South Sinai governor Khaled Fouda gifted 1,000 suits and ties to Sharm el-Sheikh’s taxi and mini-bus drivers in a festive ceremony a few days ahead of the Egypt Economic Development Conference (EEDC), slated to kick off on Friday.
This was one of the final stages of grooming that the resort city has undergone over the past two months. Newly planted trees now adorn the city’s re-planned and repaved main roads, flowers bedeck the main Salam Avenue, and huge screens have been installed across the city.
The governor is also following up on other preparations: an open-air theater to host music performances for the conference guests, a musical fountain and a 34.5-meter Peace Memorial in the newly built Salam Square.
The renovation frenzy comes after a long conference-hosting hiatus for Sharm el-Sheikh. Before President Hosni Mubarak fell from power in 2011, the resort city was often the locale of choice for regional and international summits. The city highlighted the Mubarak regime’s development program in the peninsula, and logistically was more manageable than the congested capital of Cairo.
Some saw the distant destination as reflective of the gaping discrepancy between the reported growth of the Egyptian economy on the one hand, and the rampant inequality, unemployment and economic hardships endured by average citizens on the other.
Sharm was also a second home to the Mubarak family, who owned some contentious properties in the seaside town that temporarily landed them in prison on corruption charges after the 2011 uprising.
Over the past four years, the political instability, economic stagnation and security concerns plaguing the country effectively wiped Sharm from the summit map. Coupled with a slump in tourism, hotel occupancy rates have sharply declined.
This month, however, the government will host two major meetings in the Red Sea resort town.
About 60 countries have been invited to participate in the EEDC this week, according to Foreign Ministry spokesperson Badr Abdel Aty. Two weeks later, Sharm el-Sheikh is also set to host the Arab League Summit for the first time since 2003.
The Egyptian Chamber of Hotels estimates that hotel occupancy rates in Sharm el-Sheikh will increase from the current 35 percent up to 80 percent in March.
Essam Khedr, director general of operations in South Sinai, told the state-owned news site Ahram Gate that 54 flights carrying 11,743 tourists landed at Sharm’s international airport on Monday, four days before the conference opening.
But as promising as the number are, local business owners wonder if this economic reboot will be sustainable.
Mohanad Khedr is the vice chairman of a family-owned hotel in Sharm that first opened in 1999. Neighboring the convention center that hosts the EEDC, Khedr’s hotel was approved by Egyptian security to house conference attendees. He says that the conferences and summits in Sharm have always been good for business, but that such short-term spikes in occupancy rates are not reliable as area businesses struggle to fight their way back from the losses incurred by the post-2011 collapse in tourism.
“It has been one hit after the other,” Khedr says.
The decline in tourists isn’t the only problem. The lack of minimum hotel pricing caps and constantly changing regulations have also added to the pains of those businesses that aren’t owned by business tycoons.
While representing his hotel at this year’s ITB Berlin, the world’s largest tourism trade fair, Khedr says he received mixed messages from companies looking into investing in Egypt’s tourism sector, who cited unstable security as their chief concern.
A few days before the ITB opened, the German ambassador to Cairo released a statement lifting the travel warning on South Sinai. But just a few days later, a deadly suicide attack on a police station in the North Sinai city of Arish killed two people and injured 24 others.
Even though North and South Sinai are drastically different landscapes, Khedr says that for investors and tourists alike, “Sharm is Sinai.” But in reality, he says, “the security situation in Sharm has been more or less stable over the past four years, more stable than Cairo. There has been a car accident here or there, and that’s it.”
This is a far cry from the distressing security situation in Cairo, where deadly or diffused bombs have become a typical newscast item. In North Sinai, military operations against armed militants are ongoing, and fatal attacks on security institutions have intensified.
Security arrangements ahead of the EEDC have been as vigorous as the renovation mission. Sharm residents report several new checkpoints and extensive restrictions on the influx of workers for non-government construction work over the last two months.
Khedr applauds the security efforts, but says it is high time the government marketed Sharm el-Sheikh more effectively.
But Tarek Selim, an American University in Cairo economics professor, says this is precisely what the government is doing by bringing conferences back to the city.
Egypt “is sending the message that, even though there are extremist groups creating instability, it now has a more-or-less stable government,” Selim says.
By holding a conference that aims to attract an estimated US$35 billion in investments projects, Egypt is taking an important public relations step by finally translating its geopolitical advantage to economic and investment gains, according to Selim.
Of course, the heart of Egypt’s economic ailments lie deeply rooted structural problems for which the conference can guarantee no immediate cure. Nonetheless, the one in seven Egyptians the EEDC website says are employed in the tourism sector, along with business owners like Khedr, hope for an outcome more substantial than freshly paved streets.
Khedr believes that the current trajectory is promising, and that the conference may put Sharm back on the map of international events, conferences and tourism in general.
But the slightest sign of instability could be one more hit that his hotel and the sector overall are ill-equipped to afford.