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Interview with
Mr. MARK A. ELAWADI AREA
GENERAL MANAGER FOR CONRAD INTERNATIONAL, EGYPT
Sunday 1ST November 1998 |
1./Q. Conrad International Hotels are among the most reknown Hotels in the world. Could you give our readers a brief background of Conrad International Hotels?
About the organization, Conrad International Hotels is a wholly-owned subsidiary of Hilton Hotels Corporation of the U.S. Conrad International is the luxury brand of the U.S. Hilton and it trades outside the United States. The company in its existing shape has European Hotels, as well as in Asia, Australia, Uruguay and in the Middle East. In Egypt we have three hotels, two of them are resorts in the Red Sea and the one that is under construction presently in Cairo with 619 rooms and suites, with a casino, substantial ballroom and meeting space. This is scheduled to open on the first of February, 1999. The European division has five hotels: in Barcelona, London, Dublin, Brussels and Istanbul. These are the five hotels that are based in Europe. The London property is an all suite product based in Chelsea Harbor on the Thames. It is pretty. It is located in an artistic part of London. As far as the Asian division is concerned : We have Hong Kong, Singapore and we have two hotels in Australia, which make four. Another hotel is in Latin America, in Uruguay . We have the luxury brand and therefore if you compare it to the international hotel standards, to other international hotel chains it is positioned to compete hotels similar to The Ritz Carlton and The Four Seasons, I am not saying it is in direct competition but somehow it caters to that market, the deluxe market.
2/Q: The new Conrad International in Cairo is due to open in February
1999, with a brand new 619 room hotel. Could you tell us what are the main guidelines of your strategy and what are the motives behind this decision to build a new hotel here in Cairo?
The investment is an Egyptian investment, basically a consortium of banks and insurance companies, which had a vision to develop a deluxe hotel in Cairo. Cairo had not had a new hotel since the Marriott and the Inter Continental were built and launched. The Marriott opened its doors, I recall, in 1983 and the Inter Continental was also towards the end of 1987. So, basically if we look at Cairo as a city, it had not enjoyed a new hotel in the last ten years. In addition to that Cairo also had not really had a deluxe hotel ever built in it. Conrad International Cairo will be the first deluxe brand hotel ever been launched in Cairo. Conrad International is an equity partner in the investment and we have a 10% equity contribution which amounts to about $14 or $15 million. The investment decision was, of course, made and based on a feasibility study and when the studies are made they basically highlight what is the potential success of any investment. Cairo Hotel occupancy, in the Five star market to be more precise, has been running an average annual occupancy of 80%. When a hotel market reaches that type of an occupancy level it normally and historically would suggest that there is room for a new hotel, for new rooms to be added to the market place. This is how the investment decision is normally made and I am confident that this is how the investment decision was made to develop the hotel and with the strategic guidelines that it will pay back ,and provide the anticipated returns.
As far as the operating style of Conrad International as an organization, as any business, is concerned, you have owners, you have customers and you have employees and we feel very strongly that our success in Egypt is going to be based on delivery of services to the hotel customers or the hotel guests. We are committed to total customers satisfaction. We work with the customers. We feel that the customer is basically the unique focus for us. The product itself is going to be a deluxe product. Our key success factor is going to be in successfully recruiting and training our employees in order to respond to the guests’ expectations. Our hotel is a true five star deluxe hotel and we definitely have the product and all the abilities to deliver these expectations. Concerning the financial returns based on our five-year projections we feel that if the market is stable, provided that Egypt will continue to enjoy the safe environment as it has since the unfortunate incident last year, it is expected that the hotel occupancy in Cairo will reach 80% in 1999 and 2000. For us, as Conrad International of course, we will build up the occupancy but that is something that we reach in the third year of operation We call it the stabilizing year. We expect our occupancy to be in line with the market, between 70% and 80% occupancy level.
3/ Q: With the Luxor attack last year, occupancy rates plummeted 70% after the accident. Where do we stand today exactly?
I can only answer your question as a person who presently lives in Cairo. We are unable to make any judgements on the safe environment in Egypt, except for our personal experience, what I see around here every day. I am not equipped to answer questions on behalf of the Ministry of Interior Affairs. That is their business and that is the government business to control these activities. I, speaking as a businessman, traveling with my family. I don’t feel threatened. I enjoy what I see. I have been to Opera Aida and I saw great security measures being taken. So, as I go around in Cairo and as I look at some of the security measures I personally do not feel at risk.
