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Sound and Light Company negotiates with Chinese investor to establish tourist project in Hurghada: El Shazly - Daily News Egypt

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Sound and Light Company negotiates with Chinese investor to establish tourist project in Hurghada: El Shazly

Company’s losses last year reached EGP 19m, losses expected to decline by the end of FY to EGP 13m


The Sound and Light Company, which is affiliated to the Holding Company for Tourism, Hotels, and Cinema, is negotiating with a Chinese investor to establish a hotel and shopping malls, in addition to a food court, with total investments worth $17m, on a 42,000 sqm plot of land owned by the company in the governorate of Hurghada.

Nagwa El Shazly, acting chairperson of the company, told Daily News Egypt that a feasibility study of the project was developed, and the Chinese investor is studying the project. The investor is expected to make an offer during the upcoming few months in order to negotiate the implementation of the project.

There is a piece of land owned by the company in Hurghada. Will a study be held to utilise the land?

We are negotiating with a Chinese investor to establish a hotel, shopping malls, and a food court on a land with an area of 42,000 sqm, with approximate investments of $17m.

According to the feasibility study, the financing allocated for the project is expected to be recovered within six years from the project’s operation, especially since Hurghada is considered one of the most important tourist areas in Egypt and has 20% of Egypt’s inbound tourism annually.

The French company Prism prepared to contract on developing the sound and light shows in the Pyramids area in January 2015.

The cost of the project is $50m. The company is waiting for approval from the Ministry of Antiquities to start implementing the project, which will take 14 months to be implemented.

Prism is currently preparing blueprints of the project and is expected to start working within two months.

What about the company’s losses last year? Is there a plan to reduce them over the upcoming months?

The losses were estimated at EGP 19m. I expect the losses to decline by the end of this fiscal year, with growth in the number of inbound tourists over the past five months.

What are the ranges of the reduction in losses expected by the end of this fiscal year?

Indicators say we will reduce losses by the end of this fiscal year to EGP 13m compared to EGP 18bn last year.

This decline in losses will take place despite the increase of material prices and the inevitable prices in salaries, which represent 70% of total expenses.

This decline in losses will be done through two parallel aspects. The first depends on promoting sound and light shows to increase revenues, and the second depends on reducing expenses as much as possible, including diesel, gasoline, and lighting inside the offices of the company.

This strategy adopted by the company has already enabled it to save 30% of its expenses. A decision was made to not operate ACs before the beginning of May in order to rationalise the use of electricity and lighting. One car was also allocated for the transportation of more than one head of a department in the company instead of allocating one car for each employee separately.

How does the tourism sector see the decision of increasing ticket prices which you have recently made?

The company has decided to activate a new increase in the fees of tickets in early April from EGP 125 to EGP 150 for foreign visitors. The increase is not random, though, and does not compensate the company for losses.

The increase comes against an increase of the costs of operating materials by 300% that took place during the past months in order to keep up with the increase of costs, not to increase the company’s profitability.

The ticket was worth $10 before flotation. The increase was supposed to take the price to EGP 200 in order to equal the current dollar exchange rate.

The company has carried out the slight increase in order to test the market and tourism companies first. The company had addressed tourism companies about the increase, and they have not showed objection.

It is decided that a meeting will be held soon with tourism companies in the presence of the chairperson of the Holding Company for Tourism and Hotels, Mervat Hataba, in order to notify the tourism companies about a new increase in the ticket prices after the agreement of all involved parties.

The Sound and Light Company provides facilitations and discounts for tourism companies and their tourist groups as a kind of promotion for the sound and light shows.

Are there any other activities other than the sound and light shows?

The activities of the company are divided into three activities. The main activity is the sound and light shows that are in five regions, including the pyramids and regions in Upper Egypt. This activity depends on tourism and security.

The second activity of the company is allocated to the implementation of lighting projects for others, such as the Citadel of Salah Ed-Din and Al-Moez Street.

The third activity of the company depends on the establishment of concerts and events, both in the Pyramids area of ​​Giza and the Temple of Phila in Luxor. These concerts are supposed to pay us off, but we always meet several obstacles.

Like what?

There are many obstacles facing the organiser of the concert, such as problems related to the payment of theatre rent and lighting services, in addition to paying another amount of money to tourism and antiquities police for securing the region during the concert, as well as the Ministry of Antiquities, as the area belongs to them.

These costs represent a heavy financial burden on the organizer of the concert, as the organizer pays money to roughly six different parties. If the financial return is good, the concert is held,but if not,then the concert gets cancelled.

In commercial concerts, there is a percentage paid for taxes, as well as paying an amount of money to the Musical Profession Syndicate and arts copyrights.

The company seeks to facilitate concerts to be held in the sound and light theatre, but the other authorities are out of its hands, while the organiser of the concert requests a reduction of the amount of money they pay to those authorities.

The sound and light show capacity in the pyramids area is 3,000 seats, with a courtyard rented by the Ministry of Antiquities, worth EGP 400 per person, compared to EGP 75 previously.

The rent received by the company from the organiser of the concert for the theatre does not exceed EGP 150,000, and there will be a special discount to government agencies and ministries, and the Ministry of Antiquities may get EGP 2m from the event for renting the courtyard for 5,000 people per concert.

What about lighting projects for others that are implemented by the company?

We recently completed a lighting project for four villas in Sheikh Zayed area in 6th of October City, where we are working on the implementation of lighting projects for all sectors, both public and private.

Work is also being done on studies and special measurements for the project of lighting the Fatimid Cairo wall for the benefit of the Ministry of Antiquities.

We are targeting projects for third parties during the fiscal year 2017/2018 worth EGP 10m.

Is there an improvement in the demand of sound and light shows in the current period?

Rates are good and exceeded 50%, and we hope to reach 90% during the coming period with the improvement of inbound tourism to Egypt.

What about scheduling the dues of the company with the Ministry of Antiquities?

The Ministry of Antiquities called for a delay fine against the Sound and Light Company estimated at EGP 7m for the project of lighting in the western Luxor.

The Ministry of Antiquities submitted a complaint to the State Council against the company because of its failure to comply with the date of implementing the project of lighting in western Luxor.

We reached an agreement with Mamdouh Al-Damaty, the former Minister of Antiquities, on scheduling debts owed, with EGP 1m paid per month, and the ministry began to repay it in May 2015.

Upon activation of this agreement, we were surprised that the ministry submitted the delay complaint to the State Council, which approved it.

It was agreed that the Sound and Light Company sent all documents that confirm its commitment to implementing the project in accordance with the time period specified in the contract, which is 13 months.

The Upper Egypt Electricity Distribution Company requested a further study of the project to adjust the cable track, whereby the project implementation period was extended by an additional three months, and the ministry did not mention the reason behind the delay complaint.

How much is the delay fine on your company?

The delay fine for was estimated at EGP 7m, and the company agreed to settle it by deducting 25% of the monthly instalment value that is worth EGP 1m.

We have exerted great efforts to negotiate with the ministry in order to obtain its approval on the repayment through deducting a monthly amount of money to collect the fine, instead of collecting it in one tranche, especially in light of the lack of income of the sound and light shows over the past years.

There is always a delay in the payment of the monthly instalment by the ministry, and it is scheduled to be paid during the first week of each month, in accordance with the agreement between the two parties, due to the lack of financial resources suffered by the Ministry of Antiquities in the recent period.

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https://www.dailynewsegypt.com/2017/05/04/sound-light-company-negotiates-chinese-investor-establish-tourist-project-hurghada-el-shazly/
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