CAIRO Feb 24 Tarek el-Sayyed had no customers
at his gift shop in a 14th-century Cairo market where he sat
contemplating a difficult future.
Instead of buses ferrying tourists to the Khan el-Khalili
market, the plaza outside Sayyed's shop on Monday was filled
with police officers, a day after a bomb attack in the area
killed a French teenager and wounded at least 20 people.
"Of course it will affect us," he said in front of his shop
that sells replicas of ancient Egyptian artefacts. "At this time
of the day buses would be bringing tourists here ... but today
things are as you can see."
Tourism in Egypt was already feeling the pinch of the global
financial crisis as tourists have stayed home.
Across the country, hotel revenues and occupancy rates have
fallen, forcing some establishments to dismiss workers or close,
according to analysts and industry sources.
The prospect of rising unemployment is daunting for a
government that depends on tourism to provide direct and
indirect jobs for 12.3 percent of the workforce and to
contribute about 7 percent of gross domestic product.
Analysts say unemployment could fuel the same type of social
unrest, protests and labour strikes, that Egypt has seen over
the past three years when fast economic growth pushed inflation
to 24 percent, a 16-year-high.
"We can see that a lot of hotels are laying off employees,"
said Daniyah Darwish, vice president of equity research at
investment bank EFG-Hermes, which forecasts the number of
tourists would fall by 18 percent in 2009 to 10.5 million.
Occupancy rates are also expected to drop below 50 percent,
Egypt is home to some of the world's most famous historical
sites, such as the Pyramids of Giza. It also boasts sandy
beaches and spectacular coral reefs along the Red Sea coast. The
majority of visitors come from European countries such as
Russia, Britain, Germany and Italy.
In Khan el-Khalili, where narrow alleys teem with shops
selling everything from jewellery to leather products and belly
dancing costumes, merchants said business has been slow in 2009.
"We are used to haggling, but people used to buy stuff in
the end," said Ibrahim Mahmoud, who like Sayyed had no customers
in his shop the morning after the bomb attack. "Now they haggle
but (many) ... leave without buying anything."
Vassili Tawadros, who runs the Ding Dong bazaar near the
Egyptian Museum in downtown Cairo, said his business had slowed
by about 40 percent since the financial crisis started to hit
Europe. He is also worried about the impact of the bomb attack.
"We work our whole business with tourists. These things
happen and it's very bad for our business and for Egypt."
EURO, POUND HIT
Analysts said Sunday's bomb attack, the first deadly attack
on tourists in Egypt since 2006, was unsophisticated and
unlikely to signal a wide resurgence of Islamist militancy.
Bomb and gun attacks that have hit Cairo sporadically over
the years have often been linked to Nile Valley militants. But
the largest two such Islamist militant groups in Egypt halted
attacks after the killing of dozens of foreign tourists at a
pharaonic temple in Luxor in 1997 caused a public outcry.
That attack drove tourist arrivals down by 13 percent in
1998, investment bank CI Capital said in a report. The industry
soon recovered and militant attacks elsewhere in the world
caused the impact of instability on Egypt "to lessen and to have
a shorter time span," the bank added.
Tourism executives say the financial slowdown has hit the
resort towns on the Red Sea, such as Sharm El-Sheikh, Hurghada
and Marsa Alam, owing to the decline in the value of the euro,
the Russian rouble and the pound sterling against the Egyptian
Elhamy El-Zayat, chairman of Egyptian travel group Emeco,
said one Russian agency that used to bring 20,000 customers a
week to the country "was now down to 1,000 customers a week".
"When the number of Russian tourists dropped there was panic
among the hoteliers," he said.
In Marsa Alam, which depends on Russian, British and Italian
tourists, three hotels shut down because they were unable to
cover their expenses, said Ahmed Balba', head of the Hotels
Association of South Sinai.
He said hotel revenues have also slumped because of the
decline in the value of European currencies.
EFG-Hermes expects revenue from tourism to decline by 15
percent to $9.2 billion in the fiscal year that ends in June and
by a further 15 percent in the following year.
Some tourists, however, said that with a treasure of
antiquities, such as the golden mask of the Pharaoh Tutankhamen,
Egypt remains an attractive and affordable destination despite
the financial crisis and security threats.
"This is a historical place, that's why we are here," said
Raghu Ramaraju, a 35-year-old Indian who works for an oil
company in the United Arab Emirates. "Everybody ... wants to see
(For analysis: Egypt bomb unlikely to signal resurgence of
militancy, click on [ID:nLN428437]; For a factbox on previous
attacks in Egypt, click on [ID:nLN213772])
(Writing by Alaa Shahine; Editing by Janet Lawrence)