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Egypt’s Red Sea gem: Sharm El-Sheikh grappling with tourism decline  - Daily News Egypt

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Egypt’s Red Sea gem: Sharm El-Sheikh grappling with tourism decline 

While domestic and Arab tourism attempts to fill the void left behind by foreign travellers, the Red Sea resort city continues to grapple with the adjustment to tourism’s decline


The number of tourists visiting Egypt declined significantly following the crash of the Russian aeroplane in Sinai in late October 2015, which had a heavy negative impact on the Red Sea resort city of Sharm El-Sheikh.

The city, once the country’s tourism gem on Sinai’s Red Sea coast, has had to adjust to a significantly lower number of visitors, with many hotels shutting their doors and employees seeing a significant cut to their salaries.

The number of tourists coming to Egypt declined by 52% in the first half of the year, with a total of 2.3m tourists visiting compared to 4.8m tourists in the same period last year.

Daily News Egypt took a tour of Sharm El-Sheikh to observe the state of tourism in the resort city 10 months after the Russian aeroplane crash. To understand the status of the city, Daily News Egypt spoke to tourism sector employees, hotels, and shopkeepers to get a glimpse at the repercussions of dwindling tourism numbers.

 

Hotel employees: income declines as fewer tourists opt for Sharm El-Sheikh as a vacation spot                                                                                                           

The Russian aeroplane crash led to a severe decline in the number of foreign tourists visiting Sharm El-Sheikh, which pushed some hotels to lay off some of their employees. As a direct result, the 12% service charge that goes to hotel workers decreased and monthly tips declined by more than 50%.

Reception supervisor Eid Ibrahim said that the majority of hotels in Sharm El-Sheikh looked to lower their expenses by 50% under the losses in revenues they incurred in recent months.

He noted that all hotel departments are currently operating with just half the number of staff members, explaining that the average basic salary in the reception department starts at EGP 500 and goes up to EGP 900. Ibrahim noted that the 12% service charge currently ranges from 50 to 55 piasters per employee.

Ibrahim explained that the salaries of those who make EGP 500 per month reach approximately EGP 750 after the service charge is added. The 12% service charge can occasionally reach up to EGP 1, but some hotels do not apply the earned service charge to salaries for months, according to Ibrahim.

Cleaner Ahmed El Sayyed said that last year, the value of tips ranged between EGP 5,000 and EGP 8,000 per month, noting that tourism in the city is mostly dependent on foreign guests.

Restaurant manager Mohamed Hanafy said that the salaries of new employees range between EGP 400 and EGP 600, explaining that the 12% service charge last year varied between EGP 1.5 and EGP 2.

Hanafy believes that some hotels resorted to decreasing the number of employees as an attempt to decrease expenses, while some other hotels offered different service jobs when the local tourism rate started to increase. However, there was not a high demand for these jobs because of the low salaries offered.

Cleaner Ramy Hasan said that the tips he used to make from foreign guests can go from $5 to $20 daily; however, tips no longer reach those heights. Currently, the average daily tip does not exceed EGP 20. Hasan added that some workers have resorted to working extra shifts to meet their financial needs.

 

Average revenues per month for bazaars at the resorts ranged between EGP 150,000 and EGP 200,000 last year  (DNE Photo)
Average revenues per month for bazaars at the resorts ranged between EGP 150,000 and EGP 200,000 last year
(DNE Photo)

Bazaars and tourism shops appeal for help: revenues decline by 70%, reaching an average EGP 30,000 a month

The decline of tourism in Sharm El-Sheikh has affected not only the hotels, but also the workers in the resort’s bazaars and shopping areas, as monthly revenues have declined by 70% this year.

Bazaar manager Ahmed El Sayyed said the average revenues per month ranged between EGP 150,000 and EGP 200,000 last year. This amount has retreated by 70% in 2016, with average monthly revenues varying between EGP 30,000 and EGP 35,000.

El Sayyed added that employees in the shops tried to counter the decrease in customers by attempting to attract more with discounted prices of up to 50%. However, the attempts were to no avail, noting that the purchasing rate amounted to no more than 3%.

He noted that foreign tourists tend to purchase a range of products, but they prefer souvenirs related to Egypt’s ancient history. In comparison, most Egyptian tourists tend to purchase simple jewellery that costs between EGP 15 and EGP 20.

A manager of a shop selling silver products, Badawy Mohamed, said that average monthly revenues used to amount to approximately EGP 60,000, but this year that amount dropped to EGP 12,000 and EGP 15,000.

He explained that the purchasing power of the foreign tourist is 80% higher than that of the Egyptian tourist, adding that Egyptians prefer to spend their money on entertainment programmes, such as safaris and the marine trips, than purchase souvenirs.

He noted that the rate of Arab tourists visiting Sharm El-Sheikh is no more than 10%. Mohamed also mentioned that some hotel owners decreased the shops’ rent by 25-50% as a result of declining revenues.

An employee in a shop selling handcrafted products, Malak Ibrahim, said that average monthly revenues amounted to EGP 90,000 last year, but now they are about EGP 10,000. He noted that those who buy handcrafted products the most are from Russia, Italy, Great Britain, and the United States, adding that the majority of Egyptian customers, prior to the aeroplane crash, were from the high-income bracket.

A manager of a company for arts and handcrafted products, Hazem Khater, said that a lower number of tourists from Ukraine and Italy visit the city nowadays.

He added that the rent value for shops varies depending on the shopping area. They start at around EGP 7,000 and can reach up to EGP 40,000. He said that the city started to see a demand for products following the Eid al-Fitr holiday, thanks to Arab tourists visiting Sharm El-Sheikh, especially those from Saudi Arabia, Kuwait, Jordan, and Lebanon.

