HAMAD EL CHIATY Chairman and CEO of Travco Group

P.M. Communications: Could you please share with our readers a brief history of Travco and explain your main activities?

Mr. El Chiaty: Travco was established 27 years ago as a small, specialized travel company bringing tourists from abroad in order to show them the best of Egypt. Gradually we started attracting more tourists and putting together the necessary infrastructure to provide better services to our clients. We started acquiring cars and buses and opening offices in various cities for our customers. Then we started building ships on the Nile and organising cruises for our guests from Cairo to Aswan, or from Luxor to Aswan, to be able to control the quality of the services from the beginning to the end. The next logical step was to move into hotels and provide the most convenient accommodation for our guests. This evolution has been steadily growing from one year to another.

Today, Travco is by far the largest tourism management company in Egypt offering a wide range of services. The company employs more than 13,000 people and we own and operate about 30 hotels, 20 Nile ships and a fleet of more than 800 buses. Nowadays, Travco has branch offices all over Egypt.

Five years ago, we started expanding regionally and we opened offices in Qatar, Dubai, Oman and in three cities in China and Japan. In line with our strategy, we also plan to continue our expansion in other areas.

P.M. Communications: Travco is identified as a symbol of excellence and an innovator in the market place. What is the philosophy behind the day-to-day operations of the company and what are your ambitions?

Mr. El Chiaty: We started the company with the philosophy of delivering precisely what the client expects. Travco is founded on reliability: when we promise something, we have to deliver what we promised, regardless of the internal consequences. In the past, Egyptian travel companies had a bad image because the clients were poorly looked after. Certain people wanted to make quick money by selling something without caring what happened after the sale. In other words, they had a short-term policy.

We had a long term approach. We wanted to expand and gradually provide a wider range of products to be able to control the quality of service. We have faced recessions and crises situations in the region and in the country, but we persevered by investing, building, growing and going against the current. People were telling us to slow down and not to invest too much. But we believed in the potential of the tourism in this country, because of the amazing climate, the fantastic beaches and the friendliness of the people. Egypt offers twelve months of sun on the Red Sea and people can come any time of the year, whereas other countries serve as either summer or winter destinations. Greece or any other Mediterranean country offers fantastic products, but they are more expensive and they only operate in summer. So the return on investment is much better in Egypt, as you can operate 12 months a year and pay salaries 12 months a year. This improves the economy and energizes growth.

Travco is involved in three main activities. The first includes anything related to travel, such as cars, buses, airlines ticketing, aircraft handling and flight operation. The second is the hospitality arm, which includes hotel accommodations, resorts, Nile cruises, restaurants, etc. This is a strong arm and it contains the majority of our employees. The third arm is Travco Properties and Development; a company specialized in the development, rental and sale of real estate. This company only started this year mainly because of the new incentives from the government allowing foreigners to own properties and gain easy access to visas and residence. The Egyptian real estate prices when compared to other countries in Europe or in the world, are about 80% cheaper, which makes Egypt a very good value for money. We focus mainly on the British, German and Italian markets, but now we are also active on the Russian and Ukrainian markets. A square meter in Moscow costs about 5,000 L.E. whereas in Egypt it costs about 1,200 L.E. So people say: 'Why not buy a home in Egypt where the weather is nice and we can come in winter?'

P.M. Communications: What are the main areas in Egypt where you have properties and developments to offer?

Mr. El Chiaty: We have developments in the Red Sea, Hurghada, Sharm El Sheikh, Marsa Alam in the south of the Red Sea, and in Cairo, in El Sheikh Zayed's area. Our biggest development is on the Mediterranean coast where we have a mega project of 5 million square meters, where we will be developing 3,500 homes and some hotels. The Mediterranean is a new destination and this year we inaugurated our first hotel. We also participated in the finalisation of the international airport Marsa Matrouh on the western coast of the Mediterranean Sea. Marsa Alam is an old city that traditionally never received tourists. We have built a 400 room hotel as our first stone in this area, and started receiving charter flights from Europe, mainly from Italy, Milan and Rome. All of a sudden, this small Egyptian resort became a European summer resort! For this project, Travco has received an award for being a pioneer in attracting Europeans to the Mediterranean coast on charter bases.

P.M. Communications: Egypt is undergoing a residential tourism's boom with different companies developing resorts and creating new tourism destinations. How do you compete on the market and what are your competitive advantages?

