Number of hotel rooms to increase 300% in 8 years: Marsa Allam Investors Association Study

Aisha Zidane
4 Min Read

A study released by the Marsa Allam Investors Association said that the rate of room increase during 8 years will reach 300% as the requirements of this increase, including infrastructure facilities, power plants, desalination plants, among others increase too.

Chairperson of the association, Adel Rady, said that the increase is linked to the increase in direct and indirect labor, along with increasing operational movement, contractors, and suppliers.

He explained that the Marsa Allam Investors Association presented their study to the cabinet to highlight the importance of continuing to invest in establishing new rooms there and diversify the options offered to tourists.

Rady said that projects begin with direct employment of 196 employees then grow in the following 8 years to 223%, from 196 employees to 633. The salary increases by 47.5% during the same period.

He added that the tourism industry return on investment is below 5% due to the low accommodation price and the declining occupancy rates that remain under 60%, along with the increasing cost of energy and operation requirements and imposing sales tax on the accommodation price without deducting the tax paid on raw material and operation expenses from the due tax value.

He added that the reasons for the low rate of return on investment also include the increase in the interest rate of loans granted, which amounts to more than the original loan value on the long term and with the volatility in exchange rate, as well as the lack of unified price policies and controlling tour operators by the state.

He pointed out that the study also hinted that the total transactions of the hotel with the suppliers of requirements and raw materials during 12 years reaches EGP 442.5m, while the total transactions between hotels and contractors amounts to EGP 220m.

Moreover, the total payments of salaries, service fee and bonuses for direct labor amounts to EGP 160.78m, while EGP 14.37m is paid for social insurance, EGP 81.41m for electricity and water bills, EGP 92 paid to banks’ interests, which all amount to EGP 1.059bn from each hotel over 12 years.

He noted that the city witnessed a revival in the incoming movement during July, increasing by 141% compared to 2016, where the arrival rate registered 2 per minute, while departure registered 7 per minute, with regularity of 8.5%.

He added that German nationality recorded an increase of 163% in July compared to the same month last year, where some 39,000 Germans have visited the city, accounting for 31.5% of all arrivals there.

In second ranking came Czech Republic with an inflow of 28,000 visitors in July, up by 98% from July 2016, contributing by 25% of total arrivals.

In addition, Italians represented 14.7% of arrivals, up by 286% from July 2016, where arrivals throughout the month recorded 18,500.

Finally, nationals of Poland accounted for 11.5% of the total arrivals in July, up by 169% from the previous year, recording 13,900 visitors.

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