Egyptian hotel resort thriving thanks to Nordic support

Nordic financing and vision have helped the Radisson SAS El Quseir Resort on Egypt’s Red Sea coast go from strength to strength since opening in late 2005. Among other awards, the luxury hotel was voted third best in the country in 2006 and is providing much needed jobs and environmental leadership in an economically depressed region.

Background and financing

By 2000 the project had been revived by engaging Radisson SAS as the hotel operator. That same year, the Danish Industrialisation Fund for Developing Countries (IFU) agreed to assist with financing. Swedfund and the Nordic Investment Bank (NIB) made similar commitments in 2002. NIB has now contributed USD 4.4 million in loans to the project.

IFU and Radisson SAS provided the share capital and construction was restarted in 2003. Financial closure was achieved with all lenders in 2004 with the first disbursement of loans taking place in August that year. Total investment in the project stands at USD 23 million, of which USD 10.6 million is share capital and USD 12.3 million loan capital.

NIB entered into a Framework Agreement with the Government of Egypt in 2000 and may provide finance both to private and public sector projects.

“The reason for NIB’s loan to Radisson SAS El Quseir was mainly to enhance Nordic-based investments in Egypt. The efforts which have been made on the environmental aspects are very positive, and we appreciate the Danish support in this respect,” says Lars Fuglesang, Senior Manager for NIB lending in Africa and the Middle East.

Without Nordic cooperation and financing, the hotel, with its pristine sandy beaches and peaceful location, would have ended up just another unfinished construction project, many of which litter the Egyptian coast.

Today the hotel employs around 250 staff, most of whom are local. El Quseir is a small, unspoilt resort with a laidback atmosphere compared with bustling Hurghada up the coast. Many visitors find it the ideal place to unwind after a Nile cruise.

Danida’s Private Sector Development Programme

Starting a hotel committed to supporting the local area meant comprehensive training was needed for those living nearby wanting to work at the new resort. Danida’s Private Sector Development (PSD) Programme, now known as the B2B Programme, recognised the need and contributed DKK 1.85 million to the resort’s development in March 2005. The money was used not only for staff training, but also for water and energy- saving initiatives and corporate social responsibility (CSR) programmes that have helped local people.

In July 2006 the B2B programme granted DKK 750,000 (corresponding to EUR 100,000) for further environmental improvements and CSR activities. The main environmental and energy-saving activities were to:

• install water saving equipment,
• install solar energy systems at the resort and
• improve the ecological balance in the adjacent lagoon.

The local community has been closely involved in establishing and running an ‘educational village’ that will allow visitors to experience and learn about the local culture and ecosystems. The village features a coral reef education centre, a phosphate mini-museum, as well as displays of local music, cooking and produce.

In February 2007 Danida granted another DKK 250,000 (EUR 34,000) for a ‘cultural and development training centre’ in El Quseir. The centre will set a new standard in corporate social responsibility in the hotel industry in Egypt. It will offer computer skills, communication skills, health and safety training, and language tuition to local unemployed people as well as those working at the resort.

Also one of the Swedish Wallenberg Foundations has granted funds to the town of El Quseir for waste treatment, as well as cultural and educational development.

History

The ancient town of El Quseir lies 130 km south of Hurghada on the Red Sea coast. From the time of the Pharaohs until the 10th century, it was the most important port on the Red Sea and a major point of departure for pilgrims travelling to Mecca. The town was prominent in the ancient world, serving as an important trade centre for goods coming from China, India and East Africa.

The Romans used El Quseir as a key centre for trading with the Far East and Africa. The Ottomans saw El Quseir as strategically important. In the 16th century they built a fortress to consolidate control of the region. The building is now a museum, and the most important historic site in the town. When the British took over Egypt in the 1880s, El Quseir became the main import point for the spice trade from India to Britain.