Internet Developments in the Egyptian Tourism Industry. Christoforos Mavromatis Dimitrios Buhalis Center for eTourism Research (CeTR) School of Management, University of Surrey, Guildford GU27 XH, UK
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[email protected] Abstract Tourism developments are a top priority on the strategic agenda of the Egyptian government. Internet penetration could prove to be one of the major factors that could assist Egypt tourism to enhance its competitiveness. The Internet can potentially improve the efficiency of all local suppliers and provide tools for the development and delivery of differentiated tourism products. This study aims to investigate the activities and usage of Internet by Egyptian tourism organisations and future trends. Findings reveal that Egyptian tourism organisations are in hybrid stage concerning Internet developments. Most tourism establishments use the Internet mainly as a communication tool. Few organisations have websites and a very small percentage has established a comprehensive Internet presence. Nevertheless, people in the industry have faith in this technology, but still they are not ready to invest in it. It is concluded that the government should adopt a comprehensive eTourism strategy that will enable Tourism in Egypt to enhance its competitiveness and achieve its full potential. Keywords: Internet; eTourism; Egypt; government; tourism industry.
1
Introduction
The Internet revolution has been changing the tourism industry dramatically (Buhalis, 2003). The Internet not only can increase the revenue and market share of the organisations, but it can also reduce the distribution, promotion and marketing costs contributing directly to the bottom line (Dennis,1998). Inkpen (1999) notes that the location of the organisation becomes less important due to the fact that transactions take place on the Internet. Egypt is one of the world’s most exciting destinations due to its unique historical treasures and outstanding natural beauty. During the last years, Egyptian tourism has grown dramatically. The industry it is the largest foreign exchange earner, in addition to a key driver for growth (U.S. Department of State, 2002). Despite its potential, tourism developments in Egypt face various drawbacks. Egypt is often considered as an unsafe country. This perception is attributed to events, such as the Golf war in 1991, the massacre of Luxor in 1997 and the Crisis in Iraq in 2003. In order to enhance the image of the of the Egyptian tourism product, the government aims to change the perceptions about the destination, from a heritage destination to a resort destination with additional cultural interests. Sophisticated promotional techniques are
essential for achieving that goal. The Internet is the primary tool for tourism promotion. This research examines the usage of the Internet in Egypt, and explores the perception of tourism organisations about the potential benefits and drawbacks emerged through the Internet. It also explores the role of the government and identifies suitable policies to improve the potential benefits.
2
Tourism in Egypt
Egypt is a country with extensive facilities for tourists, as well as unparalleled archaeological treasures. The vast majority of the tourists come to Egypt for leisure and culture (Hooper, 2001). The average annual increase of tourist inflows from 1982 to 1999 was 9.7 percent. Egypt has so much to offer and the Egyptian tourism product appeals to couples, singles, culture ventures and honeymooners, but it would probably not appeal to young people looking for an active highlife or very young children. Most of visitors spend a week on a Nile cruise and then a week in Luxor. The Red Sea resorts have become very popular in a short time and they are attracting a different market to the traditional visitor who was interested in history and culture (Rhafaga, 2000). Moreover the Government attempts to develop the northern coast, west of Alexandria as holiday region whilst promotes the country aggressively as a conference and incentives destination (Beltagui, 2001; Habib, 2002; Lilley, 2001; Trade partners UK, 2002; Abdel-Rezek, 2001). Oteify (2003) suggest that Egypt’s competitors might be Thailand and Singapore in the Far East and perhaps Dubai (in terms of shopping). Table 1 illustrates the characteristics of the tourism sector in the country. The number of incoming tourists rose by 79% over the last 10 years to reach 4.6 million in 2001. Arrivals of non-resident visitors at national borders of Egypt were mainly Europeans (68%), followed by the Middle East (19%) and Americas (5%). Germany and Italy are the countries that generate most of the inbound traffic. The top 10 generated countries represent almost the one third of the inbound tourism in Egypt (Felt, 2002). However, this represents a decline from the 5.5 million of 2000 (WTO, 2002) due to the world wide economic instability and the Regional problems. Outgoing tourists were far fewer (2.9 million in 2001), with a significant proportion undertaking the Muslim pilgrimage to Mecca and Medinah (Euromonitor, 2002).
