* Tourist arrivals crash 45 percent after army cracks down
* Thousands of hotel rooms empty, travel warnings remain
* Fears grow that militant attacks will spread
* But winter sun-seekers start returning to beaches
* Egyptian tourism bounced back from 1997 massacre
By Maggie Fick
CAIRO, Oct 14 (Reuters) - Morale in Egypt's tourism industryis at rock bottom; a summer of bloodshed has frightened away allbut the bravest foreign visitors from Cairo and the pyramids,and things are little better in the Red Sea beach resorts.
Yet if the business could survive the 1997 bloodbath atLuxor, when Islamist militants killed dozens of tourists at apharaoh's temple, it can probably recover from its currentconvulsions.
Already visitors are gradually returning after the worstcivil violence in Egypt's modern history, offering hope to anindustry that has been brought to its knees, depriving millionsof their livelihood and the economy of badly needed dollars.
However, Egyptians know that numbers can never climb back toanywhere near their 2010 peak as long as security crackdowns,street protests and militant attacks on the government persist.
Like other countries in trouble, Egypt could try anadvertising campaign to lure back the Europeans, Asians,Americans and Gulf Arabs who are now largely holidayingelsewhere. But for now it won't even bother.
"There is really no point in trying to embark on a PRcampaign," said Karim Helal, an adviser to Egypt's tourismminister. "If you cannot convey the feeling that it is safe,nobody will come," said Helal, a dive company owner turnedinvestment banker.
Egypt has endured almost constant upheaval since a 2011popular uprising toppled autocrat Hosni Mubarak, but things havegot much worse since the army's removal of Islamist PresidentMohamed Mursi in July and the bloodshed that followed.
As international media broadcast scenes of mosques andmorgues filled with bodies, governments in the main touristmarkets issued warnings on travelling to Egypt.
Visitors are a rare sight in Cairo these days, even thoughOctober had always marked the start of the peak season when agentle breeze from the Nile eases the stifling heat. In July,only about one in six of the capital's hotel beds were occupied,according to research firm STR Global.
Even in the Red Sea resorts, largely shielded from the violence in the big cities, occupancy rates are drasticallydown. In Hurghada, a destination usually popular with Russiansfleeing their bitter winters, only 11,000 of 50,000 hotel roomsare occupied, provincial governor Ahmed Abdullah told Reuters.
A LONELY FIGURE
Nobody has felt the consequences more than the manyEgyptians - from hotel workers to guides and gift shopowners -who rely for their living on tourism, traditionally a pillar ofthe economy and the second biggest foreign currency earner.
Horse carriage driver Ramadan Iraqi has lost hope that hewill soon see tourists return to the five-star Cairo hotel whichonce gave him work. He cuts a lonely figure late at night inZamalek, an upscale district on an island in the Nile, searchingfor a customer so he can feed his family of six.
"I am an old man," said Iraqi, 55. "What am I supposed todo?" It's been 20 days since anyone rode in his carriage alongthe Nile embankment. Iraqi can scarcely feed his gaunt horse andcan no longer afford medicine to ease severe pain in his knee.
Such individual misery is reflected at a national level.Tourism earned Egypt $9.75 billion in the 2012-2013 financialyear which ended in June, before the worst violence erupted.Even so, that was down from $11.6 billion in 2009-10, the peakbefore the overthrow of Mubarak.
In July and August, tourist arrivals crashed by 45 percent,Tourism Minister Hisham Zaazou said. He estimated losses sincethe army takeover at $1 billion per month.
There are no signs Egypt's divisions will soon heal. Peoplecontinue to die in protests in cities and towns. Adding toforeigners' anxiety, police and soldiers are coming under almostdaily attack from Islamist militants in the Sinai Peninsula,site of the Sharm el-Sheikh resort.
A Sinai-based group said it tried to kill the interiorminister in September in Cairo in a suicide bombing, and earlierthis month two rocket-propelled grenades were fired at asatellite station in a suburb of the capital.
Anyone who wants to visit Cairo's Tahrir Square, therallying point for Egyptians during the 18-day revolt thattoppled Mubarak, may think twice about going.
