Boosting Egypt’s Tourism: Coastline Projects’ Potential for Economic Growth
Updated 7/2/2024 8:00:00 AM
For decades, Egypt's pristine beaches have captivated tourists seeking a taste of paradise. Now, Egyptian tourism officials are setting their sights beyond the allure of traditional beach vacations.
Hence, the country is taking steps to elevate the tourism experience and boost economic growth.
Tourism: A Cornerstone of the Egyptian Economy
Tourism is a key contributor to Egypt’s economy. In the second quarter (Q2) of fiscal year (FY) 2023/2024, Egypt's tourism revenues stood at around $3.3 billion, down by 28% quarter-on-quarter (QoQ) from about $4.6 billion, according to the Central Bank of Egypt’s (CBE) balance of payment (BoP) report.
Going on in 2024, the tourism sector in Egypt is thriving. During the first half (H1) of 2024, tourist arrivals to the country reached 7.069 million, with tourism revenues estimated at $6.6 billion, compared to $6.3 billion in H1 2023 and $5.6 billion in the same period in 2010, according to Minister of Tourism and Antiquities Ahmed Issa.
Ahmed Fawzy Hussein, a PhD holder and assistant professor of economics, tells Arab Finance, "The tourism sector is a pivotal element in Egypt's economic landscape. It significantly contributes to the country's gross domestic product (GDP), job creation, and foreign exchange earnings."
In 2023, the tourism sector’s contribution to Egypt’s GDP grew by almost 24% to EGP 953 billion, the 2024 Economic Impact Research (EIR) by the World Travel & Tourism Council (WTTC) showed.
"Despite setbacks from the COVID-19 pandemic, which drastically reduced tourism's contribution to the GDP, the sector is on a recovery trajectory. Investments in infrastructure and marketing campaigns are bolstering both international and domestic tourism," Hussein explains.
Rejuvenating Tourism: The Ras El-Hekma Project
In February 2024, Egypt sealed a deal with the UAE to establish and develop Ras El-Hekma, a multi-billion-dollar, state-of-the-art city on Egypt's North Coast. This project envisions a major urban, business, and tourism hub.
Ras El-Hekma will be a self-contained metropolis, offering modern residential districts, luxurious international hotels, and expansive entertainment venues. It will also offer essential services, including hospitals, schools, and universities, that will ensure a convenient living environment.
Highlighting the project’s significance, Nouran ElKhouly, an economist, says to Arab Finance, "This project will bring a substantial influx of foreign currency into the Egyptian market and have a positive ripple effect throughout the local economy.”
“A project of this scale will stimulate job creation in Egypt. To achieve the Prime Minister's goal of attracting 8 million tourists, a sizeable workforce encompassing millions of opportunities in different sectors will be required," ElKhouly adds.
Meanwhile, Hussein explains, "This project is part of a broader strategy to develop the North Coast and Marsa Matrouh. It aims to transform the region into a premier tourist destination.”
“The development includes luxury resorts, residential communities, and commercial areas, which are expected to create numerous jobs in construction, hospitality, retail, and services," he points out.
Replicating Success and Diversifying Tourism
The Ras El-Hekma project paves the way for similar development projects across the North Coast and the Red Sea.
"The success of this project will boost investors' confidence in the Egyptian market. We can already see similar projects, but on a smaller scale, on the North Coast, from New Alamein City to Matrouh, and along the Red Sea," ElKhouly says.
With several coastal development projects, the tourism sector’s contribution to the Egyptian economy is poised for growth.
“Developing this region can attract both domestic and international tourists, reduce seasonal tourism fluctuations, and promote year-round economic activity,” Hussein clarifies.
He highlights that the Ras El-Hekma project, for example, "can spur the growth of related industries, such as real estate, transport, and local crafts, contributing to broader economic diversification."
"To unlock further growth potential, Egypt should diversify its tourism offerings and tap into emerging markets. This includes promoting adventure tourism, medical tourism, and eco-tourism," Hussein outlines.
Enhancing infrastructure, particularly transportation links between leisure and cultural destinations, will ensure a smoother travel experience. In addition, ramping up digital marketing efforts to reach a wider audience is crucial.
Moreover, Hussein states that fostering public-private partnerships can also be a game-changer in attracting both innovation and investment to the tourism sector.
Navigating the Challenges
Despite its potential, the Ras El-Hekma project can face financial, environmental, social, and economic factors, according to ElKhouly.
“Maintaining the long-term financial stability of the biggest investment deal in Egypt's history is another challenge that requires proper coordination among stakeholders, regular project evaluation, and thorough financial auditing,” she notes.
Yet, these challenges can be resolved without hindering development. "To address these challenges, it is essential to conduct comprehensive environmental impact assessments and adopt sustainable building practices,” Hussein indicates.
“Investing in renewable energy sources and efficient waste management systems can mitigate environmental impacts. Furthermore, coordinated efforts between the government, private sector, and local communities are crucial to ensuring that infrastructure development meets the region's growing needs," he mentions.
Egypt's coastline offers more than just economic potential. Its beauty, from the vibrant coral reefs of the Red Sea to the pristine beaches of the North Coast, provides a unique and captivating experience for travelers worldwide.
By Sarah Samir
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