Feasibility Study for a Travel Agency and Tourism Marketing Company in Egypt

How a travel company makes money, and where it loses it

A small travel company earns in two ways. The first is a commission or service fee on a booking you sell on someone else's behalf, such as a flight ticket or hotel nights: a small amount, but you pay nothing upfront and carry no exchange-rate risk. The second is a margin on a full package whose parts you buy and sell at one price, such as a domestic trip, an outbound tour or Umrah: a larger margin, but you pay hotels, airlines and the Saudi agent before the customer has paid in full, and you absorb the difference if the riyal rises or the customer cancels.

So a travel agency feasibility study starts from three questions: how much of each package is left after its cost, how much you pay suppliers before you collect from customers, and how many months a year you actually sell, because a short season covers the whole year's expenses.

Licensing: Law 38 of 1977 and the freeze on new companies

No company may carry out tourism business without a licence from the Ministry of Tourism, and the law divides companies into three categories¹:

• Category A: all activities, including organising group or individual trips inside and outside Egypt according to set programmes.
• Category B: selling travel tickets and reserving seats on means of transport, and acting as agent for airlines, shipping and transport companies.
• Category C: operating land, sea, air and river transport for tourists.

In other words, selling packages needs Category A; Category B covers tickets and bookings only. Since the 2008 amendment the law requires a company capital of at least EGP 2 million and a financial guarantee deposit with the Ministry, set by the executive regulations at no more than EGP 200,000¹. If an Egyptian company includes foreign capital, the deposit is EGP 200,000 and its capital in Egypt must be at least EGP 3 million¹. The law also requires an Egyptian general manager and notice to the Ministry of each programme at least fifteen days before it runs¹.

Most important for the timing of your study: the law lets the minister stop accepting applications for new tourism companies when the Ministry considers the country does not need them¹. This freeze has been renewed every year for more than 15 years, and the latest renewal is a ministerial decree published in the Official Gazette in April 2026 that extends the freeze on applications for new companies of all categories for another year; most reports give its number as 246 of 2026, some as 346². In May 2026 the minister told the House of Representatives that licensing will reopen as tourism improves³. As of 22 October 2026 we found no decree lifting the freeze, and the Ministry's website still lists both a new tourism company licence and a new branch licence as "temporarily suspended"⁴. Decree 889 of 2026 extended the freeze on new branch applications by 6 months, with a possible exception for Category A companies at the minister's discretion⁵.

So you either wait or enter through an existing licensed company, and then assigning the licence, changing the type of activity it is registered for, or changing the responsible partners in a partnership company needs the minister's approval¹. Maher Consulting Firm can handle the company formation once applications reopen.

Umrah: a separate law and a guarantee in the millions

Law 72 of 2021, which created the Egyptian Umrah Portal, states that Umrah trips may be run only through tourism companies licensed under Law 38 of 1977, and requires them to pay a temporary guarantee in an amount set by ministerial decree⁶. Among the rules for the 1448 AH season approved by the minister in July 2026⁷:

• A temporary guarantee of EGP 5 million in total: EGP 1.5 million, plus EGP 3.5 million by bank cheque. It, or what remains of it, is returned after the season ends, net of any amounts refunded to pilgrims because the company breached the programme, provided no complaints about the programme price are received within two months⁸.
• A programme lasts at most 15 days, extended to 35 days for programmes between 15 Sha'ban and 17 Ramadan⁷.
• A company cannot get a new trip approved until 70% of its pilgrims currently in Saudi Arabia have returned, and in the peak months of Rajab, Sha'ban and Ramadan it cannot have more than three trips in the Kingdom at the same time; there is no cap on the number of pilgrims per trip⁷.
• No programme may be advertised before electronic notice to the General Department of Religious Tourism, and the advert must include the price and the company's licence number⁷.

The three-trip rule sets the ceiling on your sales in the most expensive months of the year, so grow the group size, not the number of trips. Hajj has its own separate system that this page does not cover.

