Travel and Tourism

Egypt aims for revival of tourism

In a bid to put its recent upheaval behind it Egypt is embarking on a new campaign to boost tourism.

Rebecca Bundhun

May 04, 2011

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Egypt is hoping to attract tourists from the UAE with a new advertising campaign this month.

The campaign is expected to include television, online and outdoor advertising, the country's tourism authority announced at the Arabian Travel Market in Dubai yesterday.

"We have a special focus particularly on the GCC in Saudi Arabia, Kuwait, Qatar and the UAE," said Hisham Zaazou, the first assistant minister of tourism for Egypt.

The country's tourism industry last year accounted for 11.3 per cent of its economy and 12.6 per cent of all jobs. Twelve per cent of Egypt's visitors come from the Middle East, the country's second-biggest market after Europe, where 76 per cent of its tourists originate.

Mr Zaazou said the number of Arab tourists grew to 2.1 million last year from 1.9 million in 2009. Last year, Egypt had 53,815 visitors from the UAE, 8.5 per cent more than in 2009.

Meanwhile, Egypt's state-owned tourism holding company, Hotac said it planned to invest US$368 million (Dh1.35bn) over the next three years in refurbishing nine of its landmark hotels.

The refurbishment funds would come from its existing capital and loans, he said and added there were no plans for Hotac to sell any of its hotels.

Frederic Bardin, the senior vice president of Emirates Holidays, said tourists from the region would return to Egypt in significant numbers only when it was clear that stability had been restored in the country.

"Egypt obviously stopped almost altogether for two to three weeks," said Mr Bardin. "Now we've got business trickling in, and I would expect it's going to stay more or less like this until the elections [due in the autumn].

"We are certainly going to have a bit more business in summer because European expats mostly go to the Red Sea and the GCC nationals go to Alexandria," he said.

"I expect that to very slowly come back in during the summer, but not much. People are going to relieved when there are elections," said Mr Bardin. "At the moment, maybe it's still a bit unstable in people's minds."

UAE currency: the story behind the money in your pockets
Start-up hopes to end Japan's love affair with cash

Across most of Asia, people pay for taxi rides, restaurant meals and merchandise with smartphone-readable barcodes — except in Japan, where cash still rules. Now, as the country’s biggest web companies race to dominate the payments market, one Tokyo-based startup says it has a fighting chance to win with its QR app.

Origami had a head start when it introduced a QR-code payment service in late 2015 and has since signed up fast-food chain KFC, Tokyo’s largest cab company Nihon Kotsu and convenience store operator Lawson. The company raised $66 million in September to expand nationwide and plans to more than double its staff of about 100 employees, says founder Yoshiki Yasui.

Origami is betting that stores, which until now relied on direct mail and email newsletters, will pay for the ability to reach customers on their smartphones. For example, a hair salon using Origami’s payment app would be able to send a message to past customers with a coupon for their next haircut.

Quick Response codes, the dotted squares that can be read by smartphone cameras, were invented in the 1990s by a unit of Toyota Motor to track automotive parts. But when the Japanese pioneered digital payments almost two decades ago with contactless cards for train fares, they chose the so-called near-field communications technology. The high cost of rolling out NFC payments, convenient ATMs and a culture where lost wallets are often returned have all been cited as reasons why cash remains king in the archipelago. In China, however, QR codes dominate.

Cashless payments, which includes credit cards, accounted for just 20 per cent of total consumer spending in Japan during 2016, compared with 60 per cent in China and 89 per cent in South Korea, according to a report by the Bank of Japan.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Kareem Shaheen on Canada
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