Tucked between the mountains of the Sinai desert and the clear waters of the Red Sea, the strip of golden beaches, hotels and casinos, diving resorts and golf courses attracts many of the two million visitors to Egypt each year.
Sharm al-Shaikh, lavishly advertised as the heart of the Red Sea riviera at the southern tip of the Sinai where the Gulfs of Suez and Aqaba meet, is also important for Egypt as a symbol of sovereignty regained in the Sinai.
Conquered by Israel during the June 1967 war along with the rest of the Sinai, Sharm al-Shaikh was restored to Egypt by the peace accord signed in 1979 by late president Anwar el-Sadat and Israeli prime minister Menahem Begin.
The Israelis had begun developing Sharm al-Shaikh as a resort, building a few hotels there in the late 1980s.
Clear warm waters and shoals of
exotic fish attract scuba divers
Since then, it has grown into a major resort attracting Western and Arab investors and thousands of tourists, most of them scuba divers and snorkellers attracted by clear warm waters and shoals of exotic brightly coloured fish.
Over the years, the arid village of Sharm al-Shaikh has spawned a town, its residents a mix of tourists, hotel staff, building workers, tour guides, taxi-drivers as well as a slew of diving and water-sports instructors.
Egypt's Las Vegas
Sharm, dubbed Egypt's own Las Vegas in among the beduin villages of the Sinai, has been President Hosni Mubarak's location of choice for Middle East peace summits for years.
He also likes to show off development in the area to foreign guests he invites there for political meetings.
In 2002, Unesco - the United Nations Educational, Scientific and Cultural Organisation - honoured Sharm al-Shaikh as a City of Peace.
That peace was shattered on Saturday when a string of bombings left at least 45 people dead and 150 injured in the height of the tourist season.