Egypt economy awaits its lost tourists

Washington Post Staff Writer
Tuesday, February 15, 2011

SHARM EL-SHEIKH, EGYPT - The people of Egypt spent nearly three weeks in the streets to wrest control of their lives from a suffocating regime. Now, they have to figure out how to pay for their dreams of freedom and prosperity, a challenge made all the more difficult by the recent unrest.

Here in this no-care-in-the-world resort town on the Red Sea, the palm trees wave over empty swimming pools, lonely waiters prowl deserted restaurants, taxis stand by the dozens in unmoving lines. The tourists are gone, their return date unknown, the losses uncalculated.

Tourism makes up 11 percent of Egypt's national economy, and in places such as Sharm el-Sheikh, which attract willing but poor hands from across the country looking for work, the effect of a downturn is magnified. Some estimates put the financial cost of the crisis at $310 million a day; the Central Bank said tourism could take a hit of up to $1.5 billion.

While this town was quiet during the protests that roiled Cairo, in cities across Egypt banks locked their doors, factories stopped production and large numbers of workers vanished, further straining the economy. EgyptAir said Sunday that it had canceled three-quarters of its flights during the crisis, losing 80 percent of the revenue it expected to collect.

Samir Radwan, the finance minister appointed at the end of January as former president Hosni Mubarak was trying to appease protesters, said economic growth would be affected for the rest of the year.

One of Egypt's biggest tasks ahead, he said, is to create jobs in an economy with a pre-crisis unemployment rate of 9 percent, a figure widely considered far below the actual number. The lack of jobs has been felt most keenly among young people, the very ones at the heart of the protests. According to the World Bank, the national income per capita was $2,070 in 2009. And the gaps are enormous between the well-off and the poor.

Here in Sharm el-Sheikh, the satisfaction with what the protests accomplished has been accompanied by frustration with foreign governments that declared the whole country unsafe for their citizens, driving away the all-powerful tourists.

"Look around you," said Abdel Fatah El Assy, the local tourism minister, waving toward his window at the undisturbed street beyond. "It is safe, it is peaceful, it is perfect."

Normally at this time of year, hotel occupancy is 65 to 70 percent, he said. Right now, it is 14 percent. That means a devastating loss of work, though no figures for job cuts among the 70,000 people employed in tourist-related businesses in Sharm el-Sheikh have been reported publicly.

As the German, French, Italian and Russian governments warned their citizens off, tour operators lost their insurance, shutting down travel. Only the British have kept coming, fully insured.

Russian tourists, according to news reports in their home country, had no interest in fleeing the beaches of Hurghada and Sharm el-Sheikh; they returned home only when airlines were told to stop flying here and tour groups were ordered by Moscow to stop taking new reservations. They make up 1.5 million of Sharm el-Sheikh's 4 million annual tourists, and last week Alexander Lukashevich, the Russian Foreign Ministry spokesman, said not one had complained of a ruined vacation because of the protests.

Meanwhile, El Assy sits at his desk, the sleeves of his crisp white shirt rolled up, awaiting the tourists' return. And if Americans are moved to help a nation trying to rebuild, he knows exactly how they can help.

Come here, and sit on the beach.

© 2011 The Washington Post Company