Danish infrastructure investor met Planning Minister Hala El Saeed to discuss green investment opportunities in Egypt. (Statement)
  • The Electricity Ministry received a nearly completed draft of the national hydrogen strategy and is working to complete it. The government is aiming to publish the strategy before the beginning of Ramadan at the end of March, sources told us last month.
  • A fresh World Bank grant to tackle waste: The World Bank will grant the government’s Greater Cairo pollution reduction project a USD 9.1 mn grant to improve the management of e-waste and healthcare waste disposal systems.

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