Soldiers manning armoured personnel carriers and riot policekeep a close eye on it and try to keep members of Mursi's MuslimBrotherhood from protesting. Only a few hundred metres awaystands the Egyptian Museum, which houses some of the greatestpharaonic treasures including King Tutankhamen's burial mask.
Nevertheless, Egypt has been here before. On Nov. 17, 1997gunmen descended on Queen Hatshepsut's temple near the Nile townof Luxor. In a short time they shot or hacked to death 58tourists and four Egyptians in their campaign for what theyregarded as a pure Islamic state.
The following January and February, visitor numbers weredown almost 60 percent from the previous year. Hotel occupancyrates collapsed from 70 percent just before the massacre to just18 percent.
Yet the indus1try staged a remarkable comeback. In 1999almost 4.5 million visitors came to Egypt, well up on the 3.7million in 1997.
At that time Mubarak's security apparatus was able to keepthe streets much quieter than they are now. Nevertheless, hoperemains that the industry can again recover, if more slowly.
Holidaymakers from Germany, one of Egypt's biggest markets,have been starting to return since last month, when the Berlingovernment relaxed a travel advisory that had said touristsshould stay away from Egypt entirely.
Tour agents and operators said many clients were stillopting for quieter destinations. "Bookings to Egypt are comingback but they have not caught up to levels seen a year ago,"said a spokeswoman for the Lastminute.de booking website."Customer interest is there, but it's cautious. Bookings to theSpanish islands or the Turkish Riviera have increased instead."
But some were surprisingly upbeat. "Weekly bookings areabove those seen one year ago," said a spokesman for DERTouristik, one of Germany's biggest tour operators.
"We have cut capacity but can react quickly to demand. Weexpect a swift recovery for tourism to Egypt and expect a waveof demand for March and April."
Most Germans seeking Egyptian winter sun are heading for thebeach. TUI Germany, along with its rivals, has not resumed tripsto Luxor or Nile river cruises in accordance with German foreignministry advice to avoid overland travel in those areas.
But the company, which is part of Europe's largest touroperator TUI Travel, can fly guests directly to Cairo.
The United States, Britain and Russia still have stricttravel warnings. However, Maya Lomidze, executive director ofthe Association of Tourism Operators of Russia, told Reutersthat tens of thousands are ready to visit their favouritedestination, Hurghada, immediately if Moscow eases its warning.
BELIEVING IN EGYPT
Some hotel operators, like Alexander Suski of KempinskiHotels, expect Egypt to bounce back one day. "We really stillbelieve in Egypt as a destination," said Suski, who thinks arecovery would be possible in two to three years and has noplans for the hotel group to leave Egypt.
Austrian-based Kempinski already runs an upmarket hotel inCairo which opened shortly before the 2011 uprising, and anotheron the Red Sea near Hurghada. A third on the outskirts of Cairois due to open next year.
However, much depends on whether Egypt can regain somedegree of stability following the long period of turmoil.
Capital Economics estimated the industry's losses rangedfrom $250 million to $650 million a month. William Jackson, aneconomist at the London-based group, said a rebound is possible,but that "the events over the past two and a half years give usevery reason to be cautious about thinking that will happen".
There are bright spots; unlike in 1997 Islamist militantshave not targeted tourists. Cairo visitors are probably at muchgreater risk crossing the road through the capital's anarchictraffic than they are of getting caught up in the streetviolence, which affects only small areas of a huge city.
In the meantime some tourists are enjoying aonce-in-a-lifetime opportunity to see the riches of the EgyptianMuseum or the Sphinx up close, without being jostled by tourgroups.
"It's paradise: the pyramids, the museum, everywhere isempty because of the situation," said Alvero Rocca fromArgentina, a country which has endured its own upheavals inrecent decades.
"For Westerners, perhaps it's more problematic ... We inArgentina are more used to the chaos," Rocca said at Cairo'sKhan al-Khalili bazaar which was nearly empty of tourists. "Forus it's better. I know for Egypt's economy it's a catastrophe."
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