The structure of world tourism is complex. It is important to distinguish between international or cross-border tourism and internal tourism. It is equally important for the analysis of international tourism to separate intraregional from intercontinental tourism. The importance of these different forms of tourism differs from one country to another, depending on the level of development.

In many cases international tourism is one of the motors that help drive the economies of developing countries that have reached the stage of industrialisation. Internal tourism on the other hand hardly exists at all in the poorer countries, where tourism demand tends to be highly internationalised.The situation is very different in the industrialised nations, particularly those that specialise in tourism. They are in fact the inventors of modern tourism. These countries are less internationalised today than was the case in the 19th century. Most however have developed internal or domestic tourism to a high level. Few of them however have tapped the new potential of the globalised market.Internal tourism is the tourism of both resident visitors and non-resident visitors, within the economic territory of the country of reference.

Internal Tourism certainly is one of the top priorities for investment and job creation. For example, according to IPAT, resident visitors and non-resident visitors to Panama are up almost 8% from last year and hotel occupancy is up 6%. In 2003, 865,000 tourists generated $800 million in revenues. Although this is a positive trend, there is still much that needs to be done to take full advantage of this sector's potential.

Therefore many countries of the world try to increase internal tourism for their unique countries:

- Boost internal tourism. That is, more of resident visitors living in their native countries need to get out and enjoy majestic heritage of their native countries;
- Improve internal tourism infrastructure and balance public and private involvement;
- Special rates in hotels, museums and so on for resident visitors;
- Promotional campaign in a bid to encourage local tourism. The campaign encompasses marketing all-inclusive packages at attractive prices;
- Setting up a maximum of new tour operators dedicated to marketing existing internal-tourism services;
- Setting up of new integrated services targeted for various segments;
- Presenting a thrust to the national tourism industry and create more jobs in the sector. Customers, on the other hand, will benefit from better service.

In recent years, many developing countries have turned to tourism as a possible engine for economic growth. However, internal tourism is also a highly volatile industry that is prone to frequent shocks leading to downturns in activity. For example, we focuses on Egypt in light of its experience with successive internal and external shocks and tourism's increasing importance to the economy. The paper also assesses Egypt's tourism resiliency, the determinants of its tourism fluctuations and the effectiveness of policies to mitigate the negative implications of tourism volatility.

The economic impacts of tourism downturn are immense. The tourism industry is resilient and responds quickly to crises and regains momentum over a relatively short span. However, this fast recovery is due to drastic price cuts which cause sluggish growth of tourism receipts in relation to tourist arrivals, and aggravate the adverse impacts on the business sector as well as the macroeconomic implications of tourism downturns. Tourism receipts are more volatile than tourist flows.

The most important factor determining the demand for tourism in Egypt is the extent of international competitiveness as expressed by the real effective exchange rate.In Egypt, domestic shocks have a stronger impact on inbound tourism flows compared to external shocks.