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Tourists leave Egypt in droves

Egypt's tourism industry will suffer a short-term blow in the wake of the Sharm el-Sheik attacks but will bounce back quickly, the nation's tourism minister said on Sunday.

A leading financial analyst, however, predicted that Saturday's attacks, which killed 88 people, could cost the industry -- Egypt's No. 1 source of foreign currency exchange -- up to US$2 billion during this fiscal year, which began on July 1.

The fallout has already started.

Italy, Egypt's top tourist market, has advised its citizens not to travel to Sharm, while some tour operators are offering bleak, medium-term forecasts for the industry.

Some 6,000 tourists flew out of Sharm in the first 24 hours following the bombings, about double the number expected, according to Tourism Minister Ahmed El Maghraby.

Many of those who left were desperate to flee following the attacks, flying out on unscheduled flights added by airlines, including Egypt's national carrier, EgyptAir.

"Of course the attacks will have an impact, but I feel the industry will rebuild very quickly because of the recent pattern of bombings around the world," El Maghraby said. "People are no longer shocked by these things."

But Hani Genena, senior economist at EFG-Hermes -- Egypt's top brokerage -- said he believed tourists from Italy, Germany and Britain will stay away from Egypt in droves during the current financial year amid fears of further terror attacks and a general unease about travel to the Middle East and Muslim countries.

"There will be a long-lasting effect on the tourism industry for the next six months at least," said Genena, who is preparing a report on the impact of the attacks on the economy.

Genena's firm had predicted tourism would bring US$7 billion into the local economy during this fiscal year, about US$1.4 billion (US$1.1 billion) more than the previous year.

But following Saturday's attacks, Genena estimated gross tourism revenues for this year would only reach US$5 billion to US$5.5 billion, levels below those of two years ago.

"Sharm attracts one-quarter to one-third of all tourists coming into Egypt, with the bulk from Italy, Germany and Britain, and these nationalities normally are very sensitive to incidents such as attacks," Genena said.

El Maghraby, the tourism minister, described as "ridiculous" Genena's prediction of a US$2 billion shortfall, saying it was too early to give an estimate of losses.

But a major tourism investor, speaking on condition of anonymity because of market vulnerabilities, predicted the industry would lose no more than US$300 million.

July and, particularly, August are traditionally Egypt's two biggest months for tourism, especially in Sharm were Europeans, led by Italians, fly to the beach resort in their tens of thousands during their annual holiday period.

But tourism operators are bracing for the worst, particularly in Sharm, which attracted at least 20 percent of Egypt's 8.7 million visitors last year.

Shares on the Egyptian Stock Exchange fell three percent on Sunday, driven down by the battering taken by Egypt's biggest tourism industry company, Orascom Projects and Touristic Development, Genena said. Its shares fell from US$6.70 apiece at Thursday's close to US$5.70 on Sunday, the start of the Egyptian business week.

Following Italy's warning to its citizens not to travel to Sharm, the Italian Association of Tour Operators said all package tours to Sharm were temporarily suspended.
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