Sources in the tourism sector revealed that a group of Egyptian and American investors bought three hotels in Sharm El-Sheikh. The total value of the three hotels exceeds $52m, and they have a capacity of 300 rooms.
A source told Daily News Egypt that the alliance is composed of one main Egyptian investor and a number of American and Egyptian businessmen.
Last week, Daily News Egypt reported that an alliance of Gulf investors is in negotiations with owners of two resorts in Marsa Alam. According to sources, this group is comprised of Saudi Arabian and Kuwaiti investors. The Gulf alliance will buy hotels and real estate assets in Egypt worth $500m in 2016.
Egyptian tourism has suffered over the past five years since the 2011 revolution, following which the number of tourists declined significantly. The income from tourism reached its lowest point in 2013, recording just $5.9bn. Additionally, the Ministry of Tourism disclosed that the Russian jet crash last October pushed income in 2015 down to $6.1bn compared to $7.3bn in 2014.
The current conditions of the Egyptian tourism sector may be a good opportunity for foreign investors, where many hotel owners seek to exit business after five years of losses, an official at the Ministry of Tourism said.
An official at the Tourism Development Authority (TDA) alleged that the Russian jet crash last October has prompted the authority to reconsider offering land for investment, and could be postponed until mid-2016.
He added that foreign interest in Egyptian hotels, despite its positive effect, will reduce the potential for more investments to increase the current hotel capacity. Hotel capacity in Egypt stands at about 225,000 rooms, 65% of which are in the Red Sea and South Sinai region.
TDA Head Serag el Din Saad previously told Daily News Egypt that the authority achieved high investment rates over the past two years by offering organisational services. He added that the most recent advertisement of land will increase the value of the land the authority will market later.
According to prominent tourism sources, foreign investors aim to refurbish hotels and then resell them when tourism recovers, rather than use them for their own operations.
“The collapse of global financial markets at the beginning of January and the fall of oil prices make Egypt an attractive spot for Gulf investments,” sources said, explaining that real estate is one of the most secure sectors for investment.
In spite of the difficult conditions experienced by the tourism sector at the moment, investors expect an imminent recovery after the British Control Risks company issues its evaluation of security at airports.
The Egyptian cabinet entrusted Control Risks to review security procedures at Egyptian airports. Tourism Minister Hisham Zaazou said the British company will begin mid-February.