Table 1. Tourism products characteristics in Egypt Tourism attracted 4.65 million visitors and generated an estimated $3.8 billion in 2001 Tourism is Egypt’s largest source of foreign currency Tourism is Egypt’s main provider of employment, accounting for two million jobs representing 12.6 per cent of total employment 70% of all foreign tourists visiting Egypt are from Europe. Tourists visiting Egypt for leisure and entertainment outnumber those visiting for cultural and historical sightseeing Cairo is the main tourist destination followed by the red Sea and South Sinai Aviation is the leading mode of transport used by international tourists Foreign firms manage the majority of four and five star hotels in Egypt The planned future growth in accommodation capacity coupled with increasing hotel privatisation offers and significant opportunities for hotel management companies. Tourism education in Egypt was initiated in 1962, with private sector participation in tourism and hotel education beginning in 1990. In addition to the creation of a website to market Egypt as a tourist destination, several information technology activities were initiated in 2001 to increase tourism growth
3
Internet and e-commerce in Egypt
The Egyptian population adapts new technologies, like the Internet, fairly speedily in comparison to other countries (Business Middle East 2000). Internet service has improved dramatically in Egypt in the last few years (Galal, 1999). Estimating and forecasting the number of people who use the Internet, is a difficult task. At the end of 2001 NUA (2003) showed that were 600,000 Internet users in Egypt. The US-Egypt Business Council (2002) estimated that in 2003 there are more than 1 million Internet users. Finally, the Ministry of Communications and Information Technology (MCIT) puts the number of Egyptians who access the WWW at 1.8 million, or 3% of the country’s 62 million population (Palmgren, 2003). E-mail is considered the most used tool, replacing the use of fax. Many Egyptian domains and websites operate under a .com (commercial) or .net (network) domain. There are also 5848 .eg (Egyptian domain) domains and the number is growing rapidly. The diffusion of the Internet in Egypt can be attributed to the collaborative efforts between the government and the private sector. This effort was led by the Cabinet Information and Decision Support Center (IDSC), which offered Internet access for free for businesses, government agencies, non-governmental organisations and professionals in different domains (Brown, 2000). Since then, the number of Internet users has been steadily increasing until another government initiative was launched in January 2002, making the Internet subscription for free with a motto “Internet for all”. The effort was led by the Ministry of Communications and Information Technology and was heavily supported by the private sector represented by the Internet Service Providers (ISP’s) and other stakeholders (Ghoneim et. al., 2003). Egypt is joining the worldwide trend of online and mobile financial services with the establishment of electronic business solutions.
Barnwell and Beliakov (2000) explained that one factor that may hold back regional e-commerce expansion is unrelated to the usual infrastructure issues, such as small numbers of PC users and reluctance to use credit cards over the Internet. The issue is the lack of Arabic language e-commerce. According to Beth (1999) about 96 % of ecommerce websites are in English, making the language a barrier on trading online. To help businesses reach Arabic-speaking markets, some software designers give the capability to develop Arabic websites (Goldrup 2000). Cultural issues may also affect electronic commerce. Similarly to a number of other countries, Egyptians are used to visit the marketplace and haggle over the price of products as part of their social interaction. Personal relationships dominate commercial deals and therefore the Internet may be too rigid and flexible for their preferences. Nevertheless, younger generations are making keen to use new technologies and interact globally.
