Daily News Egypt

Tourism sector asks banks to postpone debt repayment to end of 2015 - Daily News Egypt

Advertising Area

Advertising Area

Tourism sector asks banks to postpone debt repayment to end of 2015

Banking system owed EGP 10bn from tourism sector, workers hope to postpone debt repayment to end of 2015

Tourism sector asks banks to postpone debt repayment to end of 2015. (AFP PHOTO / KHALED DESOUKI)
Tourism sector asks banks to postpone debt repayment to end of 2015.

The Egyptian Federation of Chambers of Tourism requested the banking system postpone debt repayment until the end of 2015, according to a Ministry of Tourism official.

The official added that “EU officials told us that the sector cannot handle repayment before 2016.”

According to the official, who requested anonymity, the sector will not recover before 2016, regaining its strength in 2015 due to the more stable security situation that is expected follow the completion of the political road map announced in July 2013.

Tourism income declined last year to $5.9bn, representing a 41% decline over the previous year according to the Ministry of Tourism.

Despite signs of the sector’s recovery, the official said occupancies remain below desired levels. Occupancies are no greater than 40% in Sharm El-Sheikh, 60% in Hurghada, and 30% in Cairo at present, due to ongoing demonstrations in the streets.

He said that the amount owed to banks, most of which are state-owned, by the tourism sector exceed EGP 10bn.

The Central Bank of Egypt (CBE) launched an initiative at the beginning of 2014 to postpone the tourism sector’s debts until the end of the year to allow the sector to recover.

Approximately 3.8 million individuals work in the tourism sector, of which 1.8 million are employed indirectly by the industry, mainly in the hotel industry and tourism companies.

Security is one of the biggest obstacles faced by the tourism sector. The government has stepped up the presence of security personnel in hotel complexes in Sharm El-Sheikh and Hurghada, according to the official. The security increase came in light of a call for protests, made by Islamists at the end of November.

The official said the Ministry of Tourism targeted revenues of $7bn last year compared to $5.9bn for 2013. The increase is small compared to the $12.5bn brought in by tourism during 2010, which represented the peak of tourism in Egypt, the official said.

He added: “Operating costs rose by 30% last year due to a rise in fuel prices and wage increases for workers.”

He said high operation costs combined with low occupancy rates contributed to hotels’ and businesses’ inability to pay back debts to the banking system.

Tharwat Agamy, Chairman of the Federation of Tourism in Luxor and Aswan, said hotel occupancies in the area did not exceed 18% but described them as high compared to rates under 5% over past months.

Agamy expected occupancies to increase to 40% during New Year and Christmas celebrations and increased tourism from Western Europe and East Asia in the near future.

Advertising Area

Breaking News

No current breaking news

Receive our daily newsletter