Cabinet approves incentive plan for new, converted hotel projects
Updated 12/3/2025 3:23:00 PM
Arab Finance: The Egyptian cabinet approved a draft resolution establishing a new incentive aimed at encouraging the construction, development, and operation of hotel establishments within the jurisdiction of local administrative units, in an effort to expand hotel capacity and support activity in the sector, as per a statement issued on December 3rd.
The resolution applies to a wide range of hospitality facilities, including hotels, tourist villages, boutique hotels, heritage hotels, eco-hotels, and the third category of holiday home units.
Under the draft, projects—whether newly planned or already established—that construct, develop, or operate these facilities will receive an incentive based on exempting the relevant land or buildings from improvement fees normally imposed when changing their use to hotel operations under the Building Law.
To receive the exemption, projects must secure the Ministry of Tourism’s approval confirming that the land or buildings are suitable for hotel use, as well as approval from the Supreme Council for Planning and Urban Development for changing the designated use.
They must also meet specific timelines for commencing operations.
For land converted to hotel establishments, operations must begin within two years for projects with 50 to 100 rooms, three years for those with more than 100 rooms up to 300 rooms, and four years for projects exceeding 300 rooms.
For existing buildings being converted, the required timelines are one year for 50 to 100 rooms, two years for more than 100 to 300 rooms, and three years for more than 300 rooms.
For land converted to the third type of holiday home unit, operations must begin within two years for projects of eight to 50 units and within three years for those exceeding 50 units.
Existing buildings must commence operations within one year for eight to 50 units and within three years for projects above that threshold.
The Prime Minister may extend these deadlines by one year on the recommendation of the Minister of Tourism if 80 percent or more of the licensed work has been completed.
The incentive applies only to facilities established exclusively for hotel accommodation under a rental system.
Beneficiaries may not dispose of the exempted land or buildings before operations begin as authorized by the Ministry of Tourism.
Governorates will determine the value of the improvement levy linked to the change of use and notify the Ministry of Tourism, which will record the amount as an incentive and inform the owners via registered mail with return receipt.
If any of the conditions are violated, or if a project’s license is cancelled under the Law on Hotel and Tourism Establishments, the incentive will be forfeited.
Beneficiaries will then be required to repay the full value of the improvement levy plus interest at the Central Bank of Egypt’s (CBE) announced rate, calculated from the date the change of use was approved by the Supreme Council for Planning and Urban Development, in line with the Building Law and Law No. 222 of 1955.
The resolution excludes the tourist establishments already covered by the Law on Hotel and Tourism Establishments.
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