The Ministry of Tourism and the Egyptian Tourist Authority are working hard to restore tourist traffic again after a lull over the past five years, but these institutions have not managed to secure the required funding for investors to develop the infrastructure of their hotels so as to receive tourists and provide an appropriate standard of service.
It will cost EGP 5bn to develop hotel infrastructure, both regular and floating hotels, across all tourist destinations, according to chairperson of the Tourism Committee at the Egyptian Businessmen’s Association Ahmed Balba.
Renovation of a 5-star room costs EGP 25,000, a 4-star room EGP 20,000, and a 3-star needs EGP 15,000, Balba said.
He said that all hotels need maintenance and renovations and all equipment and devices need to be tested, due to the decline in occupancy over the last period, as well as a large number of trained workers having quit.
This required financing would also be used to provide food supplies to hotels and for intensive training courses for employees.
The security aspect will be a priority as a large part of the funding will be allocated to intensify security measures, develop existing security equipment, and provide other modern equipment, such as surveillance cameras, Balba added.
Many hotels are ready to receive tourists straightaway, but there are other hotels that need to be checked to see if they are suitable and prepared to offer an appropriate standard of service, according to the vice president of the business conduct committee at the Egyptian Federation of Chambers of Tourism Karim Mohsen.
The lack of liquidity has prevented many hotels from carrying out necessary developments, and the investors cannot carry out any development in their hotels due to the lack of sufficient funding since 2011, Mohsen said.
He added that investors suffer from the decline in occupancy rates, and seek to achieve an occupancy rate that will cover their costs so as to avoid the temporary closure of their hotels. He noted that a large number of hotels closed their doors temporarily due to the current crisis.
The Civil Defence inspects hotels almost every three months to make sure that maintenance and development works are conducted. Sami Suleiman, head of the Taba and Nuweiba Investors Association, demanded that the prime minister suspend these inspections for at least the coming six months.
He pointed out that hotels are burdened by increasing financial dues to government agencies, as the government has not taken into account the rising prices of imported equipment for hotels and restaurants.
Suleiman added that the hotels pay electricity and insurance bills on top of monthly salaries, but they cannot afford that amid the current crisis. However, the Civil Defence threatens hotels which do not comply with the new requirements.
Hotels across Nuweiba and Taba did not conduct any development over the past five years, and applied basic maintenance only to meet the demands of their guests. Suleiman said that comprehensive maintenance has ceased entirely.
This is compounded by the price increases of required products that are imported due to the appreciation of the US dollar exchange rate against the Egyptian pound.
Hisham Ali, head of the South Sinai Investors Association, said that the situation of hotels in the province is pitiful, explaining that the owners do not have the required funds for the development of infrastructure.
He added that all services in hotels, both in South Sinai and the Red Sea, have been negatively affected and they need nearly EGP 2bn for redevelopment and maintenance.
Ali pointed out that the banks have stopped lending to tourist investors in the current period and have exited from most tourist projects which have been funded since 2011 due to the current crisis.
The government does not support the tourism sector in any way, unlike other surrounding countries such as Tunisia, said Ali.
He explained that the current crisis is political and has nothing to do with tourism—workers in the tourism sector cannot solve it as tourist traffic dropped significantly following the 25 January Revolution and the Russian plane crash in October 2015. He demanded that banks come to understand the current situation.
Ali revealed that a number of investors met with the prime minister and presented their demands to rescue the tourism sector, but it was all in vain.
Head of the Red Sea Investors Association, Kamel Abu Ali, said that hotels cannot receive tourists at the moment before conducting maintenance, as equipment and machinery is no longer working effectively.
He added that despite the investors not having the financial liquidity for the development of hotels, they had to take advantage of the current recession and develop their hotels, so as to be ready for the return of tourism.
He added that some banks exited from some tourism projects as, due to the current crisis in the sector and their belief that tourism will never bounce back. He called on the government to support investors because they still want to work in the domestic market, although they could also exit.