Assessment 1 – group assignment country egypt EXAMINE THE CHANGES FOR 5 MAIN SECTORS IN TOURISM

Assessment – Group Assignment Country: Egypt Course Code ECON1318 Course Name Economics for Tourism and Hospitality Location Saigon South Campus Assignment – Group Assignment Student Name/ Student ID Nguyen Ngoc Diep – s3836416 Truong Buu Doanh – s3818121 Christina Leong Ru Suen – s3878345 Huynh Duong Phi – s3817778 Nguyen Lan Phuong – s3726725 Group SG-G01-Team 09 Lecturer Mr Lee Woocheol Word Count 2,750 words “I declare that in submitting all work for this assessment I have read, understood and agreed to the content and expectations of the Assessment Declaration” Table of Contents A EXAMINE THE CHANGES FOR MAIN SECTORS IN TOURISM I II III IV V ATTRACTIONS NATURAL ATTRACTIONS PRIMARY MAN-MADE STRUCTURES PURPOSE BUILT ATTRACTIONS ACCOMMODATIONS TRANSPORTATION TRAVEL ORGANIZER/INTERMEDIATE DESTINATION ORGANIZATION SECTOR B DEMAND DETERMINANTS DETERMINANT 1: PEOPLE INCOME ATTRACTION ACCOMMODATION DETERMINANT 2: PEOPLE PREFERENCES .8 TRANSPORTATION TRAVEL ORGANIZATION DESTINATION ORGANIZATION C SUPPLY DETERMINANTS ATTRACTION 10 ACCOMMODATIONS 10 TRANSPORTATION 10 D DIAGRAM 11 I ATTRACTIONS .11 NATURAL ATTRACTIONS 11 PRIMARY MAN-MADE STRUCTURES 12 PURPOSE BUILT ATTRACTIONS 13 II ACCOMMODATION 14 III TRANSPORTATION 15 IV TRAVEL ORGANIZER 16 V DESTINATION ORGANIZER 17 E CALCULATIONS 18 A USING INFORMATION FOR NATIONAL CARRIER FLAG, CALCULATE PRICE ELASTICITY OF DEMAND OF AIR TRAVEL IN EGYPT 18 B INCOME ELASTICITY OF DEMAND OF OUTBOUND TRAVEL IN EGYPT 19 REFERENCES 20 A Examine the changes for main sectors in tourism I Attractions Natural attractions Sahara el Beyda According to Salama, the White Desert attracts about 70,000 foreign tourists each year, and more than 200,000 locals (Haitham 2017) However, due to the impact of the covid pandemic, the number of visitors coming here has declined Al Nayzak Beach In comparison to 2019, international tourist arrivals (overnight tourists) fell by 72 percent in January-October 2020 (UNWTO 2020) Accordingly, the number of tourists visiting the beach has also heavily decreased Primary man-made structures Pyramids of Gina Pyramids of Gina is a first place stimulating the tourism industry after 2020 A 17 million euro makeover is underway to make the country's most popular cultural monument more accessible to tourists (Laura & Rosie 2021) The renovation is focused on the Giza Plateau (ibid.) A new tourist center, an environmentally friendly electric bus, and the first restaurant on site are all part of the ambitious project (ibid.) Abu Simbel Director of Abu Simbel Antiquities, Hossam Aboud stated the number of visitors to Abu Simbel increased by 160 percent since the beginning of 2017 compared to the same period in 2016 (Basma 2017) In 2018, 2,500 tourists from all around the world visited the temple in southern Aswan(SIS 2018) This positive status was up until 2020, Covid pandemic occurred 3 Purpose built attractions Luxor museum During the covid-19 outbreak period, tourist activities continued as normal in Luxor in 2020, thousands of visitors flocked to its various archaeological sites such as Luxor and Karnak Temples, the Valley of the Kings and Queens on the West Bank of Luxor as well as its museums (Egypt Today 2020) This circumstance is different from other tourism places at the same time The National Museum of Egyptian Civilization After suffering the 2020 tourist arrivals decline, thousands of Egyptian and foreign visitors visited the National Museum of Egyptian Civilization in Fustat on April 9, 10 in 2021, to see the Central Exhibition Hall, which was unveiled during the welcome of the Pharaohs' Golden Parade on April (Egypt Today 2021) According to Ahmed Ghoneim, CEO of the Museum Authority, the number of museum entry tickets sold on April and 10 totaled 10,000 tickets, with a total of 25,000 visitors (ibid.) II Accommodations It reports that there were 138,997.000 hotel rooms in Egypt in 2018 (Ceicdata 2018) Egypt's overall number of overnight stays reached 42.97 million in 2020 (Saifaddin 2021) This was a significant decrease from the previous year, when there were 136.28 million overnight stays (ibid.) This decrease can be ascribed to a decrease in visitor numbers as a result of travel restrictions imposed to combat the coronavirus (COVID-19) epidemic (ibid.) With about 21.9 million nights spent, European tourists had the biggest number of overnight stays (ibid.) III Transportation In 2020, 336 thousand visitors came to Egypt via land, up from 1.5 million in 2019 The number of tourists arriving by land peaked in 2019, and hit its lowest in 2020 (Saifaddin 2021) The second transport market is airplanes, with around 3.3 million tourists arrived in Egypt by airplane(Saifaddin 2021) IV Travel organizer/intermediate To have a gradual recovery from covid epidemic, Tourism and Antiquities Minister Khaled alEnani told AFP they would prioritize workers in the tourism industry, which is essential to the Egyptian economy (Rédaction 2021) In addition, travel organizers in Egypt tourism opens more opportunities for tourists to encourage them to travel as well as regaining