RIYADH: Hotel construction in Egypt will receive a 50 billion Egyptian pounds ($1.03 billion) funding injection after the government approved a new initiative to boost the country’s tourism sector.

These funds are intended for the construction and operation of new rooms, including expansions of existing projects or converting closed buildings into hotels.

The initiative aligns with the Ministry of Tourism and Antiquities’ strategy to attract 30 million tourists a year by 2038. Achieving this target requires adding 240,000 to 250,000 new hotel keys to accommodate the anticipated increase in tourists.

Priority funding will be directed toward hotel rooms in Luxor, Aswan, and Greater Cairo, as well as the Red Sea and South Sinai, including Sharm El Sheikh, Taba, Nuweiba, and Dahab.

Egypt’s tourism revenue surged in the first half of 2024, which helped drive earnings for the sector up by 4.7 percent year-on-year to reach $6.6 billion, according to a report issued by the country’s Ministry of Tourism.

In a statement, the Egyptian cabinet announced that the plan will be funded by the Ministry of Finance, and the money can also be used to complete construction, equipment, or finishing work, provided the buildings have not previously obtained a hotel operating license.

The main stipulations of the new initiative, which have been agreed upon by the Ministries of Finance, Tourism and Antiquities, and Investment and Foreign Trade, include determining each company’s available credit based on its business volume and banking regulations. 

The maximum financing limit for a single client was set at 1 billion pounds, or 2 billion pounds for the client and its related parties, through a maximum of two banks.

Applications for the initiative will open within a month of its launch and be available for 12 months, with a maximum drawdown period of 16 months and a final deadline of June 30, 2026.

Beneficiary companies must obtain an operating license within six months after the drawdown period. They will benefit from a reduced interest rate of 12 percent, with the Ministry of Finance covering the difference between this rate and the Central Bank’s discount rate plus 1 percent.

In the first half of 2024, Egypt experienced a notable rise in tourist arrivals, reaching 7.06 million, which surpassed the peak figure of 6.9 million visitors recorded in 2010.