In an act of desperation, Egypt is selling off its historic hotels in order to alleviate its increasing debt.

In an act of desperation, Egypt is selling off its historic hotels in order to alleviate its increasing debt.

As the sun set on the lush surroundings of the Marriott Mena House hotel, the image of the Great Pyramid of Giza became more faint in a pool designed to mirror the final of the seven wonders of the world.

A musical group performed a mellow jazz version of the Eagles’ “Hotel California” on the green lawns while visitors gathered for a meal. Meanwhile, the hotel’s employees tried to maintain a normal atmosphere, despite the recent purchase of the hotel by a well-known Egyptian property mogul, Hisham Talaat Moustafa, and two influential Emirati companies.

The Emirates have financed the sale of Mena House and six other significant hotels. According to Timothy E Kaldas, who analyzes Egypt’s struggling and often unclear economy, this sale is being referred to as “an underwhelming fire sale” of state assets. The government is urgently seeking cash injections and accumulating more debt.

Moustafa, the biggest real estate mogul in Egypt, has experienced a resurgence in his business following his release from jail in 2017. President Abdel Fatah al-Sisi granted him clemency for a murder charge. Moustafa’s holdings encompass various properties in Egypt’s new capital, which is a highlight of Sisi’s large-scale developments. He also owns a hospitality division, Icon, that manages multiple high-end hotels in Cairo.

TMG, led by Talaat Moustafa, has recently purchased seven historical hotels in Egypt, such as Mena House. These hotels are significant landmarks of Egypt’s recent history, including the Sofitel Winter Palace in Luxor, the Old Cataract in Aswan, and the Steigenberger Cecil on the coast of Alexandria. Although international hotel chains currently manage these properties, Icon has acquired a controlling interest in the government-owned company that previously owned them.

The leader of Egypt, Mostafa Madbouly, praised the $800 million purchase by Moustafa and commended the acquisition for bringing in foreign funds. He also mentioned that the sale was funded by a well-known global strategic investor.

Several weeks passed before the identity of the mystery buyers was unveiled. It was discovered that the Abu Dhabi Developmental Holding Company (ADQ), a sovereign wealth fund located in the Emirati capital, was behind the purchase. Their subsidiary, the Abu Dhabi National Exhibitions Company (Adnec Group), which owns the ExCel centre in London, was also involved in the deal.

The Great pyramid Khufu on the Giza plateau in Cairo from the grounds of Mena House.

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The Egyptian government is willing to go to great lengths to secure funds, even if it means selling off land and historical sites. In the past few years, investors from the United Arab Emirates have purchased properties and businesses in Egypt, including the sale of a well-known government building in Cairo’s Tahrir square for $200 million. There are currently discussions between an Emirati group and the Egyptian government for a potential $22 billion deal to acquire land on the north coast of Egypt, which also involves TMG according to Bloomberg.

Cairo is facing a significant amount of debt and is taking steps to manage it, including selling large parcels of land and historic hotels. Under Sisi’s leadership, there has been a disproportionate economic influence for those connected to the regime, particularly Moustafa, while citizens struggle with harsh austerity measures and increasing inflation. Egypt is currently in negotiations to expand its loan program and is now the second-highest debtor to the International Monetary Fund, behind only Argentina.

Kaldas, an expert from the Tahrir Institute for Middle East Policy, stated that this is a blatant case of a nation being forced to sell its public assets. He also expressed concern over Egypt’s financial situation, which he believes is currently unmanageable.

Mena House was originally constructed as a royal hunting lodge, but later transformed into a hotel in 1887. The hotel features a cocktail bar and dining room with a stunning view of the pyramids. The historic section of the hotel is home to luxurious suites, including the room where Winston Churchill stayed during the 1943 Cairo conference, as well as an accurate replica of Egyptian singer Uum Kalthoum’s bedroom.

The hotel’s marble floors, mirrored lobby, and high ceilings served as a grand entrance for guests visiting to witness the strength of Egyptian diplomacy. This was evident when the hotel hosted peace negotiations between Egyptian president Anwar Sadat and Israeli representatives in one of its banquet rooms.

Luis Monreal, the general manager of the Geneva-based Aga Khan Trust for Culture, and a longtime visitor to Mena House, said he hoped the new owners understood that Egypt’s historic hotels have a value beyond the financial. “They’re part of the history of Egypt, tourism that contributed to the integration of Egypt into the wider world,” he said.

The representative for TMG refused to provide a statement regarding the sales of the hotel.

In 2009, Moustafa was found guilty of giving $2 million to a former officer with the intent of murdering Lebanese singer Suzanne Tamim. The murder took place in Tamim’s Dubai residence, where her throat was slit.

Egyptian construction magnate Hisham Talaat Moustafa leaves court after his conviction for murderView image in fullscreen

Moustafa, a member of the upper class in Egypt who is typically exempt from legal consequences, was brought to trial in Cairo, which was viewed as a sign of the Emirates’ frustration over the fact that the killing occurred on their land since Egypt does not deport its citizens.

The trial shocked the Egyptian public in a rare moment of downfall for the country’s super-rich, while the murder plot later inspired the film The Nile Hilton Incident, never screened at Egyptian cinemas under sweeping government censorship. Moustafa defended his innocence from jail, stating in a much-publicised letter that the charges against him were false.

He stated, “My constructed pyramids in the Egyptian economy cannot be influenced by these false statements.”

Although his remarks were heavily criticized initially, they ended up being accurate predictions. Moustafa was given a 15-year prison sentence after a new trial, but only served half of it before being pardoned by Sisi. Surprisingly, his previous conviction did not hinder his new job as a mediator for Emirati investments in the Egyptian economy.

Representatives from ADQ and Adnec did not reply to inquiries about the agreement or the importance of Emirati wealth funds choosing to conduct transactions with Moustafa.

The Sofitel and Steigenberger hotel chains did not provide a statement. However, a representative from Marriott, which manages the Mena House, reassured that operations and employees are unaffected by the transaction.

Kaldas noted that selling hotels will ultimately be detrimental to the state’s goal of raising funds. This is because the much-needed foreign currency generated by hotels will now be directed elsewhere.

The Old Cataract hotel in Aswan.View image in fullscreen

The government of Egypt received a boost of $800 million, which may seem positive at first, but it is actually a continuous loss of income from these resources. This is only a temporary solution and ultimately wasting money on an unsustainable economic system, hindered by maintaining a greedy network of supporters that harms the public’s well-being,” he stated.

According to him, this action does not effectively improve the economy, it simply postpones the issue – Egypt has a debt of $30 billion to pay within the next year.

A journalist from Cairo contributed to this article.