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Q2 2013www.businessmonitor.com
EGYPTTOURISM REPORTINCLUDES 5-YEAR FORECASTS TO 2017
ISSN 1747-888XPublished by:Business Monitor International
Egypt Tourism Report Q2 2013INCLUDES 5-YEAR FORECASTS TO 2017
Part of BMI’s Industry Report & Forecasts Series
Published by: Business Monitor International
Copy deadline: March 2013
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CONTENTS
BMI Industry View ............................................................................................................... 7
SWOT .................................................................................................................................... 9
Political ................................................................................................................................................. 10
Economic ............................................................................................................................................... 11
Business Environment .............................................................................................................................. 13
Industry Forecast .............................................................................................................. 14Inbound Tourism .................................................................................................................................... 15
Table: Egypt Inbound Tourism, 2010-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Table: Egypt Inbound Tourism, Top 10 Markets By Arrivals, 2010-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Outbound Tourism ................................................................................................................................. 17Table: Egypt Outbound Tourism, 2010-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Table: Egypt Outbound Tourism, Top 10 Destinations By Departures, 2010-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Travel .................................................................................................................................................. 19Table: Egypt International Tourism Receipts for Transport and Travel, 2010-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Table: Egypt Breakdown of Methods of Tourist Travel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Hotels .................................................................................................................................................. 21Table: Egypt Hotel Accommodation, 2010-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Table: Egypt Hotels and Restaurants Industry Value, 2010-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Industry Risk Reward Ratings .......................................................................................... 24Tourism Risk Rewards Ratings ................................................................................................................. 24
Table: Middle East and Africa Risk Rewards Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Security Risk Reward Ratings ................................................................................................................... 25Table: Middle East And Africa Defence & Security Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Market Overview ............................................................................................................... 27Table: Top 10 Global Hotel Group Presence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Table: Egypt Transport Infrastructure Projects - Airports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Company Profile ................................................................................................................ 31Egyptian General Company for Tourism & Hotels ......................................................................................... 31
Travco ................................................................................................................................................... 32
Global Industry Overview .................................................................................................. 34Table: Global Tourism Indicators, International Tourist Arrivals, 2009-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Table: global tourism indicators, hotel and establishment units, 2009-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Table: Global Sporting Calendar, 2013-2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Global Assumptions .......................................................................................................... 40Table: Global Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Table: Global & Regional Real GDP Growth, % chg y-o-y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Table: Developed States - Real GDP Growth Forecasts, % . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
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Table: Emerging Markets - Real GDP Growth Forecasts, % . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Table: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Demographic Forecast ..................................................................................................... 47Table: Egypt's Population By Age Group, 1990-2020 ('000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Table: Egypt's Population By Age Group, 1990-2020 (% of total) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Table: Egypt's Key Population Ratios, 1990-2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Table: Egypt's Rural And Urban Population, 1990-2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Methodology ...................................................................................................................... 51How We Generate Our Industry Forecasts ................................................................................................... 51
Tourism Industry .................................................................................................................................... 51
Tourism Ratings - Methodology ................................................................................................................ 52
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BMI Industry View
This quarter BMI has revised and restructured its tourism reports, incorporating a greater range of data and
focusing on the hotel industry, the value of the tourism industry itself, and the impact of macroeconomic
factors.
The report also analyses the investment potential which Egypt offers to large tourist industries - particularly
global hotel groups - as they seek to maximise the growth opportunities being offered by the local market at
the present time.
BMI is relatively upbeat on the outlook for Egyptian tourism in 2013, predicting a 9% increase in tourist
arrivals, to reach 13.2mn. However, we do not envisage a return to 2010's level of tourist arrivals until at
least 2014.
Political uncertainty remains a major impediment to Egypt's tourism industry recovering over the short
term, with the late February 2013 air balloon crash in Luxor - which reportedly killed at least 19 tourists -
also reviving fears as to the safety record of some local tour operators.
Before the balloon accident, there had been some signs that tourism demand was recovering. However, this
crash, coupled with ongoing political uprisings and other demonstrations across the country, continues to
remind tourists of the dangers associated with travel to the country.
An overview of Egypt's top ten inbound tourism markets highlights the fact that its tourism source markets
are fairly well diversified around the globe. Although the top 6 markets all lie in Europe, and are inevitably
showing some signs of slowing down, given the ongoing economic uncertainty the number one market,
Russia, should continue to show strong growth in outbound tourism demand. This is due to its own rising
prosperity, despite the economic difficulties elsewhere in the European continent.
Below the Top 6, there is then good diversification in the Top 10 markets, with Saudi Arabia (Middle East),
Libya (Africa) and the USA (North America) taking seventh to ninth positions, before the Netherlands
(Europe) rounds out the Top 10. BMI believes that the strong diversification presented by these various
source markets could bode well for future tourism development over the forecast period.
Overall, BMI remains optimistic about the outlook for the Egyptian tourism industry, provided tourist areas
remain free of the demonstrations and other political risk factors that have plagued other cities across the
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country. A weak outlook for the Egyptian pound could also see it favoured by tourists from the US and
Europe.
■ Among new hotel openings scheduled for 2013 and 2014 are several properties reportedly beingdeveloped by InterContinental Hotels Group (ICHG), such as the 300-room Holiday Inn AlexandriaWest, the 418-room Crowne Plaza Sharm El Sheikh Citystars and the 256-room InterContinental Sharmel Sheikh.
■ Marriott Hotels' independently-operated Ritz-Carlton division is also undertaking extensive renovationworks ahead of its assumption of management for the former Nile Hilton, owned by local partner MisrHotels. The new 331-room Nile Ritz-Carlton, Cairo is scheduled to open in 2014 and will mark Ritz -Carlton's debut in the Egyptian capital.
■ Carlson Rezidor is also reportedly due to open the 991-room Radisson Blu Sharm El Sheikh Lagoonlater in 2013, according to media reports.
■ Outbound air traffic looks set for good growth over our forecast period to 2017, rising from 5.89mn in2013, to 6.38mn in 2017.
■ This quarter, BMI has given Egypt an overall Industry Risk Rewards Rating of 49.64, putting it inseventh position for the MEA region, behind Jordan and ahead of South Africa.
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SWOT
SWOT Analysis
Strengths ■ The sector is benefiting from a growing trend among Arab tourists to travel closer to
home rather than take long-haul flights.
■ Well-diversified source markets across Europe, Africa, Middle East and North
America.
Weaknesses ■ Tourist numbers remain below those recorded before the overthrow of Hosni
Mubarak in 2011.
■ Hot air balloon crash of February 2013 has revived fears about the safety record of
some local tour operators.
■ Many Western governments retain travel advisories against travel to certain parts of
the country.
Opportunities ■ Hotel groups are still investing in local construction.
■ Future hotel privatisation plans could offer significant opportunities for foreign hotel
management companies to partner with local companies.
■ Possibility to develop conference and medical tourism.
Threats ■ Any political violence or unrest targeting tourist areas would be devastating for the
local tourism industry.
■ Any ban on alcohol or same-sex beaches imposed by Islamist hardliners would hit
inbound tourism flows from European market.
■ Escalating violence between religious groups also poses another threat.
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Political
SWOT Analysis
Strengths ■ Egypt has no serious disputes with neighbouring states, although its relations with
Syria and Iran are relatively tense.
Weaknesses ■ There is considerable domestic opposition to the government's relations with the US
and Israel, and, increasingly, to recent economic reforms.
■ Tension exists between the military and Islamist groups, including the popular Muslim
Brotherhood.
■ The transition away from authoritarian rule and the creation of necessary democratic
institutions will be a protracted process, and there is no certainty that the end result
will be a fully consolidated representative regime going forward.
Opportunities ■ The country is a major player in the Arab-Israeli peace process.
■ Any success for Barack Obama's plans to re-engage with Syria and Iran would
benefit Egypt.
Threats ■ Although the level of militant attacks, particularly on tourists and Western targets,
appears to have fallen in recent years, sporadic incidents should not be ruled out.
■ Demands for the military to quicken the transition process away from authoritarian
rule may not be met, which could increase the risk of large-scale unrest.
■ The reported presence of Hizbullah operatives in Sinai, apparently planning to attack
tourist sites in Egypt, has highlighted the lack of effective policing in the region and
added to security risks in the area.
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Economic
SWOT Analysis
Strengths ■ Exposure to the liquidity story in the Gulf should insulate Egypt against external
shocks to some degree and keep growth positive, assuming a relatively quick
recovery for the region from the current turmoil.
■ Low wages in global terms are advantages for foreign investors, particularly for those
wishing to use Egypt as a base for export-oriented manufacturing.
■ With a population of 84 million, Egypt is the largest market in the Arab world.
Weaknesses ■ Unemployment is high, which subdues demand.
■ Egypt has a widening fiscal deficit owing to a surging subsidies bill and rising public
wage costs.
■ There are relatively high levels of corruption and bureaucracy.
Opportunities ■ The formation of a more representative government that is democratically elected
could help reduce graft.
■ Future tenders will most likely be more transparent, helping those firms not politically
connected with the government secure lucrative contracts.
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SWOT Analysis - Continued
Threats ■ The widening fiscal deficit is adding to the costs of servicing debt, most of which is
held domestically.
■ High unemployment may lead to political resistance to privatisation plans.
■ Militant attacks on tourist sites pose a downside risk to revenues from the key tourist
sector, although increased security spending appears to have been successful in this
regard.
■ Piracy in the Gulf of Aden has resulted in large numbers of shipping companies opting
for alternative routes that do not use the Suez canal. If the situation is not resolved,
this key geo-strategic advantage will be lost.
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Business Environment
SWOT Analysis
Strengths ■ The country's geographical location is good for trade as Egypt has access to both the
Mediterranean and the Red Sea, not to mention the key Suez canal route, which
connects Europe and Asia.
■ The legal system has issued adjudications in favour of foreign firms, although there
are frequent procedural delays.
Weaknesses ■ Egypt ranks 112th out of 180 states surveyed in Transparency International's
Corruption Perceptions Index 2011, comparing unfavourably with regional peers.
