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Converting residential facilities to hotel use |
Egypt grants facilities for converting residential, administrative, and commercial facilities into hotels
The Egyptian government has decided to grant facilities for converting residential, commercial, administrative, and mixed-use facilities to hotel use, allowing for the establishment of the largest number of hotel facilities and units.
According to a government statement, the Egyptian Cabinet reviewed, in its meeting today, Wednesday, the results of the work of the working group formed to examine the appropriate legal mechanism for abolishing financial fees for converting facilities to hotel use. The results of the work included a proposal for a draft resolution to approve an incentive to encourage the construction, establishment, or operation of hotel facilities within local administrative units.
The draft resolution stipulates that projects to build, establish, or operate hotel facilities planned for construction or already established within local administrative units shall be granted a conditional incentive by exempting the land or buildings, as the case may be, from paying any improvement fees due for changing their use from various activities to hotel use.
To qualify for the exemption, a set of rules must be adhered to, including the approval of the ministry responsible for tourism affairs that the land or building is suitable for hotel use, and the approval of the Supreme Council for Planning and Urban Development to change the use of the land or building, as appropriate, to hotel activity. This is based on a proposal from the Technical Secretariat of the Supreme Council for Planning and Urban Development, in coordination with the relevant governor and the minister responsible for tourism affairs.
Project Implementation Duration
The regulations also stipulate that hotel activity must commence within the following periods: For land, two years for projects up to 100 rooms, three years for projects with more than 100 rooms up to 300 rooms, and five years for projects with more than 300 rooms. For buildings, one year for projects up to 100 rooms, two years for projects with more than 100 rooms up to 300 rooms, and three years for projects with more than 300 rooms.
According to the statement, the aforementioned periods are calculated from the date of issuance or amendment of building permits for lands or buildings, as applicable. A decision by the Prime Minister, based on a proposal from the Minister of Tourism Affairs, may extend these periods for an additional year if the percentage of completion of the licensed work reaches 80% or more. The conditions also stipulate that exempted lands or buildings may not be disposed of, as applicable, before commencing hotel activity based on a license from the Ministry of Tourism Affairs.
The draft resolution stipulates that the Ministry of Tourism Affairs, in coordination with the relevant governorate, shall determine the value of the improvement compensation due for changing the use of lands and buildings subject to the provisions of this resolution, to be recorded as an incentive granted to the aforementioned hotel projects. The Ministry of Tourism Affairs shall notify the owner of the lands or buildings exempted from the value of the incentive granted.
In the event of a violation of the terms and conditions stipulated in this decision, the incentive granted pursuant thereto shall be forfeited, and the interested party shall be obligated to pay the due improvement fee plus interest equal to the interest rate announced by the Central Bank of Egypt, effective from the date of approval by the Supreme Council for Planning and Urban Development of the change of use. The provisions of this decision shall also apply to hotel establishments, not tourist establishments.
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