The Impact of the Egyptian Political Events during 2011 on Hotel Occupancy in Cairo

Abuelkassem A.A. Mohammad, Ele

Abstract

The Impact of the Egyptian Political Events during 2011 on Hotel Occupancy in Cairo The tourism industry is the cornerstone of the Egyptian economy generating approximately 11.4% of Egyptian GDP and providing about 12.6% of direct and indirect job opportunities for the Egyptian workforce. It is the most important source of foreign exchange earnings for the national income at 20%. Despite its importance, the tourism industry is extremely vulnerable to negative events, such as terrorism, financial crises, natural disasters and political instability. This paper investigates the impact of the Egyptian political events throughout 2011 on occupancy rates in Cairo hotels and evaluates the responses of both the hotels and the government to these events. The data on hotel occupancy was collected from Egyptian Ministry of Tourism reports and shows that the political events of 2011 had a strong negative impact on the hotel industry in Egypt as hotels in Cairo and other major cities were severely hit by these events. The occupancy rates of Cairo hotels sharply declined in comparison to the occupancy rates of 2010. Juxtaposition of the occupancy data against media reports of the political events shows that each public disturbance incident had a significant negative impact on hotel occupancy in Cairo and, as a result, hotel revenues decreased. Short-term responses of the hotels included reducing room rates and reducing expenditure by laying off staff. Alongside this the government response was to financially compensate the damaged hotels. The inadequacy and inappropriateness of these responses was evidenced by hotel occupancy remaining low throughout the year. This paper discusses the alternative strategies that the hotels and the government could adopt with a particular emphasis on ensuring the safety and security of tourist and using the media to communicate this to tourists and encourage their return to a destination which provides lessons for other crisis-hit destinations.