their main contribution to the economy For example, Central Holidays is an international travel brand offering three special specials on three of its most popular Egypt packages, with savings of up to $150 per person for travel through the end of 2021 (MOONACHIE 2021) V Destination organization sector The contribution of Egypt's travel and tourism sector to the country's GDP plummeted from $32 billion (8.8%) in 2019 to $14.4 billion (3.8%) in 2020, just 12 months later According to the chairman of Egypt's Tourism Promotion Authority (TPA), the Egyptian tourism sector has recovered by 40% in 2021 as a result of COVID-19 prevention, and is expected to recover further than other countries when removing lockdowns and travel bans (Mahmoud 2021) The TPA sponsors international art and cultural events in Egypt as one of its tourism marketing tactics during the COVID-19 crisis, in addition to initiating marketing efforts around the world (Mahmoud 2021) B Demand determinants The factors that lead to fluctuations in the demand for a specific product or service can be defined as the determinants of demand and some of the determinants of demand are population, income, change in preferences and price expectations (Prateek 2021) These changes will affect the demand curve which results in the change of price and quantity demanded (Prateek 2021) Determinant 1: People Income Figure Average Household Income 2005 - 2018 Despite developing a healthy economic growth in 2020, there are still an adequate amount of people living in poverty in Egypt (AFP 2020) During the range of 2005 to 2018 which is before the pandemic COVID-19, the average household income of Egypt citizens increase rapidly by around 15 million EGP compared to the previous years (CEIC n.d., figure 1) According to data from the World Bank around April to June 2020 after the pandemic has started, roughly 2.7 million jobs were lost mainly in the tourism and transport sectors and therefore results in an increase of 9.6% in unemployment (AFP 2020) Attraction Since the government of Egypt has been trying to maintain healthy economic growth, the total revenue of tourism in 2018 had reached 174.1 billion EGP and the tourism sector is considered one of the largest employers in Egypt (OECD 2020) Specifically, in 2018 before COVID-19, it was recorded around 9.8 million international tourists arrived in Egypt (OECD 2020) However, the number of tourists started to decrease after the pandemic started due to the high rate of unemployment and the decrease in income caused by the ineffective preventive measures to cope with the pandemic (Mourad 2020) Accommodation Within the tourism industry, Airbnb is known as one of the most popular forms of accommodations besides hotels and it is also becoming the substitution threat due to its popularity among tourists and the convenience that it brings (Dori 2020) Despite having modern technology and offering convenience to tourists, prices of Airbnb in Egypt ranks from $24 to $80 per night which is a more affordable price considering the household income of Egypt citizens (figure 2) Figure Airbnb prices in Dahab, Egypt Determinant 2: People preferences Although there was an upward trend in inbound tourism since 2017, a few people, especially Eroupean travellers still not prefer travelling to Egypt as the country’s tourism industry had suffered from two tough events in the past (Egypt Independent 2021) Moreover, Egypt is also low in seasonality because it is a year-round destination as well as the preferences of tourists for uniqueness and exclusive experiences when travelling, therefore results in negative tourism image for tourists from other countries (Egypt Independent 2021, figure 3) Figure EU tourist number of nights by nation Transportation Developing and investing in the transportation sector is important to Egyptian citizens due to the growing population, increase productivity in the tourism industry as well as connecting with the international market (World Bank n.d.) After the start of COVID-19, its citizens prefer to stay at home and practice social distancing instead of going out or traveling As a result, the demand for transportation began to have a downward trend Travel Organization The MoT is one of the main stakeholders that are responsible for organizing and advertising new forms of transportation within Egypt (World Bank n.d.) Moreover, the MoT along with the Cairo Transport Authority operated and provide fundings to successful BRT systems for both citizens and international tourists (World Bank n.d.) It is estimated that after the pandemic in around 2025, high-speed rail will be developed in order to meet the demand of international tourists as well as the daily usage of local citizens Destination Organization In order to promote and encourage inbound and domestic tourism, the Ministry of Tourism in Egypt showcases Egypt’s contemporary dimensions through new campaigns as well as managing the development of new structures such as new transportation as mentioned above (OECD 2020) However, due to the propensity of citizens during COVID-19, Egyptians still have less interest in inbound tourism and they also prefer