On Sharm el-Sheikh’s sandy beaches many of the sun loungers lie empty. At a central promenade packed with shops, cafes and nightclubs, crowds are thinner than usual.
The resort on the southern tip of Egypt’s Sinai Peninsula is reeling from the impact of the war in Ukraine, which has seen Ukrainians and Russians – previously among the town’s top visitors – virtually disappear, tourism sector workers say.
Similarly, the once ubiquitous Russian signs along Montenegro’s picturesque Adriatic coast have all but disappeared as the war in Ukraine and sanctions against Russia keep tourists from those countries away from one of their favourite destinations. Adriatic resorts in Croatia, Montenegro and Albania, NATO members that have joined international sanctions against Russia, are all feeling their absence, dealing a blow to their economies.
Their absence has delivered the latest in a series of shocks to a Egyptian sector that accounts for up to 15% of gross domestic product and generates sorely needed foreign currency.
“Months ago, we were catching our breath after coronavirus hit and activity was beginning to recover, but we got out of the frying pan into the fire,” said the owner of a small souvenir shop on the main promenade in Sharm el-Sheikh’s Naama Bay who gave his name as Ashraf, adding that he’d lost about two-thirds of his business.
Egypt’s tourism revenues dipped sharply during the COVID-19 pandemic, recovering to nearly $12 billion in 2021, according to central bank data.
The sector had received a boost when Russia resumed direct flights to Sharm el-Sheikh and fellow Red Sea resort Hurghada in August 2021, six years after the crash of a passenger jet carrying Russian tourists led to their suspension.
Though no updated data is available for this year, a briefing by the cabinet last month warned of a major hit to foreign currency income from tourism.
The government, which is also struggling with rising wheat and oil import bills, recently revised its growth forecast for the financial year ending this month down to 5.5%, and for 2022-23 to 4.5%.
Egypt’s tourism ministry did not respond to requests for comment.
SIGNS IN RUSSIAN
In Sharm el-Sheikh, which will host the COP27 climate conference in November, signs are written in Russian as well as English, and some hotel staff are trained in both languages.
It’s an indication of the importance of the market – Russian and Ukrainian visitors accounted for 31% of tourist numbers in Egypt last year, according to the government, many of them coming on package tours to Sharm el-Sheikh and Hurghada.
Over the final six months of last year, more than 1.1 million Russians and about 794,000 Ukrainians visited Egypt, according to government data.
Since Russia invaded Ukraine on Feb. 24, Russian visits to Sharm el-Sheikh have dropped to a fraction of their former levels, two tour operators and two guides in the town said. Nearly all the 20,000 Ukrainians in Egyptian resorts at the outbreak of the war have been flown out.
“We lost about 70% of occupancy after the war,” said the manager of one large hotel who declined to be named as he was not authorised to speak to media.
“There’s a slight rise in numbers from Armenia and Romania, but none of these numbers can be compared with those from Ukraine and Russia before the war.”
Just 1,500-2,000 Russians have been arriving each week, said Adel Hosny, the South Sinai contracting manager for Russia-based tour operator Pegas Touristik.
Demand dropped as Western sanctions drove up travel times and costs from Russia by forcing carriers to change routes, and MasterCard and Visa credit cards issued in Russia stopped working abroad.
Daily flights are expected to resume from Russia from early July.
FILLING THE GAP?
Spending by those Russians still coming to Sharm el-Sheikh had dwindled because they had limited access to dollars, said Ahmed Akrab, a tour guide.
The introduction of Mir, a Russian payments system created after a previous round of Western sanctions in 2015, which Egyptian media have reported is in the works, could help encourage a rebound, he said.
Egypt has also been pushing to lure more tourists from Western Europe and the Gulf through marketing campaigns since the start of the Ukraine war, and neighbouring Israel recently started direct flights to Sharm el-Sheikh after lowering its security warning for southern Sinai.
But while tourism from Western Europe and other markets is seasonal, with fewer visitors in the hotter summer months, Russians and Ukrainians used to come for low-cost beach holidays all year round, said Hosny, who, like other tourism workers, was not hopeful of filling the gap left in the market.
“I see it as very unlikely for any market to replace the Russian and Ukrainian ones in the near future,” he said, adding that about 90% of his staff were idle.
SANCTIONS HITTING HARD
For the Adriatic coast, the sanctions include a ban on commercial flights from Russia, the blocking of Russian banks from international payment systems making it harder for Russians to access cash abroad, and the seizure of some real estate and yachts belonging to Russia’s oligarchs.
In the Montenegrin resort of Becici, Zarko Radulovic, a hotelier, said there would be few tourists this year from the two countries, although thousands of Russians and Ukrainians who had fled the war were renting flats long term.
Hoteliers say there are not enough of them however to compensate for the 380,000 Russians who visited Montenegro in 2019, and they are spending far less than tourists.
Some Russian tourists could come via Istanbul and Belgrade, airports still open to flights from Russia, Radulovic said, adding he hoped visitors from Western and Central Europe, Israel and even Saudi Arabia would compensate for the shortfall. Tourism has typically accounted for about 20% of Montenegro’s economy.
The World Bank last month downgraded Montenegro’s 2022 economic growth forecast to 3.6% from a previous 5.9%, due to the effects of the invasion.
It also cut its growth forecast for the Western Balkans, comprised of Montenegro, Albania, Kosovo, Serbia, Bosnia and North Macedonia, to 3.1%, from 4.1% in January. The six economies grew 7.4% in 2021 after a contraction of 3.2% in 2020.
In the last pre-pandemic year, neighbouring Croatia had a total of 154,000 Russian and 139,000 Ukrainian guests. In 2021 around 145,000 tourists from each country visited, according to official data.
In January and February of this year 12,000 Russians visited Croatia, but during March, April and the first half of May only around 4,500 came, far fewer than normal.
In Albania, where the tourism sector is anxious to recover from the effects of the pandemic, hopes were high that 2022 would be a boom year. But the war in Ukraine is threatening to disrupt that, said Aurenc Hima a hotelier from the coastal resort of Durres.
“We had many reservations from Russians and Ukrainians but they have been cancelled,” he said.
Kliton Gerxhani, the president of the Association of Tour Operators and Tourist Agencies said war in Ukraine had also unsettled potential holidaymakers from Baltic and Scandinavian countries, as well as Poland and Germany.
“There is a hesitation from these countries to make hotel reservations in Albania. Maybe the tourists of these countries will wait until the last minute… depending on the course of the war.” (Reuters)
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