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 INTERVIEW WITH
AHMED AL NAHAS
PRESIDENT MIDDLE EAST AND AFRICA
March 23, 1999
Q/1: Could you give a brief background of Hilton Egypt?
Hilton is the first international group to come to Egypt. We opened the Nile Hilton back in 1959 and that was the first international management Hotel in Egypt. This was followed by operating two Nile Cruise Ships in 1964. They were the only ships running on the Nile of International standards. Obviously with the growth of tourism in Egypt there was a lot of possibilities of growth in Cairo, because the Nile Hilton was working very successfully and we decided to build this hotel (Ramses Hilton) which is one of the largest Hilton Hotels in the world. It has 924 rooms.
Tourism at that time was basically geared to what we call a standard trip to Egypt, which was 2 to 3 days visiting Old Cairo, the Pyramids and the mosques and the Citadel. All this was followed by a cruise in Upper Egypt for 5 days and 4 nights and then back to Cairo for 1 night and off they go back to Europe. This was the standard for years and years in Egypt. Tourism of this nature had a limit, or let us say had a
[…], because there is a limit to how many people can visit these sights. Especially because there are certain worries, that if you get so many people to visit these antiquities, such as the tombs in Luxor you would have a problem with the tombs itself by virtue of the number of people.
At this time we had around 2 to 3 million tourists coming. We saw that there is so much potential here that we wanted to look into other ways to bring visitors to Egypt. At that time we had taken back the Sinai. This is what made us direct our interest to leisure tourism, rather than the standard tourism of Cairo - Luxor – Aswan – Cairo and off they go. Also the people that did this trip once just to see, did not come back a second time. We were looking at other possibilities to get repeated business. So we were the first Hotel Company to open a resort in Sharm El Sheikh. Excellent results, very good occupancy, started developing ourselves our Chain in this part of Egypt. We namely started with Sharm El Sheikh but then went on to Taba, then Nuweiba, Dahab, another two hotels in Hurghada on the other side of Red Sea, on the Gulf of Suez. We got a whole network of Hotels for leisure and sort of beach resorts in Egypt.
Apart from the two in Cairo and Luxor, there is room for this sort of business and we have provided now more leisure business.
We recently (2 years ago0 took up the management of the residence here in Cairo because we found that, again, it is a big city, and a lot of new companies are coming with the privatization. They want to establish themselves in Egypt. So we found that there are a lot of requests for long tem stays. 3 months, 6months, 1 year and so on. We took this project and furnished these 134 apartments and made them into a full service flat this is as far as Egypt is concerned.
Q/2 What is the structure of Hilton Egypt?
We have a total of 7 Hotels in Egypt: 3 Hiltons in Cairo, 2 in Sharm El Sheikh, and Hurghada, and 1 in Nuweiba, in Dahab, and Taba. There are another 2 hotels opening in Sharm El Sheikh and 1 in Taba so that makes 10 Hotels in total.
Q/3 Could you give some figures?
We had in Egypt alone a turnover of around $125 million and bearing in mind that 1998 was not the best year due to the events that happened in November 1997. In terms of rooms, there are around 3000 rooms in all of Egypt.
Q/4 how would you evaluate the market share?
We have two situations in Cairo. We take upper bracket incomes at the Nile Hilton, as there are only 400 rooms and keep it mostly for businessmen. We call it the Ritz of Cairo. The Ramses Hilton with 934 rooms is about 50% tourists 50% businessmen. The Nile Hilton has the highest room rate in town and all of Egypt. We take the business center of Cairo from the top and bottom. In the middle are the Intercontinentals and the Sheratons. Simply by virtue of the operation.
Q/5 Is the Hilton where Business meets leisure or leisure meets business?
Where Business meets leisure, because we started off with business.
Q/6 With ten hotels, how do you see the market in Egypt?
The situation in 1998 has improved tremendously. Looking at today, compared to early 1998 and early 1999 is a totally different story. Things have improved tremendously and there is a lot of potential in terms of numbers and in destinations. Our biggest business coming from outside is Germany, England and then France and Italy. We are very much looking to push Japanese business and have managed to increase Japanese business, but with the crisis they are going trough we will have to wait.
With the unification of Hilton International and Hilton Hotel Corporation of the US, so what we are doing now is joint advertising, public relation campaigns, reservations all together out of the US. We even have special thing called H honors that is distributed world wide including the America’s. In order to get more Americans out to our European and Middle East resorts. It is improving slowly.
Q/7 Many people believe that tourism is underdeveloped in Egypt? What is your opinion on that?
Absolutely. There is a lot of potential.
Q/8 Where do you see the future growth?
