Unrest leaves Egypt's hotel rooms empty
The fragile recovery in Egypt's tourism sector that began to emerge early this year has been shaken by the violence in the country over the past few weeks.
As tour operators such as Thomas Cook and TUI restrict themselves to Red Sea resorts or cancel trips, analysts expect an erosion in much-needed foreign exchange for the country. Tourism contributes about 7 per cent of Egypt's GDP.
In the capital, Cairo, occupancy rates in hotels fell to 16.6 per cent in July, compared to about 40 per cent in the same period last year, according to STR Global.
At the two Four Seasons hotels, occupancy rates plummeted to 10 to 15 per cent in July and August from about 50 per cent in the first quarter.
"We are mostly getting corporate and government business and not tourists," said Randy Shimabuku, the general manager of the two Cairo properties for Four Seasons.
"Tourism from the Arabian Gulf was starting to come back, but people are looking for stability."
His properties have designed getaway packages targeting the local market and wedding parties.
"We are thinking short-term, Friday to Friday," Mr Shimabuku said last week, referring to relative calm on the two prior Fridays, in part because of Cairo's curfew from 9pm to 6am.
The French luxury brand Sofitel, which owns and operates six properties in the country, reported an 11 per cent occupancy rate at its Cairo property.
Figures were even more dismal in upper Egypt, where the economy is more dependent on tourism. At Sofitel's Old Cataract hotel in Aswan, which the British writer Agatha Christie made famous by basing one of her detective novels there, occupancy was down to 3 per cent in the past few weeks, said Robert Gaymer-Jones, the chief executive of Sofitel Worldwide.
"It's just sad to see our employees not having anything to do," he said. "We have not closed any of the hotels yet, but it is very difficult to operate."
Sofitel employs about 4,000 people across its properties in Egypt, including almost 500 at the Old Cataract.
The hotel did not cut rates.
"It is not about rates," Mr Gaymer-Jones said. "There is no demand."
The drop has come at a time when hotel occupancy rates had started to improve in Cairo. In June, hotels there saw a 21.5 per cent increase over the same period last year and touched occupancy of 51.5 per cent, according to STR Global data.
Overall, the country recorded a 55 per cent occupancy rate in June.
But if the recent spurt in unrest continues, "we estimate that the losses to the sector could range between US$250 million and $650m per month", said London-based Capital Economics.
The bright spot in this is the Red Sea resort area. Occupancy rates at Sharm El Sheikh and Hurghada hotels hovered at about 70 per cent earlier this year, rising sharply from the 20 per cent they shared with the rest of the country when the Arab Spring broke out in early 2011, according to Capital Economics.
Occupancy is about 60 per cent at Four Seasons' Sharm El Sheikh property, Mr Shimabuku said.
Thomas Cook, a British travel management company, has cancelled trips it offers to Cairo and Luxor. It is, however, continuing to offer trips to Sharm El Sheikh and Hurghada.
"We are operating excursions to Moses Mountain and St Catherine's Monastery, as well as some within the perimeter of Sharm El Sheikh, including boat and diving excursions, quads and city tours," said a spokeswoman at Thomas Cook on Thursday.
While the UK Foreign and Commonwealth Office has no restrictions in place for travel to the Red Sea resorts, it advises against travel to Cairo, Alexandria, Luxor and Suez. About three-quarters of tourists to the country are from Europe.
Another large tour operator, TUI Germany, has cancelled all trips it runs to Egypt until September 15, following an advisory from the country's department for foreign affairs in mid August.
"Next week we will decide whether this deadline will be extended," said a spokeswoman from the company on Friday.
In its latest update on August 15, the United States government warned Americans against travelling to Egypt and advised its citizens living in the country to leave because of the continuing unrest.
Updated: September 1, 2013 04:00 AM