Mohsen: We Have Not Been Informed of Hotel Price Increase Rates to Amend Contracts... Domestic Trips Hit Fastest
Osman: Floating Hotels' Operating Costs to Rise 30% in Winter Season, Traffic Currently Weak
Randa El-Adawy: Rising Fuel Prices Add to Tourism's Burdens... 15% Difference Borne by the Sector
By Akram Medhat
Following the rise in gasoline prices, tourism companies are reconsidering their contracts, especially those already concluded, as the cost of tourism programs did not take into account the rate of the increase. They therefore have only two options: either the companies absorb the cost difference because contracts with foreign tour operators for the summer season cannot be amended, or they amend them according to the flexibility of the contract concluded.
Tourism companies confirmed that the contracts for next winter season, which are currently being agreed, will have these cost increases applied, especially those that include floating hotel programs that rely on diesel for their operation.
It is worth noting that the Egyptian government approved a new increase in fuel prices at the beginning of this July, raising a liter of diesel from EGP 2.35 to EGP 3.65 and 92-octane gasoline from EGP 3.5 to EGP 5.
In this context, Karim Mohsen, head of the caretaker committee of the Egyptian Tourism Federation, told "Travel Yalla News" that the circumstances of summer season contracts differ according to each company and the tour operator it deals with, and the capabilities and strength of each, as some contracts include a clause allowing the prices of tourism programs to be raised in the event of large changes in service costs.
He added that some companies are absorbing this increase, which has not yet been determined, as the rise in tourist transport and floating hotel costs has not been estimated; everyone knew it was coming, but its value was not known. He added that the contracts currently being concluded with floating hotels for the winter season will be subject to the new prices once agreed.
He pointed out that domestic tourist trips will be the quickest to be affected because they do not rely on contracting for long periods or well ahead of the holiday season, but rather on booking buses and hotels as soon as there is demand.
For his part, Mohamed Osman, a member of the tourism marketing committee in Luxor, said most tourism companies will absorb the increase in transport fuel costs after the rise in its prices for summer season tourism programs until the end of next October, because these contracts have already been concluded and cannot be amended mid-season. As for floating hotels, operating volume is currently low because it is not their main season, he said, noting that these increases will be applied to winter season contracts and will reach 30% of current operating costs.
Increased Burdens
On the other hand, tourism expert Dr. Randa El-Adawy explained that the rise in the price of fuel of all kinds will be a burden on tourism companies in meeting their contracts with tour operators abroad, in addition to the increased cost of operating floating hotels that use diesel, as well as higher prices for overland Hajj.
El-Adawy proposed exempting the tourism sector from the fuel price increase for the current summer season, due to low occupancy rates, and giving tourism companies the opportunity to amend their contracts with tour operators in the next winter season, stressing the need to apply the proposal if we want to support the sector's resilience in the face of its setbacks.
She said the rate of increase in the costs of tourism programs will be no less than 15%, which will fall on the companies that have already contracted with their counterparts abroad for the summer season, on top of the rise in prices of services provided for domestic and inbound tourism, which hinders the promotion of domestic tourism at the peak of its season.
