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CAIRO (Reuters) - Egypt's tourism industry, the country's top hard currency earner, has started to feel the pinch of the global financial crisis, with hotel bookings down 30 percent in January 2009 compared to the same month in 2008.
Fathi Nour, chairman of state-owned Misr Hotels, one of the country's biggest hotel firms, said on Wednesday the global nature of the turmoil has placed Egypt in competition with top tourist destinations that may slash prices to attract visitors.
"Spain has become a competitor. It will reduce prices to attract people. Spain now is looking at Egypt as a competitor. We were not competitors before," Nour, who is also a board member of the Egyptian Hotels Association, told Reuters.
The number of visitors arriving in Egypt, home to some of the world's most famous ancient monuments such as the Pyramids of Giza, is expected to reach 13 million in 2008, 19 percent more than in 2007, the tourism ministry said in November.
In Spain, meanwhile, the number of tourist arrivals declined by 2 percent to 54.6 million people in the 11 months to November, marking another blow to the country during the collapse of residential construction and real estate sectors.
Egyptian Tourism Minister Zoheir Garrana said on Monday initial signs show that future reservations will slow down in the first few months of 2009, but he refused to give a forecast for the number of tourists expected for the whole year.
"There are still reservations that come in the last minute. But as for the reservations five or six months in advance, there is a slowdown in that," he told reporters.
Europeans account for more than 70 percent of tourists visiting Egypt every year. Nour said European destinations may now appear more attractive to tourists within the continent because of their proximity.
"For Egypt, 99 percent of the tourists who visit arrive by plane. It is a cost."
The Egyptian Central Bank said on Sunday revenue from tourism in the first quarter of the 2008/09 fiscal year, which started in July, rose 15.2 percent to some $3.3 billion.
The Egyptian government has set its target for economic growth for the two years starting July 2008 at 5.5 percent, after a 7.2 percent growth in the 2007/08 fiscal year.
Reham El-Desouki, a senior economist at investment bank Beltone Financial, said tourism revenue for the entire fiscal year could stay unchanged at $10.6 billion.
Tourism represents 6.6 percent of Egypt's gross domestic product and is the Arab country's main hard currency earner, followed by worker remittances at $8.4 billion, Desouki said.
Nour said the expected slowdown in the number of visitors in 2009 should force a shift in policy to focus on promoting Egypt as an affordable destination for middle-class families.
A television advertisement that appears on key networks such as CNN promotes Egypt as a land whose best feature is its warm and sunny weather.
"Will the European who got fired, or is afraid of being fired, or got a pay cut ... will he think of coming because I am telling him the sun here is nice? He will not come," Nour said. "This concept has to be changed."
Writing by Alaa Shahine; editing by Tony Austin