■ The labour market is relatively inflexible, with Egypt performing markedly worse than
the Organisation for Economic Co-operation and Development average, and also
inferior to the regional average on the World Bank's Hiring and Firing Workers index.
Opportunities ■ Efforts towards banking-sector consolidation should bring down the cost of private-
sector credit and fuel small business growth over the long term.
Threats ■ Patronage networks impede attempts at fighting corruption and cutting bureaucracy.
■ Although levels of education are relatively high, there is a considerable mismatch
between the skills taught in schools and those required by most employers.
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Industry Forecast
Egypt's tourism industry has been badly affected by
the recent years of political turmoil and instability
following the overthrow of President Hosni Mubarak
in February 2011. According to official figures,
tourist arrivals fell dramatically over 2011, with a
return to 2010's level of tourist arrivals not expected
by BMI until 2014 or 2015.
Political uncertainty remains a major impediment to
Egypt's tourism industry recovering over the short
term, with the late February 2013 air balloon crash
in Luxor - which reportedly killed at least 19 tourists
- also reviving fears concerning the safety of some
local tour operators.
Before this balloon crash, there had been signs that
tourism demand was recovering. However, this latest
crash, coupled with continued political and other
demonstrations across the country, continues to
remind tourists of the dangers associated with travel to the country.
The UK Foreign and Commonwealth Office currently advises against all travel to the Governatorate of
North Sinai and advises against all but essential travel to the Governorate of South Sinai, with the exception
of: the Red Sea Resorts including those in the entire region of Sharm el Sheikh, Taba, Nuweiba and Dahab;
road travel between these resorts; and transfers between the resorts and the airports of Taba and Sharm el
Sheikh.According to the FCO, 'the security situation outside the resort areas in the Governorate of South
Sinai has deteriorated since early 2012 and there have been a number of hijacks, robberies and kidnaps in
the interior of the Governorate'. However, its advice adds that 'major tourist resorts remain stable and calm'.
Either way, it is clear that Egypt's tourist industry will continue to face significant challenges over 2013.
More Tourists, More Money
Total Arrivals ('000), Tourism ReceiptsBreakdown (US$bn), 2000-2017f
International tourism, receipts~ US$bn (LHS)International tourism, receipts for transport services~ US$bn (LHS)International tourism, receipts for travel items~ US$bn (LHS)Total arrivals, '000 (RHS)
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
e20
13f
2014
f20
15f
2016
f20
17f
0
10
20
30
5,000
10,000
15,000
20,000
0
Source: World Bank/Ministry of Tourism, Egypt/CAPMAS/
BMI
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On a longer-term basis, it remains to be seen if the increasing presence of Islamist hardliners in local
politics will lead to a ban on alcohol and same-sex beaches, both of which would be devastating to inbound
tourism flows.
The chart shows the strong correlation between arrivals and overall tourism receipts. It also reveals that
travel items tourism receipts form by far the largest share of the overall receipt value, only a fraction of
which is derived from transport receipts.
Inbound Tourism
Looking at inbound tourism flows by region, Europe is the largest source market for Egypt, accounting for
69% of the total forecast for 2013, a figure we see remaining largely constant for the overall forecast for
2017.
Egypt is also reportedly taking steps to boost the number of tourists from the Middle East and other Arab
nations. According to a February 2013 report in the UK's Daily Telegraph newspaper, the Egyptian tourism
minister recently visited Tehran to encourage greater flows of medical tourists between the two nations.
Moreover, if a crackdown on alcohol and different-sex beaches was to be enacted in future, then BMI
would expect a sharp drop in European inbound tourism, which could partially be offset by higher numbers
of Middle Eastern arrivals.
As a result of initiatives such as medical tourism, BMI forecasts arrivals from the Middle East to increase
by 31.2% between 2013 and 2017, to reach over 3mn tourists.
Table: Egypt Inbound Tourism, 2010-2017
2010 2011 2012e 2013f 2014f 2015f 2016f 2017f
Total Arrivals, '000 14,731.00 9,845.07 12,109.43 13,219.63 14,261.35 15,254.17 16,364.36 17,567.14
Total Arrivals, '000, %change y-o-y
17.51 -33.17 23.00 9.17 7.88 6.96 7.28 7.35
In-bound, arrivals byregion, Africa, '000
411.27 379.61 519.74 579.49 623.04 651.08 688.72 739.14
In-bound, arrivals byregion, Africa, % chg y-o-y
1.71 -7.70 36.92 11.50 7.51 4.50 5.78 7.32
In-bound, arrivals byregion, North America,'000
388.39 365.89 401.33 538.13 561.39 594.81 641.41 676.97
In-bound, arrivals byregion, North America,% chg y-o-y
-5.24 -5.79 9.69 34.09 4.32 5.95 7.83 5.54
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Egypt Inbound Tourism, 2010-2017 - Continued
2010 2011 2012e 2013f 2014f 2015f 2016f 2017f
In-bound, arrivals byregion, Asia Pacific,'000
441.99 399.93 513.70 523.61 557.00 602.90 665.62 727.07
In-bound, arrivals byregion, Asia Pacific, %chg y-o-y
17.77 -9.51 28.45 1.93 6.38 8.24 10.40 9.23
In-bound, arrivals byregion, Europe, '000
7,904.08 6,938.00 8,372.63 9,142.17 9,854.86 10,617.31 11,403.85 12,235.24
In-bound, arrivals byregion, Europe, % chgy-o-y
-8.74 -12.22 20.68 9.19 7.80 7.74 7.41 7.29
In-bound, arrivals byregion, Middle East,'000
1,855.85 1,613.34 2,216.79 2,343.89 2,573.15 2,693.47 2,863.18 3,076.05
In-bound, arrivals byregion, Middle East, %chg y-o-y
8.37 -13.07 37.40 5.73 9.78 4.68 6.30 7.44
f = BMI forecast. Source: Ministry of Tourism Egypt, CAPMAS, BMI Calculation
In terms of the Top 10 most important source markets for Egypt, Russia is the largest provider of tourist
arrivals. Indeed, our forecasts call for Russian arrivals to increase by some 57.8% over the coming five
years, as greater disposable incomes and desire for outbound tourism fuel demand. In second place, behind
Russia, is Germany, followed by the UK, Italy, France and Poland; all of which lie in Europe.
However, encouragingly for the longer-term development of the local tourism industry, there is then some
diversification in the Top 10 markets, with Saudi Arabia (Middle East), Libya (Africa) and the US (North
America) taking seventh to ninth position, before the Netherlands (Europe) rounds out the Top 10. BMI
believes that the strong diversification presented by these various source markets could bode well for future
tourism development over the forecast period.
Table: Egypt Inbound Tourism, Top 10 Markets By Arrivals, 2010-2017
2010 2011 2012e 2013f 2014f 2015f 2016f 2017f
Russia 1,976.17 1,907.79 2,589.95 2,986.38 3,343.16 3,740.66 4,215.65 4,714.04
Germany 1,139.82 1,037.03 1,222.88 1,218.92 1,190.73 1,192.98 1,216.45 1,263.96
UK 845.34 737.21 780.98 871.67 959.46 1,059.98 1,151.90 1,190.91
Italy 979.96 549.56 636.68 742.72 868.96 922.59 992.21 1,012.56
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Egypt Inbound Tourism, Top 10 Markets By Arrivals, 2010-2017 - Continued
2010 2011 2012e 2013f 2014f 2015f 2016f 2017f
France 519.83 457.56 499.21 563.27 623.34 622.53 632.40 654.07
Poland 474.05 456.85 568.15 652.73 775.39 932.24 1,009.07 1,102.50
Saudi Arabia 434.36 338.80 426.20 391.88 429.68 435.62 452.54 477.17
Libya 366.80 285.02 485.15 596.66 690.34 732.52 786.87 855.27
USA 293.07 277.96 291.48 427.93 460.20 496.67 540.84 571.81
Netherlands 244.56 220.11 254.79 263.32 257.27 262.96 274.90 293.54
f = BMI forecast. Source: Ministry of Tourism Egypt, CAPMAS, BMI Calculation
Outbound Tourism
Despite its many domestic political and economic challenges, outbound tourism from Egypt is growing
strongly and should continue to do so over BMI's forecast period to 2017. Indeed, we forecast a 34%
expansion in outbound travel on the part of Egyptian citizens over the coming five years.
The majority of outbound travel is to other Middle Eastern destinations, with Europe coming in second
place. This reflects longstanding cultural and business ties that Oman has around the Mediterranean and
beyond. Very few Egyptians travel to Africa or Latin America at the present time. Looking forward,
although BMI is forecasting a doubling in the number of Egyptians travelling to other African destinations
over the forecast period to 2017, this will still only amount to 15,380 departures.
