A number of tourism investors are expecting for closed hotels to open their doors amid expectations that Egypt’s tourism sector will recover. However, some investors warned against increasing capacity in hotels, as that would lead to a decrease in the prices of rooms.
Hisham Ali, chairperson of the South Sinai Investors Association, said that a number of hotel owners in Sharm El-Sheikh reopened their hotels after having closed them following last year’s Russian aeroplane crash in Sinai.
He added that this area does not need any more investments into hotels at the moment, due to the decline in occupancy and tourism traffic.
Ali added that some investors began to consider completing their stalled projects, due to high expectations for the recovery of tourism in Egypt.
He pointed out that South Sinai is subject to the control of a number of state agencies, as it is not treated like other investment areas for security reasons.
Ali noted that investors are waiting for the issuance of a new law regulating investment in South Sinai, and he is expecting a huge investment demand in all areas. He stressed that the South Sinai area is the largest source for minerals in the country.
He denied that some investors have pressed the government to speed up the process of issuing the region’s new investment law, but they are currently submitting demands to invest there.
Abdel Fattah El-Asi, chairperson of the hotel facilities department at the Ministry of Tourism, said hotels that closed due to the decline in occupancy rates did not always inform the ministry of their closure, therefore there is no accurate inventory of them.
Ali pointed out that there are currently no requests for reopening closed tourist facilities. However, he noted that there has been a remarkable recovery in the tourism sector, and investors are currently expecting that to continue, which would lead to an increase in profits.
Ahmed Balbaa, chairperson of the tourism committee in the Egyptian Businessmen’s Association, said that in order for hotels to consider reopening their doors, there would need to be a lift on travel bans to Egypt imposed by foreign countries.
Balbaa added that a number of investors agree with this idea, because re-opening a maximum of 500 rooms would not be feasible unless this were taken into account, and such a move would incur losses for investors due to the high operating expenses.
He pointed out that the current indicators of tourism’s recovery are good, but still not satisfactory, and cannot be relied upon as a signal for hotels to reopen their doors.
Balbaa closed his four hotels in Sharm El-Sheikh following the Russian aeroplane crash in Sinai.
Antonio Ghazal, former chairperson of hotel facilities chamber in Alexandria, said that the hotel capacity in Alexandria and the North Coast is estimated at only 8,000 hotel rooms, adding that the region needs more investments in the coming period.
He pointed out that about 60,000 hotel rooms are closed in the North Coast due to their owners’ inability to resume work in the current period in light of the decline in tourism.
Ghazal said that investments did not come to a halt in Alexandria and the North Coast, pointing out that the North Coast’s indicators for investment show continued growth.
He called for increasing the hotel capacity in the North Coast in the coming period through allocating new lands for investment at reasonable prices, as well as granting facilities and financial incentives for investors.
He said that a few of tourist facilities have been reopened in the current period, and they are likely to increase during the summer; however, the rates of closure are still high.
Nader Girgis, chairperson of Angelotel for Hotel and Cruise Management Company, said that the coming period will witness high demand from investors to reopen their hotels in the Red Sea area, Luxor, and Aswan, pointing out that Hurghada received nearly 10,000 tourists two days ago, prompting the reopening of more than 80% of the closed hotels.
He added that the number of floating hotels in Luxor and Aswan has increased this year, reaching 52 hotels compared to 17 floating hotels last year.
Girgis said there is a difference between a complete and a temporary closure, noting that most hotels are now experiencing temporary closure, as there is a limited number of hotels which handed over their operating licence to the Ministry of Tourism.
He said the hotel capacity in Egypt currently amounts to 210,000 hotel rooms, along with another 120,000 rooms under construction. When the tourism season reached its peak in Egypt, there were about 12 million tourists with an occupancy rate of 60%, which means that the increase in hotel rooms led to the current low prices, according to the law of supply and demand.
He added that tourism in Egypt needs to develop its complementary activities such as malls, walkways, areas for recreational activities, and an amusement park.
Girgis noted that Arab tourists tend to stay at serviced apartments, which are not available in Egypt at the present time.