4
Methodology
For the purpose of this study primary as well as secondary research are considered essential (Sekaran, 2003). Secondary data was obtained from books, academic journals, papers from professional bodies and research organisations, online articles and tourism related websites. Access to the records of the Egyptian specialist tourism, business and ICT journals, newspapers and magazines (EgyptToday, EgyptBusinessToday, Al-Ahram, etc) offered valuable information. Primary research included both interviews and questionnaires. The study examined to do with the Internet application of Egyptian tourism organisations. Thus, the research had to be directly involved with people working in the industry, tourism companies, as well as government officials. In order to ensure that both qualitative and quantitative data was collected, self completed structured questionnaires and semi-structured interviews were selected for the primary research. A total of 380 questionnaires were mailed throughout Egypt. As demonstrated in Table 2 and 3, a wide range of tourism organisations were targeted. The questionnaire included 26 questions and was divided into three sections. Section A provided general information questions, personal data (i.e. name, location, number of employees), in order to determine the credentials of the company and/or organisation and their activities as regards IT and Internet technology. Section B provided an insight about the industry’s customer and communication strategy. Section C addressed questions regarding company’s perceptions about the Internet. Table 2. Targeted Questionnaires and responses by sector Category Hotel/Floating Hotel Travel Agent Car Rental Company Tour Operator Bus Company Airline Total
Targeted N % 220 57.89% 100 26.32% 30 7.89% 20 5.26% 9 2.39% 1 0.26% 380 100.00%
Achieved Achieved N % of sample % Per sector 38 50.00% 17.27% 30 39.47% 30.00% 5 6.58% 16.67% 2 2.63% 10.00% 0 0.00% 0.00% 1 1.32% 100.00% 76 100.00% 20.00%
Table 3. Targeted Questionnaires and responses by location Location Cairo Alexandria Luxor Taba Marsa-matrouh Al Arish Nuweiba Hurgada Dahab Ein-Sokhna Sharm El Sheikh Marsa Alam Total
Targeted N % 150 39.47% 75 19.74% 40 10.53% 10 2.63% 10 2.63% 5 1.32% 5 1.32% 15 3.95% 10 2.63 5 1.32% 50 13.16% 5 1.32% 380 100.00%
N 58 5 3 1 0 0 0 2 4 1 2 0 76
Achieved % of sample 76.32% 6.58% 3.95% 1.32% 0.00% 0.00% 0.00% 2.63% 5.26% 1.32% 2.63% 0.00% 100.00%
Achieved % % Per location 38.67% 6.67% 7.50% 10.00% 0.00% 0.00% 0.00% 13.33% 40.00% 20.00% 4.00% 0.00% 20.00%
In addition, a qualitative approach and in particular face-to-face interviews are used to gather data-rich primary information (Cohen et al., 2000). The interviewees were chosen due to their positions and expertise in tourism development, eTourism applications, and Internet/tourism areas. Table 4 represents the number of the interviews targeted, as well as the actual figures achieved. Table 4. Targeted Interviews and responses by category Potential Interviewers Government officials Hotel executive IT managers Managers in online tourism establishments Total
Targeted 6 6 2 14
Achieved 4 1 1 6
Achieved % 66.67% 16.67% 50.00% 42.86%
The research took place in Cairo, Egypt and included companies in other cities such as Alexandria, Luxor, Sharm El-Sheikh. It took 10 days to complete in Egypt and more than 40 days with letter and e-mail communication. The quantitative data was edited, coded and entered into the Statistical Package for the Social Sciences SPSS version 11.5. Transcripts of qualitative interviews were transcribed and analysed using content analysis.
5
Analysis and Findings
It was evident from the interviews that Internet development in Egypt is at an early stage. However, the country has a great potential, mainly because of its large population and its developing economy as these factors develop the size of the market and the needs for commercial tools. Personal computer penetration is growing and there are now more than 120 Internet service providers (ISPs) already. Commercial ventures are limited because the Internet reaches only a small share of the population.
5.1
Communication channels
Figure 1 demonstrates that the most important communication channel for Egyptian tourism businesses was fax (M:4.35, SD: 1.180), followed by telephone (M:3.99, SD: 0.979) and direct sales (M:2.88, SD: 1.23). The Internet did not appear in their first choices (M:2.68, SD: 1.32), while telex, as expected was the least preferred channel. Those results confirm that the vast majority of bookings in Egypt came from international tour operators; thus fax was considered as the most convenient mean, taking into account the fact that Internet has not yet fully be exploited in the country.