VAT: what the text settles and what it does not

The general VAT rate is 14% on goods and services from fiscal year 2017/2018⁹, and registration is mandatory once sales reach EGP 500,000¹⁰, within 30 days of reaching it⁹. The exemption list includes road transport of people except touristic transport services, and non-touristic inland water as well as air transport services for individuals (items 40 and 41)¹¹. But we found no specific provision in the law that says whether VAT on a tour package is due on its full price or only on the company's margin or commission. In 2017 the press quoted the Finance Minister's adviser on VAT as saying Hajj and Umrah trips are zero-rated because the services are performed outside Egypt, and the chamber of travel companies stated the same position¹²; we did not find this in any Tax Authority publication, and it covers Hajj and Umrah only.

The difference is not a detail. In the example below, if 14% is due on the full price of a EGP 68,000 package with VAT included, the net price is EGP 59,649.12, below the EGP 60,780 cost, a loss of EGP 1,130.88 per pilgrim. If it is due on the margin only, the tax is EGP 886.67 and EGP 6,333.33 stays with you; at a zero rate the whole margin stays. Get a written opinion before you price. Note also that Law 149 of 2026 removed from the exemption the rental of units used as a separate premises to run an activity¹³, so your office rent is now subject to VAT.

Illustrative example: an Umrah season for a Category A company

A small licensed Category A company sells economy Umrah by air over a season with five travel months. The figures are assumptions to show the method, except the wage and social insurance figures, and the months are Hijri because the season follows them:

• Riyal rate: EGP 14.7 (assumption).
• Standard package: price EGP 68,000. Land package from the Saudi agent (visa, services, hotels, transport) SAR 2,400, flights EGP 24,000, local costs (supervisor, ID cards, airport transfer) EGP 1,500.
• Ramadan package: price EGP 95,000, land package SAR 3,550, flights EGP 30,000, local costs EGP 1,500.
• Pilgrims: 40 in Jumada al-Ula, 40 in Jumada al-Akhira, 80 in Rajab, 80 in Sha'ban and 120 in Ramadan, 360 in total, never more than three groups of 40 in the Kingdom at the peak.
• Collection: a 30% deposit on booking in the month before travel, and 70% in the travel month before departure.
• Supplier payments: half the land package in the month before travel (two months before for Ramadan programmes) and the other half in the travel month; 20% of flights as a deposit two months before travel and 80% on ticketing in the month before.
• Fixed costs: EGP 129,750 a month: rent EGP 25,000 before VAT; 4 staff on EGP 9,000, above the private-sector minimum wage of EGP 7,000 from 1 March 2025¹⁴, plus the employer's 18.75% social insurance share¹⁵, so EGP 42,750; general manager's drawings EGP 20,000; marketing EGP 30,000; accountant, systems and utilities EGP 12,000.
• Start-up costs: EGP 2,000,000: fit-out EGP 200,000, the Ministry guarantee at its EGP 200,000 maximum, the non-cheque part of the Umrah guarantee EGP 1,500,000, pre-season marketing EGP 60,000, booking system and website EGP 40,000. This excludes the price of buying an existing company if you take that route.

Compare that with booking on commission: a EGP 600 service fee on a EGP 24,000 ticket is only 2.5%, but it ties up none of your money. For a standard-month pilgrim, by contrast, you have paid EGP 41,640 before the travel month and collected only EGP 20,400.

Fixed costs need about 18 pilgrims a month at the standard margin. But travel happens in five months and costs run for twelve: 1,557,000 ÷ 7,220 = about 216 pilgrims a year before any profit. The method is explained in break-even and working capital.

Cash month by month: you pay before you collect

Season revenue is EGP 27,720,000 and its margin EGP 3,090,600, or 11.15%. After twelve months of fixed costs (EGP 1,557,000), profit is EGP 1,533,600 before start-up costs and tax, or 5.53% of revenue. Yet the deepest cash need is EGP 7,043,850 in Rajab, EGP 5,043,850 of it on top of start-up costs: in Rajab you pay half the Ramadan hotels, the Ramadan flight deposit and the Sha'ban tickets at once. For the Ramadan pilgrims alone you pay out EGP 6,731,100 before Ramadan and collect only EGP 3,420,000 from them beforehand. In Shawwal the balance is back to just EGP 52,600, the cash part of the Umrah guarantee comes back no earlier than two months after the season ends, and four more months of fixed costs lie ahead. The gap between profit and cash is explained in cash flow for small businesses.

What if the riyal rises or customers cancel?