Mr. El Chiaty: Our name is synonymous with quality and reliability. People know that whatever we promise will be delivered. If we promised a nice house, our client will get a nice house, and he will just need to move in with his furniture. The buyer will not have to bring a team of workers to renew the new house, as the air conditioning will be functioning, the doors will be closing properly and the door handles will not fall off! So the buyer will not face any troubles that are common not only in Egypt, but in general. Many other developers deliver houses that need to be fixed. The clients often have to repaint the house, or they find the marble or ceramic tiles badly fixed to the floors. Sometimes, when they plug in a hair dryer, the electricity can not withstand the power!

At Travco, we do our best to make things easy for our customers and this is our edge to compete on the market. When a company performs well, it stimulates other companies working in the same field to elevate their standards. I remember 20 years ago, when we decided that all our employees had to wear a uniform, be clean shaven, have shined shoes and look clean and tidy. At the beginning people were laughing because we focused so much on appearance. We even fired those who did not follow the rules! Three years later the whole industry followed suit and implemented similar measures.

When we had our buses cleaned and in a good shape, most competitors were again cutting corners and later on they realized that the clean standards that we were adhering to had to be the benchmark if they wanted to compete. We set the standards for quality in Egypt. When the market leaders set the standards and these standards are high, people will follow and this will gradually upgrade the overall industry and the market in general. I think the standards that we will demand in the real estate and hospitality businesses are going to raise the standards of the entire market. Whoever does not perform will just die away or loose their market share.

P.M. Communications: Egyptians are traditionally friendly, but in order to reach the objective of 16 million tourists by 2014, there is a pressing need to upgrade the skills of the human resources. What do you think is the best way to face this challenge?

Mr. El Chiaty: This is a very big issue. I think that first of all, on the national level there should be an increased awareness about the value of the tourist to the country. The Egyptian government has started a campaign to create more awareness about the fact that the tourist is not only coming to look at the sites, but is also acting as an ambassador for the country. One happy tourist is going to go back home and probably tell at least 10 of his friends about his visit. Maybe 3 out of those 10 will visit Egypt to see what their friend enjoyed.

When tourists come, they spend money and they drive demand in other industries like the factories producing water, bazaars, carpets, food and even farms because they produce the food that the tourist will eat. So the tourist's visit will benefit the country and the economy not only directly in the tourism sector, but also indirectly in other sectors too. This has to be clear to the Egyptians. They have to be aware that tourists are good for the country. Once people know that, they will stop cheating the tourists and they will try to give them a good service. People in Egypt are very friendly and we have noticed that when the Egyptians go and work abroad, they are the best workers because they are obedient and they follow the systems; they just have to be told what to do.

There are some programs available now for training our people. Some people graduate from universities with a degree in commerce or law and do not find a job in their field of study. With the correct programs, those people could be trained to work in hotels or restaurants. They already have an educational base, so they will need a short training course as a strong preparation for handling the tourists.

P.M. Communications: Terrorist attacks have affected the tourism industry worldwide. What is the best way according to you to face this issue?

Mr. El Chiaty: Egypt is a safe country and I do not really believe in police blockades, because if somebody wants to make an attack, he will do so despite all the safety measures. We cannot put cameras everywhere… Unfortunately, there are some radical people financed from abroad, which use the religion, the poverty and the ignorance as a tool to propagate their ideas. But these isolated incidents do not mean that the country is not safe. In Egypt, you can walk in the streets at any time of the day or night with no problem at all, which is not the case in other countries.

I do not think that travel companies have to worry about this. Egypt is safe destination and the best way we can protect our tourists is by driving a bus safely or by making sure that they do not get poisoned when they eat in a hotel or a restaurant.

P.M. Communications: Since the current government was appointed in 2004, they have implemented a series of reforms that have greatly improved the overall function of the economy. How have the reforms impacted the tourism industry?

Mr. El Chiaty: The tourism industry is one of the most important generators of foreign currency in Egypt. The previous government did not put enough emphasis on this and the people did not understand the importance of tourism. Once the new government started realizing the importance of tourism, they started pooling ideas and resources, evidenced by new tax holidays, subsidized lands and flights to encourage tourists to come.

We have a problem of overpopulation and our infrastructure is not coping with the demands of the modern society. The current government is exerting great efforts to catch-up, but this will take time because things do not change overnight. The government is also looking at expanding the airports, improving roads and implementing tougher standards for vehicles travelling on the roads. Some travel companies have very poor standards, as they do not change the tires of their vehicles on time, or they overwork the drivers so they get tired and have accidents. The government has started looking at improving the standards in general, not only for the tourism industry, but also for the related services like airports, roads, buses, trains, airplanes….etc.