outbound tourism more to experience more diversification of tourism products and services C Supply determinants Egypt Economic Report from 2020 to 2021 and also predicts the future of economic development in Egypt in 2022-23 Fortunately, Egypt is one of the Arab countries predicted to grow despite for the appearance of Covid pandemic According to Oxford Business Group, the economic growth was estimated at 4.5% to 3.5%, before dropping this figure to 2% in May 2020 However, this is still a respectable number during this pandemic and keep Egypt from recession due to the positive number of GDP In fact, the tourism industry in Egypt is hardest hit due to low tourism revenue, the country's current income is in deficit due to the absence of visitors The government has taken solutions to lockdown, however, they have invested and developed other industries such as oil, local industry, local manufacturing in the hope of replacing imported goods in the future (Yousef S and Malaika T, 2021) Because this disruption has caused supply to decrease, the government is also supporting domestic businesses with industries to hope to turn the situation into a proactive one in the future Attraction The potential for tourism development in Egypt is high, so the government is paying great attention to the development of ecotourism According to Frommer's, a travel agency in Egypt, Egypt is in fact implementing a plan to develop green tourism in this country They are establishing a total of 21 protected areas near the Red Sea, they are raising capital from many domestic and foreign donors, including the participation of the EU Among them are the Ras Mohamed National Park next to the Gulf of Suez, which is home to a very popular snorkeling and reef site, or the St Catherine reserve in South Sinai, which preserves cultural heritage and wildlife (Oxford Business Group, 2021) Accommodations According to Daily News, hotel supply in Egypt will fluctuate over 83 thousand rooms and will reach over 90,000 rooms in 2021-2022 Before Covid, famous cities in Egypt always accounted for a high percentage of hotel supply (Cairo, Alexandria and Hurghada) This rate fell by an average of 27% in Cairo and Hurghada For Alexandria, it is only 1% down because it is a new destination on the Mediterranean coast, attracting a lot of domestic tourists It can be said that Alexandria has saved the hotel supply in Egypt Besides, Egyp has also improved modern hotels instead of old traditional hotels, as well as allowing individuals to own rooms or properties for tourists (Oxford Business Group, 2021) Transportation As mentioned above, Egypt suffers from the loss of imported goods According to the American Chamber of Commerce in Egypt, more than 90% of the country's international trade is transported through Egypt's ports, and domestic goods also depend on shipping through the ports Due to the outbreak, the government requires all transportation to be carried out at night (to avoid congestion causing outbreaks) resulting in less efficient productivity than before the epidemic Some exceptions such as food and necessities will still be passed as usual D Diagram I Attractions Natural attractions 10 Natural attractions (Sahara el Bayda and Al Nayak Beach) From a theoretical perspective, the low demand and upward supply will create a significant change in equilibrium Specifically, the COVID-19 affects the tourism industry, resulting in the loss of more than 70 percent of the number of foreign tourists arrivals due to travel ban (Nadal, 2021) In addition, COVID-19 is also considered an excellent moment for recovering natural resources including wildlife and the environment (Dr Anna, 2021) It results in a 20% discount on entrance fees of historical museums and sites to attract more tourists (Oxford Business Group, 2020) Primary man-made structures 11 Man-made Location ( Pyramids of Giza and Mosque of Ibn Tulun) The demand of visitors to visit these attractions will decline due to the lesser number of tourist arrivals to both Pyramids of Giza and Mosque of Ibn Tulun during the epidemic period In theory, the decrease of demand and supply leads to the reduction of price and quantity demanded However, in reality, the ticket entrance price at Pyramid of Giza increases steadily from approximately dollars (2018) to (2021) dollars (Norman, 2018) (Egypt Tailor Made, 2021) 12 Purpose built attractions Purpose built attractions (Abu Simbel and The National Museum of Egyptian Civilization) Regarding two purpose built attractions, The National Museum of Egyptian Civilization and Abu Simbel, both of these attractions undoubtedly affected by the Covid-19 pandemic Therefore, both demand and supply decrease significantly because of the drop of foreign tourists leading to the reduction in price However, in reality, the entrance fee of Abu Simbel does not decrease, and it increases from dollars (2018) to approximately 17 dollars (2021) (The World Travel Guy, 2019) (Julie, 2021) 13 II Accommodation Accommodation Both demand and supply of accommodation also suffer a huge decrease since the lesser of foreign tourists as well as the cost of production In addition, numerous hotels have to