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4/Q: This accident did not stop you from building the Conrad International?
I came in January of this year but basically the area of Luxor and Aswan, in Upper Egypt suffered a dramatic cut in their business. Some of the five star hotels were running at 3% to 5%. I think they are recovering very slowly. If we look at the Red Sea market which is basically the resorts, the five star hotels occupancy level were running about 80% to 82% prior to the incident and Cairo was running at about 85%. This was the projection. After the incident the resorts went down to, I think, between 20% and 25%. But remember that the resort market is totally European. 80% of business in the resorts is European. So, that was the impact of the incident on the Red Sea corridor. In Cairo the occupancy shrank about thirty points. But so far this year the feedback and the numbers are suggesting that Upper Egypt remains to be weak. The tourists in the Red sea corridor are coming back. We are looking at an occupancy of about 60%-62% year to date and Cairo is getting to the 68% to 77%.I am talking of course about the five star hotels; the Marriott and the Inter Continental and the rest of them. We feel that, provided there are no further incidents, the occupancy should move back to the eighties both in Cairo and the Red Sea. I am unable to provide any comments about Upper Egypt. But we could see that the Swiss customers are coming back, we see of course the Italians are in Egypt in big numbers. So, surely I think the foreign tourism is realizing that they can come back and give it another try.
5/ Q: There are still sectors of the economy which are still publicly owned in Egypt, such as tourism. Indeed, for example in Sharm EL Sheikh, the property of Conrad International is private while land remains public. What is the situation of Conrad International Hotel in Cairo?
We are privately owned. As we said earlier by a consortium of banks and insurance companies. While we are on the topic, the Egyptian government owned hotels are in the process of being privatized, through the privatization program. I think that the Egyptian government has successfully been able to sell some of the hotel assets to private investors.
6/Q: In terms of tourism again, according to you, what should the government do to support even more this sector?
I think safety is very important. But that is not the only thing. I think also the traffic in Cairo needs to be brought under control, to clean up the environment; the streets. All these are interrelated. Egypt needs to make sure that it is not a blood pressure raising experience to travel to some of these areas. I am very critical of the situation. But I am very vocal and I say what is on my mind.
7/ Q: The ecological aspect of a company is being more and more important for consumers. What is your policy on this issue?
Our policy internally on environmental issues is that we would work very hard to control some of the waste that is going to come out of the hotel, control it at the source. And the things that need to be disposed of will be treated in a proper manner through recycling. So, the environment is very critical in my opinion. Street cleanliness, traffic organization, respect for the law, all these things are very important because you are selling a package to the tourist. Before we make anything, we have some initiatives that we are not ready to share yet within our community around us, if we can organize an effort. Again, I do not like to talk about something that I am not ready to publicize yet; to work with the neighbors in the neighborhood because this is somehow within our control. We can not talk about macro programs. But we can talk about micro and things that we can do in our own way to improve our surroundings and to ensure at least work with our neighbors to show them a different way of living as it relates to where you live. It is one of our plans to work in our community because we want to be good neighbors and looked at by the community as community leaders. It is part of our mission. We look after our customers in order to be the most preferred hotel for our customers and the most preferred employer with the employees but also to be well-respected in the community, so that people will be able to see us as an asset to the community, not as a liability.
8/ Q: At Sharm EL Sheikh, on the Red Sea coast, at Nabaq Bay, new international hotels are being built up, with massive investments. What are the comparative advantages of Conrad International compared to your main competitors?
We are talking about five star hotels. I really truly feel that our competitive edge is going to be in delivering services. If it is service, it is value for money. Our consistency in delivering services will be the key to our success. We are going to be new, we are exciting, we have a beautiful hotel in terms of product with well-trained employees who are ready to look after the customers, and the market is ready for us. The market has set the expectations for us.
9/ Q: Mr. Elawadi, keeping in mind that Forbes magazine reaches more than 4.5 million readers, what will be your final message to our readers?
For the readers of Forbes magazine what I would like to ask them is to read the ad about Egypt and to come and visit Conrad International Cairo when it opens its doors. Definitely the right time to come will be the year 2000 or even before next winter. We’ll be ready and we’d love to see them. |
© 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
