The Tourism Development Authority (TDA) is considering deferring the tender of 20m square metres to the last quarter of 2014 following parliamentary elections according to a Ministry of Tourism official.
The official attributed the postponement to the fear of little investor interest if the tender were to take place during the month.
Egypt’s tourism income declined during the first half of the year to $3bn, down from $4.4bn for the same period last year.
The TDA offered a tender for 19m square metres in areas under its jurisdiction in the Red Sea and South Sinai last December. Only 5 sites in Ain Sukhna and Ras Mohammed were purchased, with the price per metre for the five sites ranging between$75-163.
Although four companies were awarded the five sites, two eventually withdrew from the deal.
The TDA hopes to attract investments of EGP 9-10bn from the tender process this year according to Serag El-din Saad, Chief Executive of the Authority.
He added that the tender will follow the system of financial and technical differentiation instead of the measures stipulated by the tenders and auctions law.
“Land tenders form a large risk at present in light of the tourism sector’s circumstances,” said Hossam Al-Shaer, Chairman of the Egyptian Travel Agents Association.
Al-Shaer felt that the offer should be expanded by adding investment opportunities giving the tourism sector greater power in light of competition from other countries in the region.
Over the past ten years, investors have expanded Egypt’s hotel capacity without expanding services, trade, and recreational investments next to resorts, Al-Shaer said.
There are currently 208,000 hotel rooms under construction according to the head of the Egyptian Federation of Chambers of Tourism, Elhamy Zayat.
Current hotel capacity expansion is negatively affecting the price of tourism services thanks to the presence of a plethora of rooms against weak tourism demand in Egypt.
Egypt suffers from low tourism rates due to political unrest over the past three and a half years. According to the Sub-Accounts Unit of the Ministry of Tourism, tourist spending has fallen to less than $63.3 per night compared to $85 per night at the end of 2010.
Zayat feels that the drop in spending and hotels’ inability to conduct maintenance processes and replace assets affects tourism investment negatively.