In addition to this, they have started providing remote areas with the necessary infrastructure to encourage the tourists to come. In our case in the Mediterranean coast, we started our project in the middle of nowhere. It was an area that was actually a military zone, not even Egyptians knew about this area. When they opened up this area for tourism, we applied for the infrastructure and we managed to get water, electricity, and telephone lines. Beyond this, the current government is also looking at upgrading other important services, such as the hospital care for foreigners.

P.M. Communications: How important is the British market for Egypt in general and specifically for Travco, and where do you see the potential for further growth?

Mr. El Chiaty: Our company brings 14% of the total tourists coming to Egypt, which is close to 1.3 million tourists. With regard to the British market I would say we control about 35%, which is about 350,000 tourists.

P.M. Communications: According to the Minister of Tourism, the number of British tourist arrivals grew by 29% in the first 9 months of this year. What are the main attractions for the British tourists when they come to Egypt?

Mr. El Chiaty: Until a few years ago, the British tourists were mainly coming to Egypt for cultural tourism. They loved going for a week on a Nile cruise, and some of them even did 3 or 4 cruises in a row. It is cheap, the weather is warm, the people are friendly, and so it was a good value for their money.

Then the Red Sea started coming into perspective with destinations like Hurghada and Sharm El Sheik appearing on the map. The British tourists do not like construction areas and a lot of hotels on the Red Sea were under construction at that time, so the British tourists were put off by the amount of construction. The moment construction calmed down and the Spanish hotels rates soared after joining the EU, the British began to look elsewhere for a new winter destination.

They could go in a 4 ½ hour flight to the Canary Islands or go in a 4 ½ hour to Egypt. These were the only places for the winter sun, making Egypt the ideal winter sun holiday. They could still go to Cuba, the Caribbean or the Dominican Republic but these trips require 10 hour flights. Beyond distance, the Egyptian hotels are relatively new and well priced (a good value for money), compared to the Canary Islands, where it is windy, more expensive, the hotels there are old and it is not an exotic place. Egypt is still regarded as an exotic place.

The moment the British market realized that Egypt is an alternative to the Canary Islands, was the moment we saw double-digit growth. Normally the growth is 2 to 5 to 9 percent, so when you start from scratch your growth is very high. One tour operator will encourage the competition to start, and all of a sudden there will be 15 tour operators working with the UK market.

There is a huge potential for growth, but it will not continue like this. You can grow from 200,000 to 500,000 but you are not going to grow from 500,000 to 1 million. It is a curve and it will slow down, then you have to sustain it and go up again. Tourism is a fashion, you cannot be booming every year. A lot of people go to Egypt and the next year they want to go to somewhere else. Then the following year they remember Egypt again.

To increase repeat visitors, we are diversifying the tourism offer by providing such products as adventure tourism excursions. We have trips to the oasis and the desert and there the tourists will see things they have never imagined. The desert is something you do not see in Europe, so people have a certain curiosity. They drive on dunes through pretty rough territory. It is a mixture of nice hotels in the middle of the desert or just camping. Currently this is a small market segment, but it is growing and becoming more important.

P.M. Communications: Last year Egypt won the prize of the Best Undiscovered Golf Destination in the World. How do you capitalize on this award?

Mr. El Chiaty: Golf is the fastest growing sport worldwide. It is becoming a fashion today and it is ideal for middle-aged people in winter, as golf is a game that a man and his wife can play together.

Golf is important for Egypt because first of all it enhances the real estate market, as a lot of people would like to have a house on a golf course. The second thing is that having a nice garden in front of your house is an added value, especially in Egypt.

We have just completed a golf academy on the Red Sea, because there are a lot of people who want to learn golf, but they are ashamed to play in the golf courses of their homeland. They do not want to make a fool of themselves, so they go away for 2 weeks, learn golf, come back and all of a sudden they know how to play!

P.M. Communications: I would like to give you the opportunity to send a final message to the 2.6 million readers of The Daily Telegraph. Please go ahead…

Mr. El Chiaty: My message to your readers is that if they have not been to Egypt before, they have to come and see for themselves what the country has to offer. Once they discover Egypt, I am sure they will come every year.