Table: Egypt Outbound Tourism, 2010-2017
2010 2011 2012e 2013f 2014f 2015f 2016f 2017f
Total Out-bound, touristdepartures, '000
1,298.23 1,749.09 1,679.93 1,814.64 1,988.16 2,121.37 2,255.16 2,431.22
Out-bound, tourist departures, %chg y-o-y
22.51 34.73 -3.95 8.02 9.56 6.70 6.31 7.81
Average Tourist Departure per1000 of the population
0.02 0.02 0.02 0.02 0.02 0.02 0.03 0.03
Out-bound, resident departuresby destination, Africa, '000
5.97 6.25 6.41 7.70 9.49 11.15 13.00 15.38
Out-bound, resident departuresby destination, Africa, % changey-o-y
19.36 4.76 2.54 20.08 23.28 17.53 16.60 18.31
Out-bound, resident departuresby destination, North America,'000
57.44 61.72 59.46 65.98 74.61 81.53 88.55 97.47
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Egypt Outbound Tourism, 2010-2017 - Continued
2010 2011 2012e 2013f 2014f 2015f 2016f 2017f
Out-bound, resident departuresby destination, North America, %chg y-o-y
15.26 7.44 -3.66 10.96 13.08 9.28 8.61 10.07
Out-bound, resident departuresby destination, Latin America,'000
1.24 1.56 1.35 1.62 1.96 2.21 2.47 2.80
Out-bound, resident departuresby destination, Latin America, %chg y-o-y
54.79 25.26 -13.10 19.36 21.61 12.68 11.66 13.35
Out-bound, resident departuresby destination, Asia Pacific, '000
41.65 39.14 42.80 50.68 60.27 67.27 73.90 82.49
Out-bound, resident departuresby destination, Asia Pacific, %chg y-o-y
17.95 -6.03 9.36 18.42 18.91 11.62 9.86 11.61
Out-bound, resident departuresby destination, Europe, '000
213.54 235.64 237.56 266.85 301.80 325.55 349.48 386.17
Out-bound, resident departuresby destination, Europe, % chg y-o-y
-2.74 10.35 0.82 12.33 13.09 7.87 7.35 10.50
Out-bound, resident departuresby destination, Middle East, '000
978.39 1,404.79 1,332.34 1,421.81 1,540.04 1,633.66 1,727.75 1,846.91
Out-bound, resident departuresby destination, Middle East, %chg y-o-y
30.60 43.58 -5.16 6.72 8.31 6.08 5.76 6.90
f = BMI forecast. Source: National Sources, BMI Calculation
The most visited destination by Egyptian tourists is Saudi Arabia. Many of these travellers are visiting holy
cities or participating in Muslim pilgrimages such as Hajj. The second-most visited destination is the UK,
which has a relatively large ex-pat population.
In third place is the UAE. A portion of these departures could well include not only holidaymakers, but also
numbers of Egyptian workers heading to jobs in the UAE. That said, there is clearly growing demand for
outbound travel on the part of Egyptian citizens to all parts of the globe.
Table: Egypt Outbound Tourism, Top 10 Destinations By Departures, 2010-2017
2010 2011 2012e 2013f 2014f 2015f 2016f 2017f
Saudi Arabia 763.90 1,157.81 1,089.48 1,146.12 1,221.11 1,281.25 1,342.25 1,419.75
UK 42.31 40.70 44.14 46.32 49.00 51.06 52.46 56.83
UAE 150.56 164.04 161.51 181.81 208.70 230.25 252.12 279.90
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Egypt Outbound Tourism, Top 10 Destinations By Departures, 2010-2017 - Continued
2010 2011 2012e 2013f 2014f 2015f 2016f 2017f
Turkey 61.56 79.67 78.35 92.09 108.59 118.57 129.31 147.35
USA 57.44 61.72 59.46 65.98 74.61 81.53 88.55 97.47
Italy 56.00 71.00 70.17 78.00 87.43 94.25 100.70 108.40
Oman 28.27 29.27 28.31 34.00 41.52 47.56 53.68 61.46
Jordan 35.66 53.67 53.03 59.89 68.71 74.59 79.70 85.80
Hong Kong 11.78 10.76 12.22 13.80 15.93 17.66 19.43 21.88
f = BMI forecast. Source: National Sources, BMI Calculation
Travel
BMI estimates that receipts for transport services during 2013 will increase by some 16% in US dollar
terms, to US$1.4bn, in line with higher visitor numbers entering the country. Transport items cover costs by
tourists on all tourist transportation within Egypt, fares on buses, railways, airplanes and boat trips where
the company operating is domestic, carrier charges and fees, excess baggage fees, car transportation costs,
package holiday trips within that country excluding cruises, possibly car hire within that country, food and
drink costs the transport in question.
Table: Egypt International Tourism Receipts for Transport and Travel, 2010-2017
2010 2011 2012e 2013f 2014f 2015f 2016f 2017f
International tourism, receipts fortransport services, US$bn
1.26 0.91 1.20 1.40 1.63 1.88 2.19 2.53
International tourism, receipts fortransport services, US$bn, % changey-o-y
25.53 -27.90 32.88 15.79 16.66 15.62 16.10 15.73
International tourism, receipts fortransport services, EGPbn
7.09 5.39 7.32 9.21 9.77 11.10 12.67 14.62
International tourism, receipts fortransport services, EGPbn, % changey-o-y
27.45 -23.94 35.72 25.88 6.06 13.69 14.14 15.33
International tourism, receipts fortransport services, EURbn
0.95 0.65 0.95 1.12 1.36 1.57 1.82 2.11
International tourism, receipts fortransport services, EURbn, % changey-o-y
32.48 -31.20 45.44 17.65 21.53 15.62 16.10 15.73
International tourism, receipts for travelitems, US$bn
13.78 10.06 12.40 13.89 15.72 17.71 20.09 22.79
International tourism, receipts for travelitems, US$bn, % change y-o-y
28.14 -27.00 23.25 12.04 13.13 12.69 13.42 13.43
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Egypt International Tourism Receipts for Transport and Travel, 2010-2017 - Continued
2010 2011 2012e 2013f 2014f 2015f 2016f 2017f
International tourism, receipts for travelitems, EGPbn
77.65 59.80 75.28 91.69 94.30 104.49 116.51 131.70
International tourism, receipts for travelitems, EGPbn, growth y-o-y
30.10 -22.99 25.89 21.80 2.85 10.81 11.50 13.03
International tourism, receipts for travelitems, EURbn
10.39 7.24 9.76 11.11 13.10 14.76 16.74 18.99
International tourism, receipts for travelitems, EURbn, % change y-o-y
35.24 -30.33 34.90 13.83 17.84 12.69 13.42 13.43
f = BMI forecast. Source: World Bank, UN, BMI Calculation
However, it is the receipts for travel items which are account for the largest share of the money pie, forecast
by BMI to reach US$13.89bn in 2013 (up 12% y-o-y in US dollar terms) and then to rise to US$22.79bn by
2017. International tourism receipts for travel items are expenditures by international inbound visitors in the
reporting economy. These receipts include any prepayment made for goods or services received in the
destination country. They also may include receipts from same-day visitors, except in cases where these are
so important as to justify a separate classification. Travel items can include such things as sun cream and
other common travel accessories, travel luggage bought in Egypt, tickets to get into national parks, cruise
excursions and so on.
The breakdown of tourist travel into specific sectors shows that Egypt is massively weighted towards air
travel in the tourist sector, both in domestic tourism and outbound tourism. Outbound air traffic looks set for
good growth over our forecast period to 2017, rising from 5.89mn in 2013, to 6.38mn in 2017.
Moving forward, however, BMI believes that cruise ship tourism will also play an ever-increasing role in
Egypt's overall tourism industry over our forecast period to 2017, especially if there is a return of political
stability.
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Table: Egypt Breakdown of Methods of Tourist Travel
2010 2011 2012e 2013f 2014f 2015f 2016f 2017f
Air transport passengers carried, mn,out-bound
5.47 5.83 5.78 5.89 6.02 6.13 6.24 6.38
Air transport passengers carried, mn,out-bound, % change y-o-y
-11.94 6.58 -0.95 1.86 2.35 1.77 1.74 2.25
Air transport, registered airlinedomestic and non-domestic takeoffs,'000
49.51 52.00 51.62 52.36 53.32 54.05 54.79 55.76
Air transport, registered airlinedomestic and non-domestic takeoffs,'000, % change y-o-y
-12.24 5.03 -0.73 1.44 1.83 1.38 1.37 1.77
f = BMI forecast. Source: World Bank, UN, BMI Calculation
Hotels
Egypt's hotel industry has been severely hit by the recent years of political upheaval. Openings in recent
years have been scarce, but have included Accor's first Ibis Styles hotel in Egypt, at Dahab Lagoon.
Given the continued uncertainty over the domestic political and economic outlook, BMI is cautious on the
outlook for the local hotel industry, forecasting virtually no growth in the number of hotels and
accommodation establishments over the forecast period to 2017. Clearly, if there is an improvement in the
local political situation, then we would look to make some upward predictions to our currently downbeat
forecasts. We also predict a slight drop in total overnight stays and occupancy rates across the forecast
period.
Table: Egypt Hotel Accommodation, 2010-2017
2010 2011 2012e 2013f 2014f 2015f 2016f 2017f
Number of Hotels andestablishments '000
1.24 1.26 1.27 1.27 1.28 1.28 1.28 1.29
Number of Hotels andestablishments '000% change y-o-y
-3.43 1.61 0.64 0.32 0.31 0.31 0.23 0.23
Total overnight stays'000
51,800.00 53,803.35 52,874.90 52,419.70 51,992.57 51,585.49 51,130.29 50,637.12
Total overnight stays'000, % change y-o-y
-1.71 3.87 -1.73 -0.86 -0.81 -0.78 -0.88 -0.96
Average length ofstay, nights
3.64 3.64 3.64 3.64 3.64 3.64 3.64 3.64
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Egypt Hotel Accommodation, 2010-2017 - Continued
2010 2011 2012e 2013f 2014f 2015f 2016f 2017f
Average length ofstay, nights, %change y-o-y
0.74 - - - - - - -
Hotel rooms '000 141.19 139.78 138.38 138.65 138.93 139.28 139.56 139.84
Hotel rooms '000, %change y-o-y
-4.90 -1.00 -1.00 0.20 0.20 0.25 0.20 0.20
Occupancy rate % 55.00 55.10 55.49 55.41 55.33 55.24 55.16 55.08
f = BMI forecast. Source: N/A. Occupancy Rate = Room occupancy rate
Lastly, BMI believes that the overall value of Egypt's hotel and restaurant industry will climb from US
$4.29bn in 2013, to US$5.03bn by end-2017, representing growth of 17.2%.In GDP terms, the contribution
of the hotels and restaurants industry to overall GDP will fall slightly from 1.59%, to 0.95%.
