UPDATE 5-Travel firms cancel holidays as violence grips Egypt
* Germany and Sweden advise against any travel to Egypt
* Travel agents including Thomas Cook Germany stop all trips
* Some holidaymakers in Egypt confined to resorts
By Victoria Bryan and Belinda Goldsmith
FRANKFURT/LONDON, Aug 16 (Reuters) - Violence sweeping Egypt has hit its tourism - a vital part of the economy - as governments warn holidaymakers to stay away, prompting some foreign travel agents to stop all trips there.
The latest unrest looks likely to kill off a tentative recovery of a sector that accounted for more than a tenth of GDP before the uprising that ousted President Hosni Mubarak in 2011, starting a period of political uncertainty which worsened with events of this week.
Millions of foreigners visit Egypt each year to laze on its beaches, tour ancient ruins and cruise along the Nile, but Germany has advised its citizens to avoid its Red Sea resorts and Americans have been warned to keep away completely.
"Something like 10 percent of our bookings have been cancelled," said Mohammed el-Sharbagy, owner of a diving centre in Hurghada one of several isolated Red Sea towns far from Egypt's cities that had been holding up relatively well.
The latest travel warnings are a bitter blow to people like Sharbagy who said media coverage of the deadly violence was partly to blame for hurting business.
"Most of the events are 600 km (370 miles) away in Cairo and in Alexandria, but people just don't realise that," he told Reuters by telephone.
"Downtown Hurghada is absolutely quiet. All I saw today were some people and police sitting together protecting the church."
German tour operators Thomas Cook Germany and TUI Germany, part of Europe's largest tour operator TUI Travel , cancelled all trips to Egypt after the German foreign ministry advised against travelling to the beach resorts, which are popular with European sun-seekers and divers.
They said customers would get the chance to rebook to other destinations free of charge.
Air Berlin, Germany's second biggest airline which is one-third owned by Gulf carrier Etihad, said it was still operating scheduled flights to Red Sea resorts but would not accept new bookings to Egypt until Sept. 15.
Germany's foreign ministry advised against going to the resorts, which help attract about 1.2 million Germans to Egypt each year. It stopped short of a full warning that would mean evacuating tourists.
"Foreign Minister Guido Westerwelle urges German citizens to take this travel advice very seriously," a spokesman said.
Similar advice from Sweden's foreign ministry led Swedish tour operators to stop all trips to the resorts of Sharm el-Sheikh, 400 km (250 miles) from Cairo on the Sinai Peninsula, and Hurghada on the Egyptian mainland.
Belgium followed suit, extending a travel warning to tourist resorts on Friday that led to travel agencies Neckermann and Jetair cancelling all trips to Egypt until Aug. 31.
Egypt experienced more violence on Friday as Islamist protests descended into a bloodbath, with around 50 killed in Cairo alone on a "Day of Rage" called by followers of ousted President Mohamed Mursi, two days after their protest camps were stormed by security forces using lethal force.
The United States on Thursday warned Americans against travelling to Egypt and urged U.S. citizens living in Egypt to leave the country.
ALCOHOL AND BIKINIS
Egypt attracted 14.7 million visitors in 2010, including 2.8 million Russians, 1.5 million Britons and 1.3 million Germans, according to OECD figures.
Three years ago the $13 billion industry accounted for 11 percent of GDP, according to the World Tourism Organization.
The number of tourists fell to 9.5 million in 2011 before recovering to 11.2 million in 2012. In the first five months of 2013, tourist numbers were up 12 percent year-on-year.
When Mursi, an Islamist, came to power last year, many tourism professionals feared his government would ban alcohol and bikinis, putting off their European customers.
That never came to pass.
But Egypt's image as a welcoming destination suffered again in June, weeks before Mursi's overthrow, when tourism minister Hisham Zaazou tendered his resignation over Mursi's decision to appoint as governor of Luxor a member of a hardline Islamist group blamed for slaughtering 58 tourists there in 1997.
Russia said its citizens should not travel to Egypt and advised against tour operators promoting Egyptian holidays.
Luxury tour operator Kuoni said it was contacting all clients in Britain who were due to go to Egypt in the next 21 days to offer them alternative holidays or a refund if no acceptable alternative option could be found.
Egypt is in the top 10 destinations for both TUI and Thomas Cook, though is more popular as a winter sun destination.
Travel advice issued by governments affects tourism as vacation health and cancellation insurance will often not apply to locations deemed unsuitable for travel.
Some holidaymakers already in Egypt were advised not to leave their resorts and trips were cancelled to major attractions including Luxor and the Valley of the Kings in the south and Saint Catherine's Monastery in Sinai, the world's oldest active Christian monastery.
France advised against travel to all of Egypt in early July while Switzerland on Friday also extended its advice to warn holidaymakers away from the beach destinations.
Britain's foreign office has advised against travelling to Egypt except to Red Sea resorts, although a spokesman said this guidance was under constant review.
He said some tourists in resorts at Hurghada had been advised not to leave their hotel grounds after one man was killed in clashes there on Wednesday.
Thomas Cook's British arm said travel was operating normally but it was monitoring the situation closely. An evening curfew imposed at Sharm el-Sheikh on Wednesday had been lifted.
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