Over the last 50 years, many developing countries have turned to tourism as a possible engine for economic growth and Egypt is no exception. However, despite its obvious economic benefits, tourism is generally considered a highly volatile industry that is prone to frequent internal and external shocks leading to downturns in activity.This paper examines the extent of tourism volatility and its economic impact. It addresses questions such as: How volatile is the tourism industry? How severe is the impact of tourism downturns on the economy? And how fast is tourism recovery? The paper answers these questions, while assessing the main determinants of Egypt’s tourism fluctuations and the effectiveness of its tourism restoration and business compensation policies as mitigation measures.