In the cancellation scenario the customer cancels in the month before travel; the company keeps 10% of the price under its written policy and refunds the rest of the deposit, while half the land package and the flight deposit are already paid and non-refundable.

A 10% rise in the riyal adds EGP 3,528 to the cost of a standard pilgrim, cutting the margin from EGP 7,220 to EGP 3,692 (5.4%) and wiping out 96% of the year's profit. Each seat cancelled in a standard month leaves EGP 22,440 already paid, of which the cancellation fee (EGP 6,800) covers less than a third. Net losses from cancellations in this scenario are EGP 969,705. A weak season lowers the cash need, but the same fixed costs swallow 84% of its margin.

The levers specific to a travel company

• When you buy riyals: the standard package breaks even at EGP 17.71 per riyal, so a 20.5% rise wipes out its whole margin. Cover the riyals for each booking when you collect the deposit, not when you pay the agent, and price new bookings at that day's rate instead of a fixed list for the whole season.
• Deposit and cancellation: a 30% deposit is below your non-refundable cost on a cancellation (33% of the price in the example), so raise it, and put a stepped cancellation fee in the contract that tracks this cost at each stage.
• After the season: fixed costs do not stop after Shawwal. Domestic trips for companies and schools, and flight and hotel bookings on commission, cover part of them with no guarantee or large deposit. To price these services, see how to price your product; conferences have their own numbers in the events and conference company feasibility study.

Common mistakes in a travel agency feasibility study

1. Confusing revenue with profit: in the example EGP 27.7 million passes through the company to earn EGP 1.5 million.
2. Pricing the whole season at launch-day riyal rates without working out the break-even rate.
3. Forgetting the money locked in guarantees: the Ministry deposit and the cash part of the Umrah guarantee sit idle all season.
4. Assuming a new licence while the freeze stands, or buying a Category B company to sell packages without allowing for the minister's approval to change its activity.
5. Leaving the VAT treatment without a written opinion.

Frequently asked questions about a travel agency feasibility study

Sources

1. Ministry of Tourism and Antiquities. قانون تنظيم الشركات السياحية (القانون 38 لسنة 1977 وتعديله بالقانون 125 لسنة 2008، الجريدة الرسمية العدد 23 مكرر (ب) في 11 يونيو 2008) (in Arabic) (2008-06-11); Alberonsy. قانون رقم 38 لسنة 1977 بتنظيم الشركات السياحية وفقًا لآخر تعديل صادر في 11 يونيو 2008 (in Arabic) (2024-01-20) — secondary source. Checked 22 October 2026.
2. Shorouk News. للعام الـ16 على التوالي.. وقف تراخيص إنشاء شركات سياحية جديدة (نص القرار 246 لسنة 2026 بمد العمل بالقرار 169 لسنة 2025 عامًا) (in Arabic) (2026-04-18) — secondary source; Al Borsa News. وقف تراخيص شركات السياحة يفتح ملف إعادة هيكلة السوق (in Arabic) (2026-04-18) — secondary source; Misr Elaan. وزير السياحة يوقف تراخيص الشركات الجديدة عامًا لتنظيم السوق السياحي (القرار 346 لسنة 2026، الوقائع المصرية 11 أبريل 2026) (in Arabic) (2026-04-11) — secondary source. Checked 22 October 2026.
3. El Watan News. أمام «سياحة النواب».. شريف فتحي يكشف أسباب استمرار وقف تراخيص الشركات السياحية الجديدة (in Arabic) (2026-05-05) — secondary source; Vetogate. سياحة النواب تناقش طلبات إحاطة بشأن وقف تراخيص الشركات السياحية الجديدة لمدة عام (in Arabic) (2026-05-05) — secondary source. Checked 22 October 2026.
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5. El Watan News. الجريدة الرسمية تنشر قرار وقف قبول طلبات إنشاء فروع جديدة للشركات السياحية لمدة 6 أشهر (القرار 889 لسنة 2026) (in Arabic) (2026-10-13) — secondary source; Elbalad. السياحة والآثار توقف قبول طلبات إنشاء فروع جديدة للشركات السياحية لمدة 6 أشهر (in Arabic) (2026-10-13) — secondary source. Checked 22 October 2026.
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