Higher electricity prices increase cost of accommodation: tourism officials

Aisha Zidane
3 Min Read

A number of tourism investors considered the sudden government decisions to increase electricity prices and the interest rate on loans as one of the most important factors that affect the sector negatively, halting tourism investments in the coming period.

Magdy Naguib, head of the Egyptian Chamber of Hotels, said that the increase in the electricity price increases the cost of operating the hotels by about 1%, which leads to changing accommodation prices in hotels.

He pointed out that the increase of interest rate by 2% on loans will have a short-term impact, and the current decline in the tourism sector led to a decrease in tourism investments, fearing of market instability.

Naguib stressed that the high interest rate makes the investor unwilling to inject investments or establish new projects.
Kamel Abu Ali, chairperson of Albatross Holding for Tourism, asserted that investors are fully aware of the new increase in electricity prices, but they did not know the rates. He added that the change in accommodation prices applied by the owners of hotels is unfair, because some of them are less than the expected increase in costs, while other hotels imposed higher prices, making the increase satisfactory and profitable.

Abu Ali called on the government to clarify the situation to investors before making relative decisions, to ensure that the economy will not be affected and prevent investors from quitting the local market.
He stressed that the tourism sector needs support, and what is happening now demolishes the whole sector.
Karim Mohsen, chairperson of the acting committee of the Egyptian Federation of Chambers of Tourism, said that the increase in the value of electricity segments will not have a clear impact on the price of hotel rooms.

Mohsen called for applying the Central Bank of Egypt’s (CBE) initiative to provide EGP 5bn for the private tourism sector at an interest rate of 10% over 15 years.
Nader Girgis, a member of the Egyptian Chamber of Hotels’ board, said that the increase in electricity and fuel prices contribute to increasing the cost of accommodation in hotels by $5.

He explained that hotel owners will add these increases on the accommodation prices in the new contracts, while they will bear these increases in the previous contracts, which will lead to some losses because hoteliers probably expect a margin profit of a maximum $2 per room.

Girgis stressed that the available hotel rooms exceeds the required in the market, which leads to a decline in prices, prompting workers in the sector to attract the largest number of clients. He pointed out that the sector has demanded to stop the establishment of hotel rooms for at least five years so that hotel owners can work and operate their facilities.

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