There are two locations. Basically there is the whole coastline from Taba to Sharm El Sheikh that is being developed where there are no cities yet. This is going to be 250km with a lot of development. That is the first thing being developed today. The government is looking at the other coast which is on the main land from Suez to Ein el Suchna, all the down to the Sudanese border and the other coast of Suez from the tunnel of the Canal down to Sharm el Sheikh. A lot of projects are coming up from Rash to Tur, all the way down to Sharm El Sheikh. That is the new development.
An airport is being built as well.
It is the infrastructure that is required first: roads, electricity, airports, etc. this is the travel business and without the necessary infrastructure we can not increase it.
The north coast is unfortunately not very developed. We have one hotel there. We are the only ones on the north coast, by Burg El Alam next to Alexandria. The reason for this coast being so underdeveloped in terms of tourism is because of the climate: it is beautiful four months of the year, rather hot, but you do have the beautiful Mediterranean Sea. In the winter however, you have 2 to 3 months of windy storms. But again, there are a lot of developments on the North Coast as well.
Q/9 Back to Luxor. Since one cannot talk about tourism without mentioning the incident there. Do you think Egypt has managed to overcome its tarnished image?
What happened was extremely unfortunate. It was horrible. Everyone had the right to feel upset. A lot of security measures have taken place. Thank god we haven’t had anything since 1997. It was a black day in our business and history. Now there is a lot of security and the government has taken a lot of measures to secure tourism in Luxor.
Q/10 Do you agree with Boutros Ghali in that the country hasn’t been able to market the country well enough?
A country like this in the most beautiful beaches in the world, best climate in the world, biggest antiquities in the world you should have 50 million tourists coming. France has the most visitors in the world, but this here is better. France is France. We have better beaches.
Look at Spain. It is a European country, it has a lot of attractions, and it is fun to there and so on. However there are not that many beaches in Spain. You do not guarantee the weather as you do in Egypt, and it is the Mediterranean after all. Here on the other hand, is much more to do. So the potential is tremendous and therefore I agree with him when he says 2 to 3 million are too little.
Q/11 Potential means competition. What can you say about this?
I would say, and maybe Minister Beltagi told you, by 2005 we are aiming to reach 5 million at least.
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Today there is a lot of competition because there isn’t the number, since the supply is greater than the demand. A lot of new hotels are coming up. There will be a slump one day because all these hotels will open and there will be business to fill all these hotels at some point. But once you have this available space, the demand will go up again. And then once you have the demand you then increase your prices. Egypt is considered to be very reasonable; not cheap but reasonable.
Q/12 what are the best assets of the Hilton? Why do businessmen come to the Hilton rather than other hotels?
If you ask any person who travels, what is the first name that comes to mind when thinking about a hotel chain? This is not my thought. It is statistics. The word Hilton is the best known name. I am not suggesting that it is the best chain of the world, because it is not the case. But maybe it is because we have existed earlier than any other chain. It existed after the Second World War. We have expanded all over the world. Hilton is the best renowned name of the international hotel groups of the world. Everybody has the same affinity with the Nile Hilton for example. We were the first in Istanbul 9even before the Nile Hilton). So you can say that in this part of the world we are well established before all the other hotels came in. obviously we try to be the best in service, quality, etc.
Q/13 the government has taken a liberal attitude now. In the tourism industry, what further measures should be taken to facilitate the industry?
First it is important to liberalize the airline companies for example, which is actually happening already (2 to 3 new airline companies). Also the government has been building additional airports, it has been giving facilities and tax exemptions for hotel projects and tourist projects. This has been going on and they are in the process of privatizing the government hotels into private sector to improve the standard and get more use of these hotels
Q/ 14 What about tariffs?
No, there are no tariffs. It is completely open. Everybody puts the rates they want. Importation, as long as you don’t get the goods,
If you want something that does not exist here, they give you permission to import. If it’s a new project you don’t need to pay custom duties. If you are refurbishing you pay less custom duties than normal. So it’s very much open to the world today.
Q/15 Can you explain the rate system in Egypt in terms of the Egyptian rate and foreign rate?
At one time there was a black market, it made a difference because Egyptians were paying their bills in Egyptian Pounds and foreigners had to pay in Dollars. Today the Dollar and the Pound are open and there is no black market. However, because of the fact that Egyptian Businessmen, i.e. a Businessman coming from Alexandria to Cairo, we are charging $180 per night; an Egyptian working and living in Alexandria cannot possibly pay o $180 a night in Cairo. So the ministry of tourism agreed to give Egyptian Nationals
50% discount on the rack rate, which is the highest rate. Some foreigners actually pay less. It doesn’t mean that Egyptians pay less all the time. It depends who you are. Businessmen obviously pay more than tourists do since they have special deals, but all in all it is true that a Businessman coming from abroad will pay more than an Egyptian Businessman will.