He said that his shopping outlets offered up to 30% discounts on its products, but the discounts did not succeed in raising demand. According to Khater, his average monthly sales last year would reach EGP 120,000, but that amount has declined to EGP 30,000 in 2016.

Khater demanded that the Ministry of Tourism changes it marketing strategy in order to attract more tourists, specifically targeting domestic tourism to increase the number of Egyptians travelling around Egypt.

 

The cruise trip to and from Tiran island takes two hours; however, a special permit is required to visit the island (DNE Photo)
The cruise trip to and from Tiran island takes two hours; however, a special permit is required to visit the island
(DNE Photo)

Tourism decline’s effect on cuisine: restaurants adjust to lower numbers of foreign tourists

Chef Hassan Abdel Naeem, who is originally from Minya and works at one of the four-star hotels in Sharm El-Sheikh, said that the amount of food served to guests daily depends on the occupancy rate in the hotel.

For example, if the occupancy rate reaches 60%, the amount of food cooked for 300 guests on a daily basis would reach 255 kg, portioned into 50 kg of rice, 100 kg vegetables, 20 kg of frozen meat, and 85 kg of chicken. The total cost of the food nears EGP 9,000 a day. The cost per individual, including amounts served for breakfast, lunch, and dinner, is EGP 35.

On the other hand, the amount of wasted food is approximately 70 kg, which is the result of reducing the number of kitchen staff members from 25 to 16.

He added that the total quantities served throughout 2015 reached nearly 125 kg of vegetables, rice, meat, and chicken, with a total cost of no more than EGP 4,000 for 600 guests. In 2015, foreign tourists represented the largest percentage of those occupying the hotel.

Abdel Naeem explained that companies that deliver their products to the hotel include Faragello juices, AlBaraka for rice and groceries, Nestlé Waters, Panda, and Domty for cheese products and Osama for food products. The hotel serves meat imported from India and Brazil, whereas vegetables and fruits are supplied by traders in Obour market.

Abdel Naeem added that the food products in high demand by foreigners include salads, sautéed vegetables, fresh potatos, soups, lasagna, and white rice, while Egyptians prefer meat, chicken, and other main dishes.

He explained that the restaurant used to offer various meals everyday to guests throughout their time in the hotel, including oriental, Italian, Chinese, Mexican, and Indian foods. These days, most hotels tend to fix their menus in order to cut costs, especially after the increase of vegetable, fruit, and meat prices by nearly 25% compared to 2015. The economic condition of the city also had an effect on the variety of cuisines offered to guests.

 

Tourists are opting to visit Tiran island because of the recent media attention given to the demarcation deal with Saudi Arabia The cruise trip to and from Tiran island takes two hours; however, a special permit is required to visit the island (DNE photo)
Tourists are opting to visit Tiran island because of the recent media attention given to the demarcation deal with Saudi Arabia

(DNE photo)

Cruise trips: Tiran island takes away from Ras Muhammad National Park

Following the maritime demarcation agreement between Egypt and Saudia Arabia, more Egyptians are opting to take cruise trips to Tiran island as part of their stay in Sharm El-Sheikh.

Tiran island, as well as Sanafir island, were transferred to Saudi sovereignty following the agreement, but an Egyptian court cancelled the deal last month following much controversy.

Mahmoud El-Fekky, general manager of Bright Way Company, said Egyptians’ interests in travelling to the island increased following the maritime border agreement between Egypt and Saudi Arabia. He pointed out that a yacht’s driver may be held accountable by security forces if he violates the minimum allowed distance, which is 500 metres.

El-Fekky said the number of Egyptians seeking to visit Tiran island has increased by 70% this year. Those were mainly attracted to the Red Sea island amid media reports about the controversy surrounding the Saudi-Egyptian agreement. He said Tiran island has managed to steal the spotlight from Ras Muhammad National Park in recent months.

A source from a major cruise company, who spoke on condition of anonymity, said that 90% of Sharm El-Sheikh’s cruises opt to visit Tiran island.

He noted, however, that Ras Muhammad is the second most important world nature reserve following the Great Barrier Reef in Australia.

Ras Muhammad requires entry fees from visitors in addition to the basic cost of the cruise.

Marwan Mohamed, an employee in Time Tours Company, said that the cruise trip to and from Tiran island takes two hours. The trips come in two types. In the first, customers travel on a yacht that can accommodate up to 50 individuals for seven hours, starting from 8am to 4pm. The average cost per individual is roughly EGP 150, including lunch served on the yacht. Last year, the trip cost EGP 400.

In the second type, customers travel to the island on a large motorboat that can accommodate roughly eight individuals. The average cost of the trip, which takes two hours, is roughly EGP 700, compared to the cost of EGP 2,000 last year.

He said that there are three stops for the yacht in Ras Gameela, Shark Bay, and Hadabet Om El Sayed areas, and each stop lasts for an hour and a half. The customers have the option of snorkelling, and are given a chance to see dolphins and turtles that appear around the island.

He explained that foreign tourists want to see the island, take photos, and pass by the submerged ship found along the island’s coast.

Mohamed said that, as a result of interest in Tiran island, the demand on trips to Ras Muhammad National Park has declined.

While attention to Tiran island has increased, it is still largely prohibited to visit the island unless you have a special permit.

Sayed Ahmed, a marketing director for a company that specialises in aqua games, safaris, and cruise trips, said that yachts usually anchor 1.5km away from the island’s coast, and that there are security forces protecting the island that do not allow anyone near it.

He noted that the average monthly revenues of cruise companies last year ranged between EGP 150,000 and EGP 200,000, while that number has declined significantly in 2016.

 

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