Table: Egypt Hotels and Restaurants Industry Value, 2010-2017
2010 2011 2012e 2013f 2014f 2015f 2016f 2017f
Domestic Hotels andRestaurants Industry ValueEGPbn
33.76 28.30 28.06 28.30 28.50 28.74 28.88 29.07
Domestic Hotels andRestaurants Industry ValueEGPbn, % change y-o-y
9.49 -16.15 -0.88 0.88 0.71 0.83 0.51 0.63
Domestic Hotels andRestaurants Industry Value, US$bn
5.99 4.76 4.62 4.29 4.75 4.87 4.98 5.03
Domestic Hotels andRestaurants Industry Value, US$bn, % change y-o-y
7.84 -20.52 -2.95 -7.21 10.78 2.54 2.24 0.98
Domestic Hotels andRestaurants Industry Value,EURbn
4.52 3.43 3.64 3.43 3.96 4.06 4.15 4.19
Domestic Hotels andRestaurants Industry Value,EURbn, % change y-o-y
13.82 -24.15 6.21 -5.72 15.39 2.54 2.24 0.98
Domestic Hotels andRestaurants Industry Value, %of GDP
2.65 1.99 1.78 1.59 1.38 1.21 1.06 0.95
Domestic Hotels andRestaurants Industry Value, US$per capita
73.85 57.69 55.04 50.23 54.73 55.24 55.61 55.32
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Egypt Hotels and Restaurants Industry Value, 2010-2017 - Continued
2010 2011 2012e 2013f 2014f 2015f 2016f 2017f
Domestic Hotels andRestaurants Industry Value, US$per capita, % change y-o-y
5.98 -21.88 -4.60 -8.75 8.98 0.92 0.68 -0.52
Domestic Hotels andRestaurants Industry Value peremployee, US$
12,876.07 9,834.96 9,185.92 8,215.44 8,782.94 8,701.70 8,606.28 8,690.32
Domestic Hotels andRestaurants Industry Value peremployee, US$, % change y-o-y
3.46 -23.62 -6.60 -10.56 6.91 -0.92 -1.10 0.98
f = BMI forecast. Source: UN, ILO
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Industry Risk Reward Ratings
Tourism Risk Rewards Ratings
Table: Middle East and Africa Risk Rewards Ratings
Rewards Risks
Limits ofpotentialreturns
TourismMarket
CountryStructure
Risks to realisationof potential returns
Marketrisks
CountryRisk
TourismRating
Rank
UAE 65.31 66.67 63.28 62.42 77.53 50.06 64.44 1
Qatar 61.15 63.33 57.88 64.65 75.08 56.11 62.20 2
Israel 62.00 53.33 75.00 61.61 62.69 60.74 61.88 3
Bahrain 59.55 66.67 48.86 66.86 68.00 65.93 61.74 4
Kuwait 58.13 66.67 45.33 61.55 65.19 58.58 59.16 5
Jordan 53.22 61.67 40.54 61.06 62.37 59.99 55.57 6
Egypt 48.69 52.50 42.96 51.87 60.84 44.52 49.64 7
SouthAfrica
42.66 41.67 44.15 61.94 60.51 63.10 48.44 8
Oman 43.37 50.00 33.43 56.36 75.53 40.67 47.27 8
SaudiArabia
38.12 38.33 37.79 60.95 74.70 49.70 44.97 8
Kenya 39.21 35.00 45.51 40.09 48.85 32.93 39.47 8
Morocco 32.07 36.67 25.16 53.82 57.95 50.44 38.59 9
Source: BMI
Limits Of Potential Returns
This is an evaluation of the sector's size and growth potential in each state, along with broader industry and
state characteristics that may inhibit its development. The reward ratings for tourism take into account the
numbers and percentage growth of tourist arrivals over the past year and our forecasts for future growth
over 2013.
BMI expects tourist arrivals figures to see a steady rise in Egypt over the coming years, despite domestic
political uncertainty. As such, we believe Egypt will continue to see good growth in annual tourism arrivals
and tourism revenues. This gives Egypt a Tourism Market figure of 52.50 this quarter.
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Indeed, the major Red Sea tourist resorts have been largely unaffected by demonstrations against the
government. However, we would have to revise Egypt's score significantly were tourists to become
involved in any violent political unrest.
The Country Structure score takes into account labour costs and infrastructure. Egypt is fortunate in that it
already has quite well developed tourism infrastructure and fairly low labour costs. Egypt's Country
Structure score is consequently 42.96 this quarter.
Risks To Realisation Of Returns
This offers an evaluation of industry-specific dangers and those emanating from the state's political and
economic profile that call into question the likelihood of anticipated returns being realised over the assessed
time period. The market risks score takes into account short term political stability and regional stability and
also takes into account vulnerability to external factors. Egypt has an overall market risks score of just 60.84
this quarter, the fourth-lowest in the region, reflecting continued uncertainty as to its future political
direction.
Lastly, BMI's proprietary country risk scores cover aspects such as legal framework, bureaucracy, market
openness and security risks. Egypt scores fairly poorly for all of these and has achieved a score of 44.52 this
quarter, again placing it towards the bottom of this metric on a regional basis.
Taking all of the risks and rewards together, Egypt obtains an overall Rating of 49.64 this quarter, putting it
in seventh position for the MEA region, behind Jordan and ahead of South Africa.
Security Risk Reward Ratings
BMI sees the growing possibility of a military coup in Egypt, if violence continues unabated. The defence
minister, General Abdel Fattah El-Sissi, warned on January 29 that the country faced the risk of 'collapse'
that could 'threaten future generations'. His comments followed days of violence across Egypt, in which
dozens of people were killed. On January 28, President Mohamed Morsi declared emergency rule in the
cities of Port Said, Suez, and Ismaila, all of which are along the vital Suez Canal. In addition, Egypt has
seen clashes between pro-Morsi Islamists and secularists opposed to the president coinciding with the
second anniversary of the overthrow of former president Hosni Mubarak.
Morsi's assumption of ever greater powers following his election as the country's first democratic and
Islamist president in June 2012 have fuelled fears of creeping Islamist authoritarianism, as opposed to the
liberal democracy that many demanded when Mubarak was deposed. There is also widespread
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disappointment that the post-Mubarak era has been so unstable and that the economy has deteriorated over
the past two years, as evidenced by the Egyptian pound falling to record lows in January 2013.
Against an overall backdrop of deteriorating stability, BMI sees growing risks of a military coup. That said,
a coup would be enormously risky for the military. An outright seizure of power would mean that the
military would have to take responsibility for the economy as well as public order. The experience of
comparable countries that have experienced coups in recent years, such as Pakistan (1999), Thailand (2006),
and Bangladesh (2007), has shown that while coups were initially welcomed by the public as a means of
restoring stability, the armed forces lost support within six to twelve months, leading to calls for new
elections.
Table: Middle East And Africa Defence & Security Ratings
Inter-state Terrorism CriminalComposite
domestic risk RankComposite
security risk Rank
UAE 84 83 78 81 1 82 1
Kuwait 88 76 79 77 2= 81 2
Jordan 85 71 77 74 4= 78 3
Saudi Arabia 80 68 81 74 4= 76 4=
South Africa 92 88 49 69 7 76 4=
Israel 62 61 79 70 6 67 6=
Turkey 76 60 65 63 8 67 6=
Uganda 64 66 55 61 9 62 8
Iran 28 79 74 77 2= 60 9
Egypt 64 58 39 49 10 54 10
Iraq 64 40 27 33 13 43 11
Syria 21 52 40 46 11 38 12=
Sudan 36 49 31 40 12 38 12=
Libya 39 35 30 33 13= 35 14
Yemen 37 33 29 31 15 33 15
Scores out of 100, with 100 the highest. The 'Composite Security Risk' is the principal rating. It comprises 'Interstate' risk- the risk of becoming a primary party to an inter-state conflict that threatens significant damage to homeland; 'Terrorism'risk - the risk of terrorist groups (domestic or international) being able to launch a major attack/sustained campaign; and'Criminal' risk - the risk of (politically motivated) violence against expatriate workers. Each of the three risks is given equalweighting. The 'Composite domestic risk' rating comprises 'Terrorism' and 'Criminal' risk, each of which is given equalweighting. Each rating (State, Terrorism, Criminal) is assessed subjectively by our analysts within a clearly definedmethodology, incorporating a minimum of six conceptually distinct elements. Source: BMI
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Market Overview
Egypt's hotel industry is slowly recovering from the
impact of the Arab Spring in 2011 and a concomitant
drop in inbound tourism demand. Recent research
from hotel consultancy firm HVS Global would
indicate that 2012 saw a strong rebound in national
occupancy rates; however this was at the expense of
average room rates, which reportedly dropped by
just over 10%.
According to recent information from the Hotelier
Middle East website, there are some 16 major new
hotel projects under construction within Egypt at the
present time, which could add over 4,500 rooms to
the national supply when completed.
These include several properties being developed by
InterContinental Hotels Group (ICHG), such as
the 300-room Holiday Inn Alexandria West, the
418-room Crown Plaza Sharm El Sheikh Citystars and the 256-room InterContinental Sharm el Sheikh.
Marriott Hotels is also undertaking extensive renovation of the former Cairo Hilton, which is scheduled to
open in 2014 as the 331room Nile Ritz-Carlton Cairo, marking its debut in the Egyptian capital. Carlson
Rezidor is also reportedly due to open the 991-room Radisson Blu Sharm El Sheikh Lagoon later in 2013.
All of which indicates that sentiment towards the Egyptian hotel industry from the world's major hotel
chains remains positive, despite the risk of continued short-term political uncertainty. Many of the foreign
hotel chains are looking to partner with smaller, domestic firms for the development of their hospitality
operations in Egypt.
Visible Decline Due to PoliticalUpheaval
Number of Hotels ('000) and Hotel IndustryValue (US$bn), 2000-2017
Number of hotels and establishments, '000 (LHS)Hotels and restaurants industry value, US$bn (RHS)
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
e20
12e
2013
f20
14f
2015
f20
16f
2017
f
0
0.5
1
1.5
0
2.5
5
7.5
Source: CAPMAS/BMI/UN
Egypt Tourism Report Q2 2013
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Table: Top 10 Global Hotel Group Presence
Global Hotel Group Presence in Egypt Hotel Brands present in Egypt
Accor Hotels Operates 17 hotels (3,935 rooms) across the country as ofJune 2012.
Mercure, Novotel, Sofitel
Best Western Operates one four-star resort at Marsa Alam. Best Western
Carlson Rezidor HotelGroup
Operates one Park Inn by Radisson resort at Sharm ElSheikh, as well as four Radisson properties (hotels andresorts) in Alexandria, Cairo, El Quseir and Sharm ElSheikh.
