The Operation of Tourism Industry - Report Example

Name: Tutor: Title: Operation of Tourism industry Within Egypt Institute: Date: Introduction Tourism is among the most essential sectors in Egypt’s economy. The cumulative trends and patterns indicate international receipts increased by an estimated 8.2 percent annually in the last decade alone (Sahar & Swinscoe, 2000). The country remains an important destination for people in the Middle East, Africa and Europe, something that has evolved since ancient times. At the beginning of 19th century, Napoleon’s invasion of Egypt designed an increased interest in Egyptology; this marked the foundation for the modern tourism industry in this country. The country has varied celebrated tourist attractions. Ranging from millennia-old monuments in which Nile Valley is world’s famous. Primary among them are pyramids and the Great Sphinx situated at Gaza, the Abu Simbel shrines that are south of Aswan and the Karnak Temple complex, gorge of the Kings among other tourist attraction. In Egypt, Cairo too boasts of the Cairo museum and the mosque commonly known to the Egyptian as the Mohammed Ali Pasha and the coastal areas of Sinai Peninsula. For many years tourism destination in Egypt has remained popular, and receiving a massive frequent visitors to their sites (Scranton, 2007). In Egypt tourism is one pillar that has received wide support from government. The Egyptian economy was mainly based on agriculture. Following the revolution, the government directed its efforts to the tourism industry to conform to evolution of the age. The Egyptian government invited foreign investments, through a well established outward looking economic policy. In the policy Egypt developed connection, and a great number of facilities to Arabs and foreign investors, creating a free zone for investments. One of the sectors which benefited from the economic policy and encouragement for investments is the tourism sector. In 2000, the tourism sector registered about 5.5 million foreign tourists arrivals, the estimates further reveals of the total 5.5 M tourists, 3.8 million visitors came from Europe. The receipts indicate a revenue generation of about $ 4.3 billion. Total rooms available were estimated to be 113,611 in hotels and 227, 222 beds, more than 73% of the available rooms were occupied in that year. Furthermore, the estimated average cost of staying in Cairo on a daily basis was $ 167; according to the U S government estimates the figure varies slightly when visiting other major cities in Egypt, around Cairo. By 2008, more than 12.8 tourists visited Egypt, providing revenue that is estimated to add up to nearly $ 11 billion. The tourism sector employs an estimated 12% of the total Egyptian workforce (Sahar & Swinscoe, 2000). Tourism and Transport sector contribution to the Economy The transport sector plays a major role in the tourism industry in the country. The sector is faced with diverse challenges that range from security, climate among others. The country’s tourism sector depends on the available transport modes, which are Air transport and railway. Passports and Visas are required for the foreign visitors, except natives of the Middle East countries. Transport by either plane or ship has no requirement of obtaining visas. There are isolated cases where travelers native to most of the African countries, are required to have a test of both yellow fever and Cholera (Organization for Economic co-operation and Development, 2010). Egypt has nine international airports serving all of its country’s major cities. Cairo international airport is the main gateway to Egypt, located15 miles in the northeast of the city. Cairo’s three terminals receive flights from major world cities that include those in North America, Europe, Africa and Asian Countries. The airport terminals are served by bus, while numerous taxis run to the city and the surrounding hotels at reasonable price. For a more comfortable alternative, Limousines are available for that service within the capital city. Other airports like the Luxor International airport, is remarkably popular and serves the Nile valley, the terminal purposefully serves as a tourist gateway for people heading to tourist sites in the region. Currently, the two updated terminals serve both foreign and domestic flights. For tourism industry air transport in Egypt boasts high occupancy rates as earlier indicated above 73% occupancy rate in 2000 estimates. The figure compared to other modes like transport, is more than double, further more air transport centrality covers costs involving its infrastructure. Hence, increased tourism boasts economic growth, through indirect contribution made from taxation measures in the country (Scranton 2007). Table below gives a statistical data on international tourist arrivals in Egypt in 1999-2004 Source: Worlds Travel and Tourism Council, 1997 Role of Tourism in the Egyptian Economy Basing on the records given by the national Accounts data, tourism is reflected to have contributed in the service sector in hotels and restaurants, in the results tourism industry accounts for only 1.1 – 1.8 percent of the GDP, and further contributes a 0.9 % of the total employment in the Egyptian economy. The whole definition of this figure, base on tourism revenue that only