Legislative changes in Egypt enhancing the Hotel and Tourism Industry

In a recent interview with LegalcommunityMENA, Tarek Fouad (pictured), Partner and Head of Projects and Infrastructure at ALC- Alieldean Weshahi & Partners, shared valuable insights into the recent legislative changes aimed at enhancing the growth and efficiency of the hotel and tourism industry in Egypt

How does this new law impact business?

The issuance of Decree number 705 of year 2023, comprising the Executive Regulation for the new Hotel and Tourist Establishments Law, has introduced significant changes that impact businesses in the hotel and tourism industry. The updated licensing regulations, governmental duties, and sanctions outlined in the Executive Regulation aim to streamline the licensing process and meet the evolving needs of the fast-growing industry.

Notable changes include the establishment of accreditation offices, which inspect technical aspects and documents related to licensing establishments and issue accreditation certificates, providing assurance of competency. Additionally, a Permanent Committee has been formed to oversee license requirements, categorize fees, and monitor licensing procedures.

The new law also revises the fees for licensing hotel and tourist establishments, ranging from EGP 1,000 to EGP 1,000,000, inclusive of all due payments to governmental entities. However, industry practitioners, particularly small business owners, have expressed concerns about the perceived high fees, especially considering the post-Covid recovery phase of the tourism industry.

Furthermore, current touristic establishments are granted a grace period of one year to reconcile and legalize their position in accordance with the new law. These legislative changes aim to facilitate the licensing process, enhance industry standards, and drive the growth of Egypt’s hotel and tourism sector.

How does this new law interact with other laws or regulations?

The former abolished Hotel and Tourist Establishments Law number 1 of year 1973 comprised the general clauses governing the hotel and touristic establishments industry, while different business lines of the tourism industry were regulated by a myriad of Ministerial decrees under the umbrella of the former law such as furnished apartments leasing, food and beverage retail business, floating restaurants, and diving and snorkeling activities.

The former-issued ministerial decrees will remain in force as long as their clauses do not conflict with the ER or the Law. Thus, the various Ministerial decrees under the umbrella of the former law are still in force, but we are optimistic that that the Permanent Committee would play a significant role in refining and updating such regulations, like the evaluation of hotel establishments.

Are there any potential challenges or difficulties that might arise in implementing this new law or amendment?

The former law stated that the license tenure should be permanent unless otherwise stipulated, while the Law and ER also lacked the proper guidelines on regulating the license term and its renewal.

How do you think this new law or amendment will impact current practices or regulations?

We are seeing a positive impact in terms of facilitating the licensing procedures. Having said that, the business lines regulated by Ministerial decrees under the umbrella of the former law remain untouched, as the ER was silent about any updates regarding such decrees as long as their clauses do not conflict with the ER or the Law.

Are there any provisions of this new law or amendment that you think are particularly beneficial or innovative?

Article 26 of the Law stipulates that some incentives may be introduced to the industry upon a Prime Minister’s decree regarding building, establishing, operating, or renewal of hotel and tourist establishments. Such article opens the door for future incentives and or exemptions that will benefit the industry and help to flourish the tourism industry in Egypt. We anticipate that the industry market leaders will favorably come up with a new framework to develop the market on both local and international levels.

Do you think this new law or amendment will have a significant impact on how businesses or individuals operate?

We believe introducing accreditation offices to the licensing process, is deemed to be a significant positive impact. Professional consultancy firms will start approaching the ministry to acquire the accreditation offices license, which will be considered a new revenue stream for the professional consultancy firms.

About Tarek Fouad

Tarek Fouad has been a Partner and Head of Projects and Infrastructure at ALC – Alieldean Weshahi & Partners since January 2022, having initially joined the firm as a senior associate in February 2016. With over 12 years of experience in corporate, commercial, and administrative law, Fouad has developed a strong expertise in these areas. He brings extensive knowledge in advising on construction and project finance matters, leading the Projects & Infrastructure Practice.

Additionally, Fouad has gained significant experience in the tourism and hospitality sector, providing guidance to clients on hotel and residence management agreements, as well as addressing various legal and compliance-related concerns within the tourism industry. Prior to joining Alieldean Weshahi & Partners, Fouad worked at a regional law firm, where he advised clients across different industries, including FMCG, pharmaceutical, and automotive, on general corporate matters.

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