Park Inn by Radisson, RadissonBlu
Choice Hotels International No Presence not present
Hilton Operates five hotels in Cairo and Alexandria, plus 12resorts throughout the country, from Sharm el Sheikh toHurghada.
Hilton Hotels and Resorts
Hyatt Operates one Hyatt Regency Resort in Sharm El Sheikhand one Hyatt Regency hotel in Taba.
Hyatt Regency
Intercontinental HotelsGroup
Operates six hotels and resorts across Egypt. Crowne Plaza, InterContinentalHotels and Resorts
Marriott Operates eight hotels across four brands in Egypt. JW Marriott, Marriott Hotels &Resorts, Renaissance Hotels,Ritz-Carlton
Starwood Operates 11 hotels and resorts across Egypt. Le Meridien, Sheraton, St. Regis
Wyndham No Presence not present
Source: BMI
Underlining the well-developed nature of the Egyptian hotel sector, eight out of the Top 10 global hotel
chains identified by BMI currently have a presence of at least one property in Egypt.
Of the Top 10, Accor and Hilton are the best represented hotel chains in country, both operating some 17
hotels and resorts. Starwood Hotels and Resorts is also a key player operating some 11 hotels and resorts
across the country, with Marriott Hotels operating eight hotels. ICHG operates six hotels and resorts across
Egypt, under its Crowne Plaza and InterContinental Hotels and Resorts brands.
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Carlson Rezidor operates five properties across its
Park Inn by Radisson and Radisson Blu brands,
with Hyatt operating two Hyatt Regency properties
and Best Western just one resort at Marsa Alam.
Travco is Egypt's largest leisure group and is
engaged in a number of activities across the tourism
sector, including the operation of hotels, cruise liners
and travel agencies. Travco's hospitality
management company, Jaz Hotels, Resorts &
Cruises, owns and manages more than 73 hotels and
resorts across Egypt and the Middle East. The
company's brands include Jaz, Iberotel, Sol Y Mar
Hotels & Resorts, and Travcotels.
The state-owned Egyptian General Company for
Tourism and Hotels (EGOTH) oversees 14 hotels,
including the Cairo Marriott, the Palestine Hotel
(Alexandria) and the Mena House Oberoi, and one
Nile cruiser, as of August 2012. The company is
owned by HOTAC.
Given ongoing political uncertainty, it is little surprise that the authorities are not prioritising extensive
amounts of expenditure on Egyptian aviation infrastructure at the present time. The below table shows that
current and proposed airport infrastructure projects currently total just over US$1bn in Egypt, a smaller total
than in many of its regional peers.
Increasing Arrivals EncourageIncrease in InfrastructureConstruction Investment
Total Arrivals ('000) and Total Investment (US$bn), 2000-2017
TOTAL ARRIVALS: Total arrivals, '000 (LHS)INVESTMENT: Total capital investment, US$bn (RHS)
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
f20
14f
2015
f20
16f
2017
f
5,000
10,000
15,000
20,000
0 0
25
50
75
100
Source: Ministry of Tourism, Egypt/CAPMAS/BMI/Central
Bank of Egypt
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Table: Egypt Transport Infrastructure Projects - Airports
ProjectName
Sector Value (US$mn)
Capacity/ Length Companies Timeframe Status
HurghadaInternationalAirport -constructionof newpassengerterminal
Airports 295 7.5 mn passengers Saudi Bin LadinGroup
na Contractawarded (Jan2010)
Cairo AirportT3 upgrade
Airports 387 7.5 mn passengers Limak 2011- Contractawarded(March 2011)
CairoInternationalAirport T2upgrade
Airports 400 8.5 mn passengers na Constructionscheduled forcompletion in2013
Bidding phase
Source: BMI Key Projects Database
Egypt is, however, making more of an effort to develop its domestic rail infrastructure. Although the
primary purpose of this is to improve the carriage of local residents and cargo across the country, improved
rail infrastructure could also have the side-effect of boosting tourism flows around the country. Certainly,
the proposed Cairo-Alexandria high speed railway could potentially see an increase in two-centre holidays
embracing both cities.
There are rail infrastructure projects presently totalling some US$7.7bn across Oman at the present time,
according to BMI's Key Projects Database.
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Company ProfileEgyptian General Company for Tourism & Hotels
Company Overview EGOTH belongs to the Egyptian government through 100% ownership by the Holding
Company for Tourism, Hotels & Cinema (HOTAC). Among the company's hotel
business are branded international establishments such as Marriott, Oberoi Hotels,
Sofitel and Mercure. In Q312, EGOTH property included 14 hotels throughout the
country (Luxor, Cairo, Giza, Alexandria and the Red Sea) and one Nile cruiser. The
group's hotel capacity amounts to approximately 3,750 rooms. The company shares in
18 joint ventures operating in the fields of tourism, hotels and tourist development.
EGOTH also owns plots of land at prime locations in Cairo, Luxor and Hurghada,
allocated for hotel and tourism development projects.
In November 2005, the former government announced plans to partially privatise five
hotels owned by EGOTH, following EGP407mn worth of upgrade and renovation work
to make them more attractive to potential investors. The sale of stakes in the Marriott
Cairo, Mena House Oberoi, Sofitel Cataract Aswan, Winter Palace Luxor and Helnan
Palestine Alexandria will not affect management contracts for the hotels.
Operational Data Key Statistics
■ No. of employees: 2,164 (FY2009/10)■ No. of rooms: approximately 3,750 (August 2012)■ Established: 1976
Company Details ■ EGOTH
■ 4 Latin America StreetGarden City
Cairo
Egypt
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Travco
Company Overview Travco is Egypt's largest leisure group and is engaged in a number of activities across
the tourism sector, including the operation of hotels and travel agencies. Since 1995,
Travco has been 50% owned by German leisure conglomerate TUI. Travco's hospitality
management company, Jaz Hotels, Resorts & Cruises, owns and manages more than
73 hotels and resorts across Egypt and the Middle East under the following brands:
Jaz, Iberotel, Sol Y Mar Hotels & Resorts, and Travcotels. By mid-2012, Jaz Hotels,
Resorts & Cruises managed Egypt's largest chain of hotels (52) and a fleet of 20 cruise
liners, which provide regular services along the Nile.
In conjunction with the operators Alpitour Group Egypt and Touring International,
which are both Travco subsidiaries, Travco Travel also organises travel packages to
Egypt.
The Iberotel Hotels and Resorts subsidiary operated a chain of 20 hotels and resorts in
Egypt in mid-2012, and one hotel in Fujairah in the UAE.
In September 2009, Travco Group and UAE-based Air Arabia signed a joint venture
agreement to launch a new low-cost carrier based in Egypt. Air Arabic Egypt will serve
Europe, Africa and the Middle East markets and will represent Air Arabia's third hub
after UAE and Morocco.
In October 2009, as part of a plan to expand its international operations, Travco Group
acquired Frankfurt-based Steigenberger Hotels after three months of negotiation.
Steigenberger Hotels has over 6,500 employees and operates 79 hotels in Germany,
Austria, Switzerland, Italy, the Netherlands and Egypt. It operates two brands:
Steigenberger Hotels and Resorts, with four and five-star hotels; and InterCityHotel,
which has hotels in the upper mid-range. In 2008, Steigenberger generated revenues of
EUR494.9mn. The acquisition makes Travco Group one of the largest operators of
hotels in Europe and the Middle East with about 150 hotels and resorts.
From Q412, Steigenberger will start operating three luxury cruise ships on the Nile and
Lake Nasser in Egypt that were previously managed by Jaz Hotels, Resorts & Cruises.
Operational Data Key Statistics
■ No. of hotels (Egypt): 52 (mid-2012)■ No. of cruise ships: 20 (mid-2012)■ No. of employees: 11,000 (2007)■ Established: 1979
Company Details ■ Travco
■ 26th July CorridorSheikh Zayed
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6th of October City
12588
Egypt
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Global Industry Overview
BMI View: The global tourist accommodation sector will greatly benefit from the rise in international
tourist arrivals forecasted from 2013-2017. The growing number of outbound and domestic-based tourists
from Asia and Latin America has provided great incentives for the tourist accommodation sector to increase
the number of hotels and rooms on offer across these regions. Even though underlying economic risk
remains, over the next five years we estimate annual growth in total hotel units to be within 3-5% from
2013 to 2017.
Despite the difficult global economic picture, international tourist arrivals are expected to grow across 2013.
Historically the number of tourists has been rising year on year in eight out of the ten years from
2002-2012, the only fall being in 2009 due to the global economic crisis. In 2012, International tourist
arrivals grew by 4.3% in 2012, we saw positive growth stemming from a number of factors including
tourists taking advantage of a weaker euro to travel to eurozone states, as well as a growing middle class in
Asia who have an increasing inclination to travel abroad. We expect this trend to continue. BMI estimates
that international tourist arrivals will report growth of 4.1% at the end of 2013, an increase of 38.6 million
tourists to 971.1 million from 2012 across BMI's tourism universe. We forecast that annual growth in
international tourists arrivals will remain between 4-5% for the next five years from 2013 to 2017.
Table: Global Tourism Indicators, International Tourist Arrivals, 2009-2017
2009 2010 2011 2012e 2013f 2014f 2015f 2016f 2017f
WORLD: Total Arrivals mn* 783.1 840.9 894.3 932.5 971.1 1019.1 1068.7 1121.1 1170.5
WOLRD: Total Arrivals mn,% change y-o-y -4.9 7.4 6.3 4.3 4.1 4.9 4.9 4.9 4.4
BMI
Growing tourist arrivals driving tourist accommodation
With international tourist arrivals set to grow from 2013-2017, the global tourist accommodation sector will
look to support the increase in number of tourists through the construction of new hotel units. Across the
world the tourist accommodation sector is likely to face stiff competition, and competitors look set to
enhance market share through pricing, aesthetics by introducing wide scale renovations and, mass branding
and marketing initiatives in the emerging markets. Over the last few years financial markets have seen an
inflow of capital and the tourist accommodation sector has taken advantage of this by taking the opportunity
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to use leverage to initiate wide-ranging hotel renovations and construct new accommodation. Historically
the level of total hotel units globally has been volatile, 2010 posted an increase of 3.7%, in 2011 total units
slowed down to 0.9% and in 2012 total units increased again by 1.7%. Internationally we see the tourist
accommodation sector increasing the number of hotel units across 2013 by 2.2% to 1.099 million units in
total by the end of the year. From 2014-2017, BMI forecasts that annual growth in total hotel units to be
between 2-2.5%.
