After 5.5 years, Russian tourists will finally make it back to Egypt in “full” after the Egyptian and Russian presidents agreed over phone to resume “full” travel between the two countries. This will include Hurghada and Sharm El-Sheikh airports. Russian flights are expected to resume in May with flights landing in both airports. Russia had banned travel to Egypt’s Red Sea resorts following a plane crash in Sinai killing 224 passengers and crew members on board back in October 2015. Russian tourism had hit a peak of 3.1mn tourists in 2014 but fell to 2.3mn in 2015 following the plane crash. So, it’s good that the two countries agreed to let bygones be bygones. But how would this impact the market?
On one hand, this bodes well for Egypt’s external finances after tourism was hit following the COVID-19 pandemic outbreak. For instance, tourism revenues registered only USD987mn in Q2 FY21, down 68% y/y and further dragging the service surplus lower by 55% y/y. Undoubtedly, the resumption of Russian tourism will help alleviate the challenges the sector has been facing recently. On the other hand, the news should be positive for all stocks with exposure to tourism in general, especially those with operations in Hurghada and Sharm El-Sheikh. Meanwhile, after almost two years, National Co. for Housing for Professional Syndicates [NHPS] finalized the sale of its Le Meridien Heliopolis hotel for a total value of EGP605mn to be paid in installments. While this deal leaves NHPS with excess cash that could be disbursed to shareholders, it does underscore the potential growth in Egypt’s tourism sector for the coming period.