The Cabinet, at its meeting chaired by Dr. Mostafa Madbouly, approved a draft cabinet decree adopting an incentive to encourage the construction, establishment or operation of certain hotel establishments within the jurisdiction of local administration units. This comes as part of efforts aimed at expanding the establishment of hotel facilities and units and encouraging work in this field.
The decree stipulates that its provisions apply to the following hotel establishments: hotels, tourist villages, boutique hotels, heritage hotels, eco-hotels and the third category of holiday apartment units (Holiday Home). Projects to build, establish or operate the aforementioned hotel establishments, whether planned or already established, within the jurisdiction of local administration units, will be granted a conditional incentive exempting the land or buildings, as the case may be, from paying the improvement fee due for changing their use from various activities to hotel activity, in accordance with the provisions of the Building Law.
To benefit from this exemption, a set of conditions and rules must be met, including:
Approval by the ministry responsible for tourism of the suitability of the land or building for use in hotel activity, and approval by the Supreme Council for Planning and Urban Development of changing the use of the land or buildings, as the case may be, to hotel activity.
For land planned to be converted into any of the aforementioned hotel establishments, starting operations within two years for projects of 50 to 100 rooms, 3 years for projects of more than 100 and up to 300 rooms, and 4 years for projects of more than 300 rooms.
For existing buildings planned to be converted into any of the aforementioned hotel establishments, benefiting from the exemption requires starting operations within one year for projects of 50 to 100 rooms, two years for projects of more than 100 to 300 rooms, and three years for projects of more than 300 rooms.
For land planned to be converted into the third category of holiday apartment units (Holiday Home), operations must start within two years for projects of 8 up to 50 units, and 3 years for projects of more than 50 units.
For existing buildings planned to be converted into this category (holiday apartments), operations must start within one year for projects of 8 up to 50 units, and 3 years for projects of more than 50 units.
These periods may be extended by one additional year by decision of the Prime Minister, based on a proposal by the minister responsible for tourism, if the completion rate of the licensed works reaches 80% or more.
The construction, establishment or operation of the specified hotel establishments must be for the purpose of hotel accommodation on a rental basis only, and the exempted land or buildings, as the case may be, must not be disposed of before hotel activity begins under a license from the ministry responsible for tourism.
The draft decree stipulates that the relevant governorate shall determine the value of the improvement fee due for changing the activity of the land and buildings and notify the ministry responsible for tourism of this value. The ministry will record it as an incentive granted to the aforementioned projects and notify the owners of the land or buildings granted the exemption of the value of the incentive by registered letter with acknowledgment of receipt.
The decree also provides that in the event of a violation of the stipulated conditions and rules, or if the establishment's license is revoked in accordance with the provisions of the Hotel and Tourist Establishments Law, the incentive granted under this decree shall lapse, and the concerned party shall be obliged to pay the value of the improvement fee due for the change of use, plus interest equal to the interest rate announced by the Central Bank, as of the date of the Supreme Council for Planning and Urban Development's approval of the change of use, in accordance with the provisions of the Building Law and Law No. 222 of 1955. The provisions of this decree do not apply to the tourist establishments stipulated in the Hotel and Tourist Establishments Law. This came according to the official page of the Prime Minister's Office on Facebook. To view the Prime Minister's statements on this matter, click here.
