The Underdogs of Egyptian Tourism: Budget Hotel in Cairo Struggles

Egypt and tourism have an age-old relationship, with the country being a steady draw for travellers for more than two millennia. But over the last four years, Egypt has witnessed more political turmoil than it had seen in decades. Amid the power struggle and the different phases of instability, several sectors that are considered core to the Egyptian economy have been fiercely rattled, especially tourism.

The tourism sector, which accounts for 11 percent of Egypt’s GDP and is the source of 20 percent of the country’s hard currency, took a deep plunge after the 2011 revolution.

How deep? Try this on for size. In 2010, when Egypt was recovering from the aftermath of the world economic crisis, it still attracted 14.7 million visitors. Four years later, while the world economy recovered, Egypt had only 9.9 million visitors.

And the underdog in all of this? The small-scale tourism operators whose businesses depend on independent travelers.

However, it wasn’t until earlier in March, when news of a new law that would make visa on arrival at the airport impossible that the cries of small tourism business owners became loud enough for people to take notice of a market segment that is rarely spoken of.

It was a cry out loud enough to question who are the actual beneficiaries of the government’s efforts to boost tourism and who remain the underdogs of the industry? In a three-part series on the website, StepFeed investigates: Can Egyptian small tourism businesses withstand another blow?

Featuring three interviews from personalities in the independent tourism industry, we will tell the story of decline in tourism in Egypt and look at if these small business owners will able to thrive in the future, in the face of new legislation that seems to favor bigger operators.

Hisham Youssef, founder and owner of Berlin Hotel, a one-star budget hotel in Downtown Cairo tells me about his 18 years of experience in the industry, and how his business went from being overbooked to boasting average occupancy of 35 to 60 percent on the good days.

“When we opened in March 1997, the industry was excellent,” Youssef says, “The number of budget hotels in Downtown was quite small, and they used to help one another out.”

But it wasn’t long though before Youssef had the first taste of the industry’s sensitivity and fragility thanks to the Luxor massacre in November 1997 . For several following years, there was barely any work due to the resulting travel advisories imposed on Egypt.

“Once the industry recovered from the 1997 blow, tourism was making gains,” Youssef says. “In September 1999, we were listed for the first time in Lonely Planet . Shortly afterwards, Lonely Planet published a Cairo guidebook where we were listed among seven hotels as the No. 1 for recommended budget hotel.”

As glad as Youssef was to see the business pick up, September 11 happened, and from then on, “things never went back to how they were.”

Even though the terrorist attacks didn’t happen anywhere near Egypt, “this time, it was more of an ideological boycott against Arabs rather than a matter of security.”

Flash forward 10 years, during which the business fluctuated between briefs periods of blossoming and recession, the January 25 uprising erupted in 2011 at the footstep of Youssef's hotel, bringing the industry to an almost full halt.

“Even the Egyptians fled the area of Tahrir Square and the surrounding neighborhoods because of the violence and unrest,” Youssef says.

But even though Youssef attributes a great deal of the industry’s frailty to the constant unrest and terrorist attacks that caused many embassies to issue security alerts on travel to Egypt, he believes that corruption played a distinct role in the market deterioration.

“In the recent times, many budget hotels are run by what we refer to as 'kherteyyah' (con artists), those who chase after people in the street selling them fake merchandise for really expensive prices, and making up stories to make the most money out of the tourists,” Youssef explains, adding that the kherteyyah make their living on cheating tourists.

However, seemingly against all odds, the number of budget hotels in Downtown has tripled from 11 to over 33. Youssef explained that this was due to not only the scams and trickery of the kherteyyah that earned them fast money, but also to the corruption of the municipality, which no longer follows the regulations of licensing hotels under the condition that the potential owner “has enough money.”

Since the government wasn’t trying to help this situation, Youssef took it upon himself to warn his guests of the scams of the kherteyyah and raise awareness on the matter through the international guidebooks. He tried reporting the kherteyyah to the tourism police but it never seemed to help.

“Most times the tourism police will let them go if they are 'compensated',” Youssef says.

Struggling to make ends meet, Youssef hopes that the terrorist attacks will stop, and that the embassies will lift their travel alerts. Otherwise, he may have to shut down his hotel, which has become more of a burden than anything else.

Part II: An Eco-Lodge Entrepreneur Turns to Music Festivals in Upper Egypt

Part III: Tour Operator Looks to the Unconventional For Success