Telex
1,13 2,68
Internet
2,88
Direct sales (high street)
3,99
Telephone
4,35
Fax 1,00
2,00
3,00
4,00
5,00
Fig. 1. Importance of Communication channels A wide range of inferences emerged from the qualitative research. Even though the Internet provides useful tools and functions for the promotion and marketing of tourism products, most tourism companies in Egypt, see the Internet as an additional mode of communication; used mainly for e-mail. The majority of the tourism organisations have not yet any online presence. The companies that have online presence had no applications or services in place to support online transactions. Only a small percentage of these companies were providing facilities for payment on-line. The e-marketplace providers were not accepting liability and were doing very little to build trust between potential trading parties. Their sites do not possess the interactive features for successful Internet marketing. These organisations use their websites primarily to provide information for current or potential customers about their company and the tours they offer. 5.2
Benefits of the Internet, considered important for a Company
Figure 2 demonstrates that Egyptian tourism companies considered that constant (M:4.35, SD:0.95) and global reach (M:4.05, SD:1.01) are the most significant benefits that Internet can provide to a company. Additionally, increase in direct sales (M:3.96, SD:0.87) and enhancement of efficiency and effectiveness (M:3.69, SD:0.9) were also thought as important. However, personalisation (M:3.37, SD:0.997), competition following up (M:3.2, SD:1.04) and focusing on niche markets (M:2.81,
SD:1.09) weighted less in the perception of managers. Companies perceive the Internet mainly as an information provision tool and less as a means that can improve their product offering and increase their bookings. Additionally, it seems that the Egyptian tourism industry is more focused on the attraction of mass markets than the provision of personalised and tailored-made services to niche markets.
2,81
Focusing on niche markets.
3,20
Follow up competition
3,37
Personalise and differentiate products
3,56
Reduce costs
3,69
Enhance efficiency and effectiveness
3,96
Increase direct sales
4,05
Global reach
4,35
24/7 reach
1,00
2,00
3,00
4,00
5,00
Fig. 2. Benefits of the Internet, considered important for a Company 5.3
Negative aspects of the Internet
The perceived major negative aspects of the Internet (figure 3), as there were revealed from the data analysis were concerns about the privacy of information (M:3.35, SD: 0.96), threat of increase completion in the industry (M:3.35, SD: 1.055), fear of credit card fraud (M:3.84, SD: 0.594), consumers’ lack of credit card ownership (M:3.47, SD: 0.87) and the fact that companies lose the personal contact with customers and suppliers (M: 3.47, SD: 1.03). There was also major concern about the suitability of the Internet for trade, especially for the domestic markets.
Concerns about privacy of information
3,35
Increase competition in your Industry
3,35
Lack of personal contact
3,45
No Credit card ownership
3,47
Security Risk (Credit Card Fraud)
3,84
1,00
2,00
3,00
Fig. 3. Negative aspects of the Internet
4,00
5,00
5.4
Reasons for which a company does/will use its Internet website
Advertisement of products (M:3.87, SD:0.79), the ability to receive comments (M:3.85, SD:0.81) and information provision (M:3.75, SD:0.79) were the main incentives for companies to use websites. Online sales (M:3.41, SD:1.24), building of customer database (M:3.16, SD:1.11) and communication with suppliers (M:3.04, SD:1.44) were not first priorities, demonstrating that companies regard Internet as a tool for advertisement and information provision. Internet beneficial characteristics, such as enhancing B2B communication and improving customer relationship management have not been yet appreciated (Figure 4).
Communicate/deal with suppliers
3,04
Build customer database
3,16
Sell products /services
3,41
Provide service information
3,75
Receive email/customer comments
3,85
Advertise products/ services 1,00
3,87 2,00
3,00
4,00
5,00
Fig. 4. Reasons for which a company does/will use its Internet website 5.5
Company's decision of having or not having an Internet website
The factors that influenced most companies’ decision of having or not an Internet website (Figure 5) were following-up of competition (M: 3.95, SD: 0.75), employee’s familiarity with technology (M:3.91, SD: 0.75), size of the company (M:3.87, SD: 0.79), cost involved (M:3.87, SD: 0.82) and finally customers’ familiarity with technology (M:3.79, SD: 1.09). The decision to employ websites in business strategies is mainly driven by impulse and personal factors, rather than result of rational business planning.