Q/16 By decreasing the Custom Duties, wouldn’t that help this sector?
At one time they were actually going to increase them. We complained, and said no, and to keep it as it is. But today, again, you see what is happening in Egypt, we had excellent beers in the old days, and excellent wines. At one time it deteriorated so much that nobody bought the beer or the wine anymore. Today we can say that we have excellent beer, and that Sawiris is doing excellent wine, bringing the grapes from France. Stella quality is excellent now that it has been privatized, so today tourists have the choice. The new wine is actually going to be called obelisque.
Q/17 Where do you see the future of Hilton in the Middle East and Africa?
Actually we were one of the first in these regions. We were the first in Kuwait, in Abu Dabi, in Bahrain. The countries in these two regions are growing and we are growing with them. We are established in the Emirates, we are getting into Saudi Arabia, and there is great potential in Oman.
In Africa, we were the first American Hotel Chain. We opened the 2 Hotels in South Africa, we are really well established in Kenya, Nigeria, Cameroon, so the growth is in South Africa, Oman, Saudi Arabia. We are also trying to start in Eastern Europe, Russia and so on, but that is not my area.
Q/18 Where will you be on December 31, 1999?
Actually we were just talking about this. We want to go along with the government plan and must therefore meet with the Minister of Tourism, so that the bigger the group is, the better the party. Once we know the event that is going to take place at the pyramids, We must advertise it from now. I don’t know exactly what the event is going to be, what the prices are going to be, or what the timing is going to be so that we can sell this with a package for the tourists coming. It folds with Ramadan, which will be somewhat of a problem. Tourists, however, won’t feel it, because we are still aloud to serve drinks and spend a beautiful Christmas and New Years.
Q/19 Could you give us some details on your own personal background?
I went to an English school in Egypt, then continued my schooling in Hotel School in Lausanne. I lived a total of 7 years in Switzerland, learning French and studying Hotel Management for 3 years and then working for 4 years at a hotel. In 1963 I joined Hilton, meaning I have been working for them for 36 years. I started off at the Nile Hilton, was then sent to Rome and when Hilton started expanding in the Middle East, I, speaking Arabic, and knowing the situation was sent to the gulf. I lived in the Gulf States from 1967 to 1980 and during these 20 years we opened 10 hotels.
Q/20 What is your final message to our readers?
My final message to everyone who comes to this part of the world. I consider Egypt to be one of the safest countries in the world. I do not believe that in any other country can a man or women, foreigner or local safely walk the streets 24hours a day without being afraid. It’s very safe. People are very helpful. Especially with foreigners, everybody will be running to help. It might be chaos, but they are willing to help. Obviously we’ve had some incidents, but incidents happen anywhere in the world. So as far as safety is concerned I truly believe it is one of the safest in the world. People are very hospitable, and friendly especially towards foreigners, because we see it as our duty to make visitors feel at home in our country. There is a lot of potential in Egypt. It has an ideal geographic location, by the Red Sea, is near Jordan, we have the long term Toschka project. We have the Nile, beautiful sea shores, we have a huge population and hence a big market, and purchasing power. So as far as industry is concerned I see no problem. Anything that is produced here our aim is not just to sell in the local market, but to improve the product to the point that you can export. The country’s goal is to manufacture here and to export, since production cost, with rather cheap labor is very reasonable here, exporting at competitive prices and bring in foreign currency. We’ve got several sources of income, Suez Canal, Tourism, a lot of Egyptians living abroad bringing in foreign currency, and geographic location and the potential. In terms of industry, when you look at Egypt 10 years ago and compare it to today, there has been tremendous improvement. I.e. when we opened this hotel back in 1980, everything here was imported, 5 years later we built the Luxor hotel and nearly all of the stuff in the hotel was locally made. Today in 1999 half of what you see is made in Egypt. Many foreign manufacturers have plants here (Mercedes, Suzuki, Citroen etc) at least for the assembly. There is great manpower, there is empty land for industry, there is water for agriculture, and there is enormous potential for tourism. Basically I see everything rosy, and form the optimistic side. Politically as well, we are not involved in conflicts, because we are interested in improving this country and I think we are on the right track. There is a lot of growth everywhere you look and one can see the difference. Infrastructure has been improving as well (telecommunications, roads…) since without the right infrastructure a country can not move in the right direction.
Everything is on the right track, which is backed by the economic situation. We never had $20 billion reserves before. That alone is our proof of what is happening in Egypt. |
© World INvestment NEws, 1998.
This is the electronic edition of the special country report on Egypt published in FORBES Magazine,
May 31st issue.
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EGYPT