Table: global tourism indicators, hotel and establishment units, 2009-2017
2009 2010 2011 2012e 2013f 2014f 2015f 2016f 2017f
WORLD: Number of hotels
and establishments, '000* 1011.1 1048.8 1058.6 1076.5 1099.8 1124.0 1149.2 1176.6 1205.9
WORLD: Number of hotels
and establishments, '000,% change y-o-y 4.9 3.7 0.9 1.7 2.2 2.2 2.2 2.4 2.5
BMI
Regionally, Latin America is set to perform the best, with forecasted growth in total hotel units to be 4.32%
in 2013 and 4.35% in 2014. High numbers of growth are dominated by the growing trend in inbound
arrivals within the region, and the rise of domestic tourism in countries such as Brazil. Over the same
forecast period Brazil will see a surge in new hotel developments in preparation for the 2014 FIFA World
Cup to be staged in twelve cities across the country and 2016 Olympics to take place in Rio de Janeiro.
Over the last few years in the Asia-Pacific region there have been many large scale hotel development
projects. With rising middle classes in parts of Asia such as China and India, people are more likely than
ever to travel for leisure. The tourist accommodation sector in the region is likely to capitalize on the greater
number of outbound travellers from these countries and provide a greater number of hotels and facilities to
offer guests. In 2012, total hotel units increased by 153,358 or 3.8% from 2011. Over the next five years
from 2013 to 2017, BMI forecasts the region to grow over 4% annually. In isolation, total hotel units in
China and India have grown by an annual average of 12.87% and 18.36% respectively over the last five
years from 2012. This is on the back of strong rising levels of domestic tourists and international arrivals
that are now attracted by the better infrastructure and facilities on offer at hotels. For 2013 we forecast
annual growth of 9% for China and 13% for India. International hotel chains Marriot International,
Starwood Hotels & Resorts and Hilton Worldwide have outlined expansion plans in China. Starwood Hotels
& Resorts Worldwide, now have 100 hotels in the country and are another 100 have been outlined. Marriot
is looking to double its share of hotels within the country by 2014.
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Elsewhere, BMI estimates that total European hotel units will show annual growth of 0.5% for 2012. This
lower pace of growth is largely generated by a 0.1% fall in total hotel units across Western Europe for the
same period. Falls in domestic income have led to a decrease in domestic hotel demand and a shorter length
of stay by international guests have fallen under 4 nights in 2012 for the first time in ten years. Across the
region, many unprofitable hotel units have been closed and others have been relocated. Over the next five
years from 2013, we expect this trend to continue, and estimate total hotel units will grow in the range of
0.5-1% annually. In the Middle East, BMI estimates a bounce back in hotel construction in 2013 buoyed by
a general lift in construction activity within the region, total hotel units will increase by 2.1%.
Hotel rooms also set to increase
For 2013, BMI forecasts that the total number of hotels rooms internationally will grow by 3.3%. The
growth in the total number of rooms will be boosted twofold, firstly by new hotel construction which will
increase the global stock levels of rooms and secondly by the restructuring and renovation of existing hotel
units that will provide greater rooms. BMI forecasts strong growth in the total number of hotel rooms in
Latin-America to be 5-8% annually over the next five years from 2013 to 2017. In other regions Europe will
grow by 1.5-2%, North America by 1.5-1.6%, Asia by 2-5% and the Middle East by 2-5% over the same
forecast horizon.
Room occupancy rates to remain steady
Hotel room occupancy rates remain traditionally high in city based states and locations due to the lack of
availability of new land for new hotel construction. Singapore and Hong Kong remain the best with rates of
86.5% and 82.37% recorded in 2011 and BMI estimates this to be around this level at the end of 2012 and
going forward into 2013. Regionally higher occupancy rates are seen in Asia, Europe and North America.
Globally occupancy rates are estimated to remain between 50-60% over the next five years from 2013 to
2017, where growing room occupation will be counteracted by growth in hotel rooms.
Overnights stays rising in Asia and Middle East
At the end of 2011 total overnight stays internationally saw contractions of 1.6% in North America and
1.9% in Europe from 2010. Africa also noted a contraction of over 6% during the same period with only
Asia, Middle East and Latin America showing growth. Trends in Europe and North America remain
subdued with hotels in major western cities a lot pricier than emerging market equivalents. In 2012, average
length of stay in Western Europe decreased to under 4 nights, the lowest it has been in a decade. We expect
this trend to continue and forecast average length of stay to remain under 4 nights from 2013 to 2017.
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Globally, BMI forecasts total overnight stays to grow at over 3% annually from 2013 to 2017, weakness in
Western Europe will be more than counteracted by strong growth in overnight stays within the Middle East
and Asia. Overnight stays in Middle East will grow by 9% in 2013, and by 3.8% in Asia over the same
period. These regions will benefit from the growing number of tourist arrivals from neighbouring nations.
Tourist accommodation sector remains sensitive to economic fundamentals
To take stock, there still remains significant underlying risk to the tourist accommodation sector, any
impending global economic slowdown that constricts disposable income will lead to a reduction in future
international tourist arrivals. This in turn will lead to a situation of over capacity in the tourist
accommodation sector which may result in losses if hotel rooms are left unoccupied. If macroeconomic
fundamentals are to improve this will translate into an increase in international tourist arrivals and provide
greater incentive for further tourist accommodation construction.
Table: Global Sporting Calendar, 2013-2022
Year Country City/Cities Event Sport
2013 Russia MoscowIAAF World Championship
Athletics Mixed
2013 South AfricaRustenburg, Johannesburg, Nelspruit,
Durban, Port Elizabeth, Africa Cup of Nations Football
2013 Brazil
Unconfirmed but short list is: Fortaleza,Recife, Salvador, Brasilia, Belo Horizonte,
Rio de Janeiro FIFA Confederations Cup Football
2013 Myanmar Naypidaw Asia Games Mixed
2013 Sweden Malmo Eurovision Song Contest Singing
2013 Czech republic Prague UEFA Super Cup Football
2013 England LondonUEFA Champions League
Final Football
2014 BangladeshDhaka, Chittagong, Narayaganj, Rajshahi,
Sylhet, Khulna, 2020 World Cup Cricket
2014 Brazil
Manaus, Fortaleza, Natal, Recife,Salvador, Brasilia, Cuiba, Belo Horizonte,Sao Paolo, Rio de Janeiro, Curitiba, Porto
Alegre FIFA World Cup Football
2014 Wales Cardiff UEFA Super Cup Football
2014 Scotland Auchterarder, Gleneagles Ryder Cup Golf
2014 Russia Sochi, Krasnaya Polyana Winter Olympics Mixed
2014 Scotland Glasgow Commonwealth Games Mixed
2014 China Nanjing Youth games (Summer) Mixed
2014 South Korea Incheon Asian Games Mixed
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Global Sporting Calendar, 2013-2022 - Continued
Year Country City/Cities Event Sport
2014 Portugal LisbonUEFA Champions League
Final
2015Australia andNew Zealand Not Decided Cricket World Cup Cricket
2015 England
Cardiff, London, Birmingham, Brighton,Bristol, Coventry, Derbyy, Gloucester,Leeds, Leicester, Manchester, Milton
Keynes, New Castle, Southampton,Sunderland Rugby World Cup Rugby
2015 CanadaVancouver, Edmonton, Winnipeg, Ottawa,
Montreal, and Moncton FIFA Women's World Cup Football
2015 Canada Toronto Pan American Games Mixed
2015 MoroccoCasablanca, Rabat, Fes, Marrakesh,
Tangier, Agadir Africa Cup of Nations Football
2015 Georgia Tibilisi UEFA Super Cup Football
2015 Singapore Not Decided Asian Games Mixed
2015 Australia Melbourne, Sydney Brisbane Canberra Asia Cup Football
2016 FranceLens, Lille, Paris, Bourdeaux, Lyon,
Marseille, Nice, Toulouse, St-Etienne UEFA Euro Football
2016 Brazil Rio de Janeiro Olympics Mixed
2016 India Not Decided 2020 World Cup Cricket
2016 USA Chaska Ryder Cup Golf
2016 Norway Lillehammer Youth Games (Winter) Mixed
2017 Libya Not Decided Africa Cup of Nations Football
2017 England LondonIAAF World Championship
Athletics Mixed
2017 Russia Moscow, Kazhan, Sochi, St Petersburg FIFA Confederations Cup Football
2018 Russia
Kaliningrad, Kazan, Krasnodar, Moscow,Nizhny Novgorod, Rostov-on-Don, Saint
Petersburg, Samara, Saransk, Sochi,Volgograd, Yaroslavl, Yekaterinburg FIFA World Cup Football
2018 South Korea Pyeongchang Winter Olympics Mixed
2018 Australia Gold Coast City Commonwealth Games Mixed
2018 France Paris Ryder Cup Golf
2019England &
Wales Not Decided Cricket World Cup Cricket
2019 JapanTokyo, Sapporo, Yokohama, Osaka,
Toyota, Kobe, Fukuoka, Sendai Rugby World Cup Rugby
2020 USA Sheboygan Ryder Cup Golf
2021 Qatar Not Decided FIFA Confederations Cup Football
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Global Sporting Calendar, 2013-2022 - Continued
Year Country City/Cities Event Sport
2022 QatarAl-Khor, Doha, Ash-Shamal, Al Wakrah,
Umm Salar, Al Rayyan FIFA World Cup Football
Source: BMI Key Projects Database
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Global Assumptions
Our global aggregate real GDP growth forecast for 2012 remains 2.6%, though it has dipped slightly for
2013 to 3.0% from 3.1% previously. Our overall outlook on the global economy remains unchanged. Most
of our high-frequency global indicators suggest that output growth is slowing and global trade is stagnant at
best, while demand and confidence are at cyclically low levels. Inflation continues to trend down as well.
