Chairperson of the Tourism Investors Association in the Red Sea Kamel Abu Ali described the initiative launched by the Central Bank of Egypt (CBE) to finance the renovation of hotels as “ink on paper and mere deceit.”
He told Daily News Egypt that the initiative has not benefited any tourism investor and needs to be implemented on the ground.
Abu Ali said it is not suitable now to inject capital in the tourism sector, as the Albatros Group recently closed a large hotel in Hurghada with a capacity of 360 rooms.
He pointed out that the recent period witnessed the closure of 25% of the hotels operating in the province.
In February, the CBE launched an initiative to finance hotel renovations, worth EGP 5bn at a 10% interest rate and a maximum of 10 years according to the customer’s credit study.
The initiative requires that the financing should be directed to regular customers to conduct the necessary renovations of hotels, floating hotels, and tourist transport fleets.
Vice President of the Tourism Investors Association in Marsa Alam Tarek Shalabi said the situation became very bad for troubled investors who do not regularly pay their dues’ installments, as banks tend to marginalise such investors.
This policy makes the investors unable to obtain any new loans from the banks unless they repay the previous loans.
The banks finance 75% of the renovation process cost, while the borrower finances 25% of the total cost.
Hisham Ali, chairperson of the Tourism Investors Association in South Sinai, said that the CBE has already completed all the procedures and executive regulations for the implementation of the initiative; however, the banks have not offered the new loans yet, as they wait for completing credit studies for each customer or facility.
He pointed out that the customers’ credit studies vary according to the establishment date of the facilities, the number of rooms, and the size of needed renovation.
Ali called on banks to speed up the completion of the required studies, as most hotels, especially in Hurghada and Sharm El Sheikh, have applied for the initiative and still await a response.
He stressed that the hotels need to be rescued quickly, as their conditions get worse day by day, demanding a timetable of not less than two years for the renovation process.
Nagy Erian, a former board member of the Chamber of Tourism Establishments, said that the initiative did not provide the desired benefit. “None of the applicants has received the support agreed upon by the initiative,” said Erian.