Development authority sees record revenues from investment deals

With an eye to the future, Egypt’s Tourism Development Authority (TDA) is concentrating on what seems at first sight some of the world’s most unlikely investment projects. While the tourism industry has been suffering body blows since the revolution of January 25, 2011 – and subsequent upheavals – the TDA has been seeking out investors for major tourist development projects. Perhaps as astonishing as the efforts being made is its degree of success. While visitor numbers, hotel occupancy and overall revenues have been decimated over a period approaching four years, the TDA saw the highest revenues it has ever earned since the authority was established 20 years ago.

By Numbers

In the 2013/14 fiscal year, which ended in June, TDA revenues were LE571m ($81.08m), almost a third higher than its target of LE430m ($61.06m). A statement from the Ministry of Tourism (MoT) said much of the income derived from projects along the Red Sea and Ain Sokhna for which advance payments equivalent to 40% of the sale price had been received. After receiving 50 bids, the TDA offered land to the winning developers to build tourist projects in the cities of Ain Sokhna and Ras Sedr at a cost of almost LE500m ($71m). Winning bidders were selected on the basis of past financial and technical efficiency as well as their ability to implement projects in accordance with the TDA’s requirements.

The TDA was originally established to act as the link between government policy priorities and private investors. Its remit is to find private sector backers for tourist projects, and then to provide them with technical assistance. The authority also promotes Egypt’s tourism programmes abroad, inevitably receiving plaudits for its successes and brickbats for its failures, with some hotel owners saying it should have closed its non-productive offices.

Investments

In August 2014 Ibrahim Ashmawy, investment advisor to the minister of tourism, announced that, as part of an overall plan for Ain Sokhna stretching over 19m sq metres, four areas of more than 500,000 sq metres each would be offered for integrated developments. Ain Sokhna is on the western bank of the Gulf of Suez around a two-hour drive from Cairo. It was first developed for wealthy Cairenes but has recently opened up to tourists.

Serag El Din Saad, chief executive at the TDA, told the English-language Daily News earlier in the year that the aim was to secure LE9bn ($1.28bn) of investments for the area. “The TDA has been one of the most economically active bodies in the recent past, with investors paying more than 76% of dues,” he said.

Much of the previous investment in Ain Sokhna has come from Egyptian developers, but there are moves now to encourage inflows of foreign capital. According to Ashmawy, the MoT has planned a one-stop shop to smooth the path for investors, including those outside Egypt. “We are working to reorganise the house from within, before marketing a group of investment opportunities externally,” Ashmawy told the ly News. To date just 3.5% of the LE68bn ($9.66bn) invested in TDA land has come from abroad.

North Coast

The Mediterranean coast is also being opened up for tourist resorts. The tourism minister Hisham Zaazou told the local press in September 2014, “I anticipate a tender taking place in the north coast this year after the armed forces complete some of the necessary procedures. The area has four airports and close proximity to Cairo and Alexandria thanks to a strong transportation network.” According to the minister, five plots of land in Marina and south Al Alamein, in total covering 1416 ha including desert hinterlands, will be offered for a tender.

Sharm El Sheikh

Traditional resort areas also continue to attract new investment. The Middle East Company for Touristic Investment announced plans at the beginning of 2014 to spend LE100m ($14.2m) on adding 502 hotel rooms in the company’s 40, 000-sq-metre compound in Sharm El Sheikh. The firm expects the project to be carried out in two phases, each comprising half the number of new rooms.