Customers' familiarity w ith technology
3,80
Cost involved
3,87
Size of company
3,87
Employee's familiarity w ith technology
3,91
Competitors
3,95 1,00
2,00
3,00
Fig. 5. Company's decision on having or not a website
4,00
5,00
Hence, the vast majority of the Egyptian tourism organisation are late adopters of Internet technology and follow pioneers in the industry. Very few professionals innovate online and are able to take their organisations to explore their full potential in the emerging electronic marketplace. 5.6
Size of the company and Internet use
Cross-tabulations between the size of the company and the presence of Internet access showed that only 16% of micro enterprises (less than 10 employees) and the 77.8% of small ones (between 11-50 employees) have Internet access. All the medium and large companies have Internet access. As far as usage of e-mail account is concerned, 32% of micro enterprises have email account, the 74.1% of small and the 94.4% of medium ones. All the large ones (more than 250 employees) have e-mail accounts. 5.7
Category of the company and Length of Internet Use
Cross-tabulation between the category of the company and the length of Internet use shows that travel agents are using the Internet longer than hotels. The majority of the hotels and floating hotels that responded to this study (73.1%) are using the Internet 1-4 years now. Finally, travel agents appear to be longer online with (52.6%) 1-4 years and (42.1%) more then four years. Similar to many other destinations intermediaries seem to be more up-to-date in Egypt, developing web sites to promote packages and tours. In comparison suppliers have failed to take full advantage of the opportunity and still communicate in very traditional ways. 5.8
Qualitative factors influencing eTourism growth
The qualitative research revealed that among the main barriers for Internet penetration are the lack of computer literacy and acquaintance with the Internet. Another problem is that people have not yet fully realised the value that e-commerce can add to their industry. The absence of proper legislation that protect and guarantee secure online transactions impede further e-commerce growth. As a government’s official stated “The companies are working under common trade laws that are not designed for ecommerce”. The interviewees also mentioned that although there is the infrastructure to support e-tourism penetration, tourism establishments have not taken full advantage. They keep using traditional channels in order to promote and advertise their products. Another major obstacle to successful e-commerce in Egypt is trade partnerships and the attitude of tour operators. “We cannot have an absolute independent online presence. The tour operators, does not let us do that. When a company tries to establish an independent web presence, tour operators could even stop the cooperation. They want to be the first on the search agents, even when someone writes our hotel name as a key word”. Respondents argued that principals should support all the channels that facilitate tourism growth. The Internet should be their first priority in order to access consumers directly. Egyptian businesses have realised that if they don’t adapt the new technologies they will miss a huge opportunity. They also recognised that “Developing a tourism website and being online, it is probably
simple, but making it running and operating effectively is really hard work”. Adopting a comprehensive eBusiness strategy will be a major challenge to overcome. All respondents stated that the growth of electronic tourism is mostly depended on public sector’s initiative. The Government should set the example and provide the resources since it is the major motivator of economic development. Furthermore they mentioned that training is a key factor for Internet adoption and that the government should fund related seminars as well as introduce eTourism classes in the tourism schools. Except for government, tourism establishments themselves and IT sector all share the responsibility to raise public awareness and bring citizens into the digital economy.
6
Conclusions and Recommendations
In conclusion, tourism is a very important sector of the Egyptian economy, contributing significantly in the national GDP and level of employment. Most of the Egyptian tourism organisations have yet to develop their online presence. Most of the companies that have online presence had no applications or services in place to support online transactions. The e-marketplace is therefore immature and requires major strategic management actions from both the public and private sectors. Tourism organisations should develop eBusiness strategies in order to take full advantage of the opportunities that electronic commerce can provide them. They need to understand the eTourism developments in the countries of origin of their clientele and to develop suitable e-commerce solutions to serve them properly. Companies that already have online independent presence should make their websites more interactive in order to attract more visitors and achieve more online transactions. The role of the public authorities is very important for simulating Internet and ecommerce applications. The government should employ its control to modify the regulations in order to help tourism establishment to adapt Internet technologies. It should provide financial support to the tourism organisations that adopt new technologies and encourage private investments and partnerships in order to create an Egyptian eTourism community. The government has to develop a strategic plan aiming at the growth of electronic tourism at the macro level and the development of a comprehensive Destination Management System. Education and training is key towards this direction as well the set of proper regulations that could guarantee secure online transactions. eTourism solutions comprise a number of opportunities that can enable Egyptian tourism to enhance its competitiveness and achieve its true potential in the future.
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