Since mid-2010, we have argued that the global economy is on the cusp of recession but that it would
probably take a major policy error to tip it over the edge. The potential for recession still looms large, with
China facing a hard landing amid a major economic transition, the eurozone contracting and the US facing a
fiscal emergency in the new year.
Table: Global Assumptions
2011 2012f 2013f 2014f 2015f 2016f 2017f
Real GDP Growth (%)
US 1.7 2.0 2.1 2.5 2.5 2.3 2.4
Eurozone 1.6 -0.6 0.6 1.4 1.7 1.9 1.9
Japan -0.7 1.5 1.2 1.2 1.2 1.2 1.3
China 9.1 7.5 7.1 6.0 6.0 6.1 6.0
World 3.1 2.6 3.0 3.3 3.5 3.5 3.5
Consumer Inflation (ave)
US 3.0 2.1 2.0 2.0 2.2 2.2 2.3
Eurozone 2.6 2.0 1.7 1.8 1.9 2.1 2.2
Japan -0.2 0.1 0.4 0.8 1.3 1.8 2.3
China 5.6 3.0 3.0 2.9 2.8 2.7 2.7
World 4.1 3.4 3.3 3.2 3.2 3.2 3.3
Interest Rates (eop)
Fed Funds Rate 0.00 0.00 0.00 0.00 0.00 1.00 2.25
ECB Refinancing Rate 1.00 0.50 0.50 0.50 0.50 1.00 1.50
Japan Overnight Call Rate 0.10 0.10 0.10 0.10 0.10 0.25 0.50
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Global Assumptions - Continued
2011 2012f 2013f 2014f 2015f 2016f 2017f
Exchange Rates (ave)
US$/EUR 1.39 1.27 1.22 1.20 1.20 1.20 1.20
JPY/US$ 79.74 78.00 75.00 78.00 82.25 84.75 85.25
CNY/US$ 6.46 6.35 6.45 6.55 6.60 6.60 6.60
Oil Prices (ave)
OPEC Basket (US$/bbl) 107.52 107.05 99.10 96.15 95.20 93.25 93.30
Brent Crude (US$/bbl) 111.05 110.00 102.00 99.00 98.00 96.00 96.00
Source: BMI
Stimulatory policy looks to be confined to the monetary rather than fiscal side for the foreseeable future. In
line with our long-standing view, the latter part of 2012 has seen an impressive degree of monetary
stimulus, with the European Central Bank (ECB), the US Federal Reserve (Fed) and the Bank of Japan
(BoJ) all announcing newly accommodative policies in September. The Fed took the biggest step with
'QE3': it will commence open-ended purchases of mortgage-backed securities of US$40bn a month until
'after' the economy improves, and indicated that the Fed funds rate would be anchored at 0-0.25% until at
least mid-2015. The BoJ also decided to expand its government bond buying programme. The ECB,
meanwhile, has revealed a framework allowing unlimited sterilised government bond purchases focused at
the short end of the yield curve, dependent on a sovereign issuer committing to a formal macroeconomic
adjustment programme. In addition, there will be no explicit cap on bond yields, the central bank will
surrender its preferred creditor status and the Securities Market Program will expire. We have pushed back
our expectations for central bank tightening accordingly, with the first Fed funds and ECB refi rate hikes
only in 2016, as opposed to 2014 in our previous set of forecasts. While these measures will not solve the
many problems plaguing the global economy - and in fact may cause a few of their own - they are a step in
the right direction given the inaction on the fiscal front.
Most major emerging market central banks have also joined the monetary easing. However, they will be
more concerned about inflation, particularly as their populaces would be harder hit by higher food and
energy commodity prices in the wake of monetary stimulus in the developed world. Emerging market
central bankers face a tough set of choices, as they may have to decide whether to prioritise currency
competitiveness or domestic price stability.
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Table: Global & Regional Real GDP Growth, % chg y-o-y
2011 2012f 2013f 2014f
World 3.1 2.6 3.0 3.3
Developed States 1.4 1.0 1.5 2.0
Emerging Markets 5.6 4.9 5.0 5.0
Asia Ex-Japan 7.2 6.0 6.2 5.8
Latin America 4.1 3.1 3.5 3.5
Emerging Europe 4.8 2.8 3.5 4.1
Sub-Saharan Africa 3.9 5.1 5.7 6.0
Middle East & North Africa 3.2 5.6 4.0 4.3
Table: Developed Market Exchange Rates
2011 2012f 2013f 2014f
Eurozone US$/EUR, ave 1.39 1.27 1.22 1.20
Japan JPY/US$, ave 79.74 78.00 75.00 78.00
Switzerland CHF/US$, ave 0.89 0.94 1.03 1.07
UK US$/GBP, ave 1.61 1.57 1.58 1.60
Table: Emerging Market Exchange Rates
2011 2012f 2013f 2014f
China CNY/US$, ave 6.46 6.35 6.45 6.55
South Korea KRW/US$, ave 1,107.84 1,175.00 1,150.00 1,100.00
India INR/US$, ave 46.67 53.50 50.00 47.50
Brazil BRL/US$, ave 1.68 2.00 2.15 2.28
Mexico MXN/US$, ave 12.44 13.05 12.80 12.60
Russia RUB/US$, ave 29.41 31.72 33.00 32.75
Turkey TRY/US$, ave 1.68 1.81 1.77 1.72
South Africa ZAR/US$, ave 7.26 8.20 8.00 8.00
Source: BMI
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Developed States
Our developed state aggregate growth estimate for 2012 has ticked down to 1.0% from 1.1%, while
remaining steady at 1.5% for 2013. Our eurozone projection for 2013 is down to 0.6% (compared with 0.7%
previously). Notably, we have revised our real GDP growth forecasts for France and Italy down for 2013,
and now see no Italian growth in 2013. The announcement of a framework for the ECB to purchase
government bonds, a constructive ruling from Germany's constitutional court and a victory for pro-euro
centrist parties in the Netherlands have been broadly supportive of efforts by policymakers to contain the
eurozone crisis. However, with the exception perhaps of the Dutch election, these policy events have met -
rather than exceeded - expectations, and the crisis is still far from over. Meanwhile, we have bumped up our
Swedish growth expectation to 1.1% for 2012 from 0.5% owing to stronger-than-expected first-half growth
figures, though we have lowered our 2013 forecast to 2.0% from 2.3%.
Table: Developed States - Real GDP Growth Forecasts, %
2011 2012f 2013f 2014f
Developed States Aggregate Growth 1.4 1.0 1.5 2.0
G7 1.4 1.3 1.6 2.1
Eurozone 1.6 -0.6 0.6 1.4
EU-27 1.7 -0.3 0.9 1.7
Selected Developed States
Australia 2.1 2.1 0.9 2.3
Austria 2.7 0.6 1.2 1.5
Belgium 1.8 0.5 1.1 1.6
Canada 2.5 2.0 2.1 2.7
Denmark 1.0 0.5 1.2 1.7
Finland 2.8 0.1 1.6 1.9
France 1.8 -0.2 0.6 1.4
Germany 3.0 0.7 1.5 1.9
Ireland 1.4 -0.5 0.3 1.4
Italy 0.5 -2.3 0.0 1.1
Japan -0.7 1.5 1.2 1.2
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Developed States - Real GDP Growth Forecasts, % - Continued
2011 2012f 2013f 2014f
Netherlands 1.2 -0.6 0.6 0.9
Norway 1.6 1.4 0.8 0.6
Portugal -1.6 -3.4 -1.7 0.1
Spain 0.8 -2.1 -0.5 0.5
Sweden 3.9 1.1 2.0 3.8
Switzerland 2.1 0.7 1.5 1.8
UK 1.0 0.2 1.7 2.3
US 1.7 2.0 2.1 2.5
Source: BMI
Emerging Markets
Emerging markets are set to grow by 4.9% in real terms in 2012, remaining relatively steady in 2013 at
5.0%. The latter represents a decline from our previous forecast of 5.2%, however, as our aggregate
forecasts have fallen for each region in 2013. The biggest downward revision among individual countries
since our last monthly update is Argentina, which we see experiencing major economic difficulty and a
significant currency devaluation in 2013. Its growth forecast for that year has been reduced accordingly, to
0.9% from 3.7%. Other major downward revisions are in Indonesia, South Korea and Hungary, all of which
will face both domestic and external headwinds to growth in 2013.
Table: Emerging Markets - Real GDP Growth Forecasts, %
2011 2012f 2013f 2014f
Emerging Markets Aggregate Growth 5.6 4.9 5.0 5.0
Latin America 4.1 3.1 3.5 3.5
Argentina 8.9 3.0 0.9 2.6
Brazil 2.7 1.8 3.7 3.7
Mexico 3.9 3.8 3.4 3.0
Middle East 3.2 5.6 4.0 4.3
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Emerging Markets - Real GDP Growth Forecasts, % - Continued
2011 2012f 2013f 2014f
Sub-Saharan Africa 3.9 5.1 5.7 6.0
South Africa 3.1 2.5 3.3 3.9
Nigeria 7.4 7.1 7.3 7.2
Saudi Arabia 7.1 5.2 4.5 3.5
UAE 4.2 2.9 3.5 4.5
Egypt 1.8 2.3 3.1 5.3
Emerging Asia 7.2 6.0 6.2 5.8
China 9.1 7.5 7.1 6.0
Hong Kong 5.0 1.8 3.5 3.6
India 6.5 5.9 7.2 6.6
Indonesia 6.5 6.0 5.6 6.5
Malaysia 5.1 3.8 4.6 4.3
Singapore 4.9 2.6 3.6 3.4
South Korea 3.7 1.9 3.0 4.6
Taiwan 4.0 1.6 4.2 5.0
Thailand 0.1 4.0 4.4 4.4
Emerging Europe 4.8 2.8 3.5 4.1
Russia 4.3 3.4 3.6 3.7
Turkey 8.5 3.0 4.7 5.2
Czech Republic 1.7 -0.7 0.8 1.9
Hungary 1.7 -1.2 1.2 2.3
Poland 4.3 2.5 2.7 3.6
Source: BMI
We are below consensus on growth in 2012 for the US, the eurozone, China, Japan, Russia and Brazil,
according to the Bloomberg survey of analysts. For 2013, we are significantly below consensus on China
and Brazil.