includes hotel and restaurants services Barbara (2003). Looking at the result it might give bias information as it concerns benefits that are generated through tourism in this country. The figures grossly undermine the effects of the foreign tourism contributions. According to Sahas & Swinscoe, (2000), estimates foreign tourist spending to be between 30% - 40% on their total spending on hotels and restaurants, the 60% to 70 % is then filtered to other different sector such as recreation services, transportation among others. This can be based on expenditure on other wide range of goods and services namely transportation, cultural activities offered, purchases made by tourist, income generated from recreational facilities naming just but a few. Although it might be important to use the statistics, their contexts perspective is inadequate hence, underestimates tourism significant role in the national economy. While there is reasonably detailed information on tourist arrival, nationalities, spending and so forth. On the contrary, there is limited information that accounts for tourism contribution of this sector in offering job opportunity, and its general income. As argued by Scranton (2007), there are two technique employed in assessing the impact of tourism on the economy. This are recent measures that involves developing Tourism Satellite Accounts (TSA),while the second initiative concerns the use of input and the output tables while conducting an analysis, commonly known as the Economic impact Analysis (EIA). The two systems are designed to develop a feasible large data base. Using these systems the results obtained indicates that the quantitative tourists’ spending by far exceeds the previous commonly held 1% of the GDP. Basing on the calculation, the direct impact inflicted by foreign tourists spending has an aggregate of about $ 3.6 billion as per the 1999 results. This represented 4.4 % contribution to the grand Egyptian GDP. International Tourism The World Travel and Tourism Council (WTTC) in collaboration with the Egyptian Tourism Federation (ERF), worked on integrated possible adoption of international policies by the Egyptian government, the policies objectives aimed at liberalization of air transport policies, primarily for the Egypt’s travel and tourism sector, and its impacts to the national economy. The two institutions made attempts in assessing the likely, direct and indirect economical benefits that are associated with such policies. The policy analysis assumed significant and tactical role for the travel and Tourism industry in the country (Oxford Business Group, 2007). The integration of the two focused on implementing the government objectives aimed at improving the international tourists’ arrivals. Analyzing the current civil aviation framework, an estimated 80% of the total travel to Egypt uses air transport. The study shows that Egypt airlines accounts for the 19% of the total international passage traffic and less than 61% of domestic traffic in the year 2004.although the case may differ when it concerns international visitors using charter carriers. Given the country’s geography and dispersed location tourist areas in existence, together with concerns over the security issues, it remains evident that air transport remains the preferred option by the tourists. Increasing of services offered at the airline tunnels. Moreover, recent developments in the aviation business, created policies that resulted in low-cost airlines services and subsequent responses of national flag carriers and charter airlines. This forced immediate changes in the role and policies regulating air transport organs. The end results were indicated through optimizing Egypt’s national tourism, on both domestic and international market, and further contribute to national economic growth (Worlds Travel and Tourism Council, 1997). The table below gives estimated passenger traffic throughout at Egypt’s main International and Domestic airports. International Domestic Airlines Passengers % share Passengers % share Foreign 13,112,504 73.7 673,218 12.3 Scheduled 5,941,940 33.4 - - Charter 7,170,560 40.3 673,218 12.3 Egypt Air 3,399,823 19.1 3,341,387 60.8 Scheduled 3,091,966 17.4 2,811,780 51.2 Charter 307,857 1.7 529,607 9.6 Other Egyptian 1,264,629 7.2 1,478,007 26.9 Schedule 13,352 0.1 - - Charter 1,264,629 7.1 1,478,007 26.9 Total 17,790,308 100 5,492,612 100 Source: Worlds Travel and Tourism Council, 1997 According to arguments made by Barbara (2003), the Egyptian private sector, as represented in the ETF. It is evident that Egypt’s private sector long term competiveness as a tourism destination. Increased sustainable growth in both its travel and tourism industry, as the sector no longer depends only on investments made in expansion of infrastructure, tourism promotions, overseas marketing, increased quality of the human resource or even flexible exchange rates, but will also benefit from existence of viable, competitive airline operating environment creating a possible international visitors travel in their desired tourism destinations, within the country. It is within this framework that WTTC designed its mission in raising awareness on the both social and economic contribution of tourism through travel tourism. The organ incorporated government policies as