The tourism industry is considered a very important factor that contributes to the economic development Egypt. The industry has shown growth in the recent years in the number of tourist arrivals to reach a maximum of 6 million in 2003. It could not be denied that government efforts contributed to the growth but nevertheless the devaluation of the pound had a significant influence on the number of visitors. The performance of the industry might look fine in general. But, this is if compared to previous performance only. However, if an in-depth look is taken it is realized that the Egyptian tourism is performing far below capacity. This paper aims at explaining the way to improve the performance of the Egyptian tourism industry using a system dynamics methodology. This will be done by defining the main factors affecting the industry, then explaining how the whole system works and finally proposing a new modified model and required course of action.