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Cablegate: Tourism Is the "Driving Force" in the Egyptian Economy

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RR RUEHWEB

DE RUEHEG #0262/01 0391358
ZNR UUUUU ZZH
R 081357Z FEB 10
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC 0161
INFO RUEHEG/AMEMBASSY CAIRO

UNCLAS CAIRO 000262

SENSITIVE
SIPDIS
DEPT FOR NEA/ELA

E.O. 12958: N/A
TAGS: ECON EAID PREL EG
SUBJECT: Tourism is the "driving force" in the Egyptian Economy

REF: 09 CAIRO 2247

1. (SBU) Key Points:

--The Ministry of Tourism (MoT) projects a 5-7% increase in tourism
revenues and arrivals for 2010 over last year.

--New growth opportunities are expected in Egypt's Mediterranean
north shore area and MoT is overseeing plans to increase hotel
capacity for the region.

-- MoT plans to pilot a zero emissions resort town in a bid to lure
foreign tourists interested in environmental issues.

--Over the last two years, MoT has initiated comprehensive employee
training programs in order to build a managerial workforce for the
tourism industry.

2. (U) On January 27, Econoff met with Senior Assistant Minister
for Tourism Hisham Zaazou, a former tourism executive who serves as
a key advisor to Minister Mohamed Zoheir Garana. He also oversees
new initiatives such as "green tourism" and improved training
programs.

3. (U) After a slight decline in 2009 attributed primarily to the
global financial crisis, both tourism revenues and arrivals - two
key industry benchmarks - are expected to increase on the order of
5-7%- for 2010 (Ref A). According to the Ministry of Tourism (MoT),
Egypt remains on track to reach its long-stated target of 14
million tourist visits annually by 2011 - a number set out in
President Mubarak's 2005 presidential campaign platform. Egypt's
"national tourism plan" targets an annual level of more than 25
million tourists by 2020.

--------------------

Growth Areas

--------------------

4. (SBU) Egypt's Red Sea coastal region should remain the country's
most popular destination for foreign tourists but Zaazou advised
that the MoT is looking to the country's Mediterranean north coast
as a key location for new growth opportunities. The area
stretching westward from the city of El Alamein (150 miles
northwest of Cairo) to the summer resort town of Marsa Matrouh,
comprises approximately 300 miles of coastline. MoT is working with
real estate developers to triple the number of available hotel
rooms in the area, from 7,000 to more than 22,000 in the next 5-10
years. The focus, Zaazou stated, will be on luring European
tourists - who make up more than 70% of Egypt's foreign tourist
market. The government is currently upgrading four airports in the
north shore area (Alexandria, Marsa Matrouh, El-Alamein, and Borg
El Arab) with an eye towards eventually allowing low-cost European
airlines to service the area and bypass Cairo.

5. (SBU) This potential new growth is crucial to MoT's plan to
generate new jobs in the tourism sector. Zaazou noted that for
every 1 million new tourism visitors, Egypt generates 200,000 new
jobs - listing hotels and tourism companies as the most obvious
recipients but also pointing out the rise in demand for skilled
tradesmen such as electricians, plumbers, and carpenters. He
explained that government economic plans call for the creation of
600,000 new jobs annually. If growth continues as expected,
tourism could provide one-third of new employment. "The tourism
industry should be the main driving force for the economy," Zaazou
said.

---------------------------------------------

Piloting Zero Emission Tourism

---------------------------------------------

6. (SBU) MoT plans to introduce what it labels "zero emission
tourism" in highly visited tourist destinations, starting with the
Sinai city of Sharm el-Sheikh. Zaazou asserted that MoT will seek
to lower carbon emission by 90% in Sharm el-Sheikh by 2020 by
improving water conservation and sanitary systems, increasing
dependency on renewable energy sources, and upgrading the city's
public transportation system. By 2030, MoT predicts that Sharm
el-Sheikh will become a zero emissions resort area. Zaazou
explained Egypt is seeking an advantage over its Mediterranean
neighbors (notably Turkey) and a future emphasis towards "green

environment tourism" may provide that edge. If MoT is successful
with the Sharm el-Sheikh project, Zaazou indicated that Egypt will
expand the program to other areas along the Red Sea coastal area
but did not identify any specific locations.

-----------------------------------------

Employee Training is Pivotal

-----------------------------------------

7. (SBU) In the last two years, MoT has begun comprehensive
training for current tourism employees as well as youth seeking
employment in the industry. Led by the Ministry-controlled Higher
Council for Tourism, the program has initially targeted popular
resort areas along the Red Sea Coastal area and will train rank and
file employees as well as middle and senior managers - primarily
for private Egyptian hotels. MoT is not working with foreign
hotels since they maintain their own training programs. Zaazou said
the goal is to build an Egyptian managerial class that currently
lacks sufficient numbers. Zaazou also couched the need for
training as a "social impact force." Egypt has problems with people
holding "radical Islamist views," he confided. Employee training
problems present the opportunity to moderate these views, noting
that "exposure to new ideas and education" will allow for improved
social interactions between Egyptians and foreigners. (Note:
According to press accounts, Minister Garana reaffirmed this
training commitment at a World Tourism Organization meeting in
Spain on February 1, 2010 where he pledged to upgrade national
employee training programs. End Note)

8. (SBU) Comment: MoT's projections for tourism arrivals, revenues,
and job creation appear overly optimistic given the difficulties
faced by the global tourism market. The intense pace of
infrastructure development - especially in the country's north
shore - is a major concern if tourism visits do not increase
according to MoT's stated 2020 goal. However, the key element in
Zaazou's overview of MoT's plans is a newfound commitment to
training, a surprising yet welcome development. Contacts in nearly
all of the government's ministries repeatedly discuss Egypt's
desperate need for a skilled managerial class. If MoT is to meet
its ambitious targets, it is critical that it develops a
well-trained tourism workforce to convince the foreign tourist
market to regularly return to Egypt.
SCOBEY

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