Egyptian Cabinet approves new incentives to expand hotel capacity, enhance tourism sector growth

EGYPT – The Egyptian cabinet has approved a draft resolution introducing an incentive to encourage construction, development, and operation of a variety of hotel establishments within local administrative units, aiming to increase hotel capacity and stimulate the tourism sector, as announced on December 3, 2025.

Scope and Eligibility

This resolution covers a diverse range of hospitality facilities, including traditional hotels, tourist villages, boutique and heritage hotels, eco-friendly accommodations, and third-category holiday home units.

Both new projects and existing operations that meet specific criteria can benefit.

Incentive Mechanism

The incentive exempts relevant lands or buildings from improvement fees normally applied when land use changes under the Building Law to hotel or hospitality purposes.

To qualify, projects must obtain approval from the Ministry of Tourism and the Supreme Council for Planning and Urban Development.

Operational Timelines

Specific deadlines apply based on the type and size of projects. For new land developments, operations must commence within two to four years based on room or unit count thresholds.

For building conversions, the deadlines range from one to three years. Extensions of one year may be granted by the Prime Minister upon recommendation if 80% of licensed work is completed.

Conditions and Compliance

The incentive applies solely to facilities established exclusively for rental hotel accommodation.

Beneficiaries cannot sell exempted properties before operations begin, and governorates set the improvement levy values, which the Ministry of Tourism records and communicates to owners.

Violation of conditions or cancellation of licenses results in forfeiture of the incentive and repayment of levies plus interest at the Central Bank of Egypt’s rate, calculated from approval dates per the Building Law.

Exclusions

Tourist establishments currently governed under the existing Law on Hotel and Tourism Establishments are excluded from this incentive program.

Previous and current government incentives have catalyzed significant investment in Egypt’s hospitality sector, attracting major international hotel brands and boosting domestic tourism infrastructure.

Projects like the expansion of the Red Sea resorts, new boutique hotel developments in historic Cairo districts, and eco-tourism lodges in Sinai have flourished.

These investments contributed to increased tourism revenues, job creation, and diversified the sector, reinforcing Egypt’s position as a leading tourism destination in the region.

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