an initiative of unlocking the industry’s potential in creating job opportunities while generating prosperity in Egypt and on the global scene. During the study, objectives of WTTC has estimated the quantitative impact and identified benefits expected in the reviewed aviation policies and airline services regulatory framework for Egypt’s travel and tourism industry, whose benefits further translates to the improved economy (Haven-Tang, 2005). In addition, liberalization of existing joint agreements and part of the restrictive provisions of the existing bilateral, which partly limiting capacity assign a second Egyptian airline on most heavily traveled routes. Adoption of the policies created a more open and competitive inclusive airline operations, hence ending of Egyptian air monopoly. Something that was mostly, witnessed on the domestic routes. According to Hara (2008), an initiative policy in allowing private investors to provide competitive services on Egypt’s major sector hiked the travel and tourism sector in Egypt, further increasing the vital contribution on which the industry adds to the country’s wealth and employment sector. Tourism along with other sectors in Egypt such as the information technology is strongly expected to lead economic activity, with increased growth in job rates, for about 1.5 times compared to any other sector. Regarding tourism export earnings, tourism remains the world’s leading export earner. This action translates to a better economy. Furthermore, the foreign currency receipts from international tourism in 1998 reached $439 billion, the largest sum to be reached compared to any supply service or product such as petroleum items, textile or even motor vehicles (Wahab, 1997). Evaluating reports on Travel and tourism implementation policies by Egyptian government made in 1999. It remains quite clear, that the current regulatory framework and operating local authority among other government organs remained responsive. The Egyptian authorities currently have maintained a consistently keen tourism and travel sector, while adopting strategies of importance and major it’s priority in delivering quality. These can well be explained in the increased investment in the tourism infrastructure, creating new resorts, implementing of the safety and security measures and international marketing reinforcement and adoption of promotional activities (The Central Bank of Egypt, 2007). The policy accounts for growth of international visitors and tourism revenues in the period from 2000 – 2004. Egypt’s tourism growth has been modest in comparison to other competitors such as Turkey, Bulgaria, and Lebanon among others. On the contrary, the Egyptian government has done little in helping country’s Travel and Tourism in achieving its best growth potential. Nevertheless, Egyptian current regime have finally recognized the importance of regional liberalization, and initiated development of economic relations while increasing overseas investments and tourism from Middle East and other Arab countries. Current financial credit numbers indicates that tourism is becoming the most important source of foreign currency, and its contribution to the country’s economy. Through evaluating different tourism contribution both on the private and government sectors, that range from employment, national tourist sites, and tourism expenditure on goods and services spending on .The sector is said to be responsible for a bout 28% of Egypt’s four major sources of receipts. As indicated before in 1998-1999, the tourism sector is reported to have generated revenue of up to $ 3.2 billion an equivalent of 29% of the grand total of the service export and 37% of the non-factor service export for the same period. The implications finding further identifies the sectors ability in enhancing businesses both inside and out of tourism industry to strategically plan their activities. Not forgetting the information on foreign tourist arrival and expenditures. That is by improving assessment of foreign tourism’s linkages to other sectors. Therefore, firms can better predict their needs in utilizing their opportunities while possibly avoiding immediate setbacks. Bibliography Barbara, I & Foud, I. (2003). An Economic Geography. London: I.B.Tauris. Council, W. T. (1997). Travel and Tourism. London: Pentice publishsers. Organisation for Economic Cooparation and Development. (2010). OECD Tourism Trends and Policies 2010. Paris: OECD Publishing. Centol Bank of Egypt. (2007). Economic Bulletin and Annual Report. Cairo: Central Bank of Egypt . Oxford Business Group. (2007). The Report: Egypt 2007. London: Oxford Business Group. Hara, T. (2008). Quantitative tourism industry analysis: introduction to input-output, social accounting matrix modeling and tourism satellite accounts. London: Elsevier Publishers. Haven-Tang, C. (2005). Tourism SMEs, service quality, and destination competitiveness. Michigan city: CABIPublisher. Scranton, J. F. (2007). The business of tourism: place, faith, and historyHagley: perspectives on business and culture. New York: University of Pennsylvania Press. Swinscoe, S. T. (2000). The economic impact of Tourism in Egypt. Working paper NO. 40 , 5- 22. Wahab, S. (1997). Tourism, development and growth: the challenge of sustainability. London: Routledge. Read More