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Table: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS (%)
US Eurozone Japan Brazil China Russia India
2012 Bloomberg Consensus 2.2 -0.5 2.3 1.9 7.7 3.9 n/a
BMI 2.0 -0.6 1.5 1.8 7.5 3.4 5.9
2013 Bloomberg Consensus 2.1 0.4 1.2 4.1 8.0 3.7 6.0
BMI 2.1 0.6 1.2 3.7 7.1 3.6 7.2
Source: BMI, Bloomberg
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Demographic Forecast
Demographic analysis is a key pillar of BMI's macroeconomic and industry forecasting model. Not only is
the total population of a country a key variable in consumer demand, but an understanding of the
demographic profile is key to understanding issues ranging from future population trends to productivity
growth and government spending requirements.
The accompanying charts detail Egypt's population pyramid for 2011, the change in the structure of the
population between 2011 and 2050 and the total population between 1990 and 2050, as well as life
expectancy. The tables show key data points from all of these charts, in addition to important metrics
including the dependency ratio and the urban/rural split.
Source: World Bank, UN, BMI
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Table: Egypt's Population By Age Group, 1990-2020 ('000)
1990 1995 2000 2005 2010 2012 2015f 2020f
Total 56,843 62,064 67,648 74,203 81,121 83,958 88,179 94,810
0-4 years 8,507 7,989 8,172 8,552 9,008 9,149 9,212 9,063
5-9 years 7,823 8,334 7,908 8,098 8,499 8,693 8,974 9,182
10-14 years 6,971 7,762 8,300 7,883 8,074 8,221 8,480 8,957
15-19 years 5,855 6,717 7,678 8,262 7,851 7,837 8,044 8,451
20-24 years 4,902 5,341 6,308 7,538 8,158 8,028 7,737 7,930
25-29 years 4,220 4,488 4,876 6,030 7,347 7,746 7,990 7,569
30-34 years 3,705 4,110 4,353 4,787 5,901 6,476 7,255 7,891
35-39 years 3,148 3,725 4,101 4,429 4,782 5,145 5,892 7,235
40-44 years 2,848 3,136 3,706 4,094 4,437 4,537 4,796 5,894
45-49 years 2,061 2,809 3,093 3,676 4,068 4,214 4,432 4,786
50-54 years 1,835 1,989 2,719 3,016 3,597 3,773 4,005 4,365
55-59 years 1,553 1,716 1,877 2,590 2,890 3,100 3,469 3,871
60-64 years 1,289 1,411 1,577 1,745 2,429 2,559 2,728 3,289
65-69 years 944 1,113 1,238 1,407 1,575 1,814 2,215 2,503
70-74 years 621 746 900 1,025 1,186 1,212 1,348 1,913
75+ years 561 677 843 1,071 1,319 1,453 1,603 1,910
f = BMI forecast. Source: World Bank, UN, BMI
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Table: Egypt's Population By Age Group, 1990-2020 (% of total)
1990 1995 2000 2005 2010 2012 2015f 2020f
0-4 years 14.97 12.87 12.08 11.53 11.10 10.90 10.45 9.56
5-9 years 13.76 13.43 11.69 10.91 10.48 10.35 10.18 9.69
10-14 years 12.26 12.51 12.27 10.62 9.95 9.79 9.62 9.45
15-19 years 10.30 10.82 11.35 11.13 9.68 9.33 9.12 8.91
20-24 years 8.62 8.61 9.33 10.16 10.06 9.56 8.77 8.36
25-29 years 7.42 7.23 7.21 8.13 9.06 9.23 9.06 7.98
30-34 years 6.52 6.62 6.44 6.45 7.27 7.71 8.23 8.32
35-39 years 5.54 6.00 6.06 5.97 5.90 6.13 6.68 7.63
40-44 years 5.01 5.05 5.48 5.52 5.47 5.40 5.44 6.22
45-49 years 3.63 4.53 4.57 4.95 5.01 5.02 5.03 5.05
50-54 years 3.23 3.21 4.02 4.06 4.43 4.49 4.54 4.60
55-59 years 2.73 2.77 2.78 3.49 3.56 3.69 3.93 4.08
60-64 years 2.27 2.27 2.33 2.35 2.99 3.05 3.09 3.47
65-69 years 1.66 1.79 1.83 1.90 1.94 2.16 2.51 2.64
70-74 years 1.09 1.20 1.33 1.38 1.46 1.44 1.53 2.02
75+ years1 0.99 1.09 1.25 1.44 1.63 1.73 1.82 2.01
f = BMI forecast. Source: World Bank, UN, BMI
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Table: Egypt's Key Population Ratios, 1990-2020
1990 1995 2000 2005 2010 2012 2015f 2020f
Dependent ratio, % of total working age 1 80.9 75.1 67.9 60.7 57.6 57.2 56.5 54.7
Dependent population, total, '000 2 25,427 26,621 27,361 28,036 29,662 30,543 31,830 33,529
Active population, % of total 3 55.3 57.1 59.6 62.2 63.4 63.6 63.9 64.6
Active population, total, '000 4 31,416 35,442 40,288 46,167 51,460 53,416 56,348 61,281
Youth population, % of total working age 5 74.2 68.0 60.5 53.1 49.7 48.8 47.3 44.4
Youth population, total, '000 6 23,301 24,086 24,380 24,533 25,581 26,063 26,665 27,203
Pensionable population, % of total workingage 7 6.8 7.2 7.4 7.6 7.9 8.4 9.2 10.3
Pensionable population, '000 8 2,126 2,536 2,981 3,503 4,081 4,479 5,165 6,326
f = BMI forecast; 1 0>15 plus 65+, as % of total working age population; 2 0>15 plus 65+; 3 15-64, as % of totalpopulation; 4 15-64; 5 0>15, % of total working age population; 6 0>15; 7 65+, % of total working age population; 8 65+.Source: World Bank, UN, BMI
Table: Egypt's Rural And Urban Population, 1990-2020
1990 1995 2000 2005 2010 2012 2015f 2020f
Urban population, % oftotal 43.5 42.8 42.6 42.6 43.0 43.3 43.8 45.0
Rural population, % of total 56.5 57.2 57.4 57.4 57.0 56.7 56.2 55.0
Urban population, '000 25,136.4 27,331.1 29,894.0 32,867.8 34,882.1 36,370.8 38,622.3 42,664.5
Rural population, '000 32,648.4 36,526.6 40,279.8 44,286.6 46,239.0 47,587.6 49,556.4 52,145.5
f = BMI forecast. Sources: World Bank, UN, BMI
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Methodology
How We Generate Our Industry Forecasts
BMI's industry forecasts are generated using the best-practice techniques of time-series modelling. The
precise form of time-series model we use varies from industry to industry, in each case being determined, as
per standard practice, by the prevailing features of the industry data being examined. For example, data for
some industries may be particularly prone to seasonality, ie seasonal trends. In other industries, there may
be pronounced non-linearity, whereby large recessions, for example, may occur more frequently than
cyclical booms.
Our approach varies from industry to industry. Common to our analysis of every industry, however, is the
use of vector autoregressions. Vector autoregressions allow us to forecast a variable using more than the
variable's own history as explanatory information. For example, when forecasting oil prices, we can include
information about oil consumption, supply and capacity.
When forecasting for some of our industry sub-component variables, however, using a variable's own
history is often the most desirable method of analysis. Such single-variable analysis is called univariate
modelling. We use the most common and versatile form of univariate models: the autoregressive moving
average model (ARMA).
In some cases, ARMA techniques are inappropriate because there is insufficient historic data or data quality
is poor. In such cases, we use either traditional decomposition methods or smoothing methods as a basis for
analysis and forecasting.
It must be remembered that human intervention plays a necessary and desirable part in all of our industry
forecasting techniques. Intimate knowledge of the data and industry ensures we spot structural breaks,
anomalous data, turning points and seasonal features where a purely mechanical forecasting process would
not.
Tourism Industry
There are a number of principal criteria that drive our forecasts for each tourism sector variable.
Figures for the tourism sector data are based, where possible, on industry associations/operators,
government/ministry sources and official data. Where these are unavailable, tourism forecasts are based on
a range of variables:
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■ Government policy, industry trends and expenditure levels stated in international and national press.
■ Industry trends and expenditure levels stated in tourism company official financial reports or releases.
■ Likely expenditure and growth patterns owing to international developments and demographic patterns.
■ Likely alterations in expenditure patterns owing to economic/political activity.
Tourism Ratings - Methodology
Our approach in BMI's Tourism Risk/Reward Ratings (RRRs) is threefold. First, we seek accurately to
capture the operational dangers to companies operating in this industry globally. Second, we attempt, where
possible, to identify objective indicators that may serve as proxies for indicators that were traditionally
evaluated on a subjective basis. Finally, we include aspects of BMI's proprietary Country Risk Ratings
(CRR) that are relevant to the tourism industry. Overall, the ratings system, which integrates with those of
all 16 industries covered by BMI, offers an industry-leading insight into the prospects/risks for companies
across the globe.
Ratings System
Conceptually the ratings system divides into two distinct areas:
Rewards: Evaluation of sector's size and growth potential in each state, and also broader industry/state
characteristics that may inhibit its development.
Risks: Evaluation of industry-specific dangers and those emanating from the state's political/economic
profile that call into question the likelihood of anticipated returns being realised over the assessed time
period.
Indicators
The following indicators have been used. Overall, the rating uses three subjectively-measured indicators,
and 41 separate indicators/datasets.
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