lay off and owe their employees’ salaries Thereby, they provide many attractive offers through Egypt private tour packages during Coronavirus with cheaper price (Cleopatra Egypt Tour, n.d) 14 III Transportation Aviation industry Due to the spread of Covid-19, customers' demand decreases since they want to put their safety as the top priority by applying social distancing, so the number of guests decreases Moreover, the price of fuel decreases, leading to an increase of supply, but the price is still decreasing (Ahram Online, 2021) In reality, to attract more customers, the government provides numerous policies by discounting the price for guests who use Egypt Air and Airco (Oxford Business Group, 2020) 15 IV Travel organizer Travel organizer The Covid pandemic influences seriously to the tourism industry by limiting the number of tourists, and numerous travel organizers provide various engaging offers through Egypt private tour packages during Coronavirus with cheaper price to compete with the other competitors (Cleopatra Egypt Tours, n.d) Therefore, the demand of customers declined during Covid-19, but there is an increase in supply It results in lower price and lower equilibrium 16 V Destination organizer Destination organizer In 2018 and 2019, the Egyptian Tourism Authority promoted inbound and domestic tourism through managing the development and diversification of the tourism product (OECD, 2020) Nevertheless, the COVID-19 pandemic has reduced the demand of customers to consume products It illustrates that there is a decrease in demand and an increase in supply, and the equilibrium point and price has changed 17 E Calculations A Using information for National Carrier Flag, calculate Price Elasticity of Demand of Air Travel in Egypt 2018 2019 Consumer expenditure of air travel (EGP million) * 8.984 10.797 Number of passengers* 1.003.507 1.029.064 * Note: - Data for ‘Consumer expenditure of air travel’ is adapted from Euromonitor (2021) - Number of passengers are taken from Egypt Air’s annual report (2018; 2019) p = 1029064 - 1003507(1029064 + 1003507) /210797000000 - 8984000000(10797000000 + 8984000000) /2 = 2.5%18.3% = 0.14% Even though the consumer expenditure on Air travel increases by 18.3%, the demand for air travel still grows by 2.5% Since the absolute value of ɛp is smaller than 1, the demand for air services is inelastic over this price range => The change in price may not have a large effect on customers since they are inelastic However, continuously improving customer services can keep them using Egyptair (ref) The company can separate different pricing strategies for targeting different groups of customers Indeed, Egypt air has applied a mix of pricing methods (Egyptair 2019) According to the 2019 World Economic Forum's Travel & Tourism Competitiveness Report (TTCR), Egypt ranks 22nd out of 140 economies in terms of cultural resources Moreover, some of the world's most iconic landmarks, such as the Giza Pyramids Complex, are found in Egypt, which ranks 38th in terms of World Heritage cultural monuments Besides, Egypt is a high performer in the Middle East in terms of natural resources and environmental sustainability (Palme & Palme, 2019) All of this leads to a rise in the number of passengers to Egypt whose consumption is more 18 B Income Elasticity of Demand of outbound travel in Egypt 2018 2019 Outbound Departures* (millions of trip) 4,108.9 3,977.2 GDP per capita (USD)* 3,831.2 3,964.987 * Note: - Outbound departures data is adapted from Euromonitor (2021) - GDP per capita (constant USD) is adapted from World Bank (2021) I = 3977.2 - 4108.9(3977.2 + 4108.9) /23964.987 - 3831.2(3964.987 + 3831.2) /2 = -0.94% By the calculation from the equation, Egypt's income increases by 133%, while the demand for outbound departures decreases dramatically between 2018 and 2019 Therefore, the elasticity’s value will be negative, equal to -0.94% => Although the income increases, customers buy less of these goods and services; they are Inferior Good According to Soliman, Egypt, unlike the Gulf Arab nations, Libya, or Algeria, is not an oil-rich country; instead, it has maintained a mixed economic model and a thriving informal sector On the condition of economic reform in 2019, the IMF will assist the government in restoring national finances By removing currency controls, eventually taking off food and energy subsidies, boosting government revenues, and eliminating state hiring, which is already at a minimum (Soliman, 2020) Therefore, Egypt’s income witnessed a significant increase; moreover, 10 percent of GDP in 2017, 2018, 2019 came from remittances However, the outbound tourism reduction significantly explained that the tourism shock of recent years was replicated in our Egypt economy-wide model by adjusting the world prices of several tourism products on both the export and import sides.Thereby, the Egyptian is no need to travel for buying and selling the foreign commodities with higher prices; simultaneously there is a significant development of inbound tourism (El-Shennawy & Khalid Siddig, 2019) 19 References Abeer, E-Sh & Khalid, S 2019, 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