Imagine this: you are upper management at an international firm interested in investigating investment opportunities in Iraq. You have attended a few conferences on the topic, spoken to a few people, done a lot of reading and started due-diligence proceedings. Now it is time to hit the ground and see for yourself what is going on, maybe start some business negotiations. Leaving aside administrative hassles, the travel hiccup will be: where will you stay? It is not an easy one to solve by a simple call to your travel agent or a quick click on Expedia’s website.
At this stage, your best options in most parts of the country are getting access to tightly controlled US government or military compounds or scoring an invitation to bunk up at the home of an Iraqi business partner (the latter being the better culinary choice). A third way is emerging, though.
Attracting the elite
The Mnawi Basha is a five-star hotel that opened in July 2009 in an affluent district of Basrah, with 136 rooms on four floors and an internationally trained service staff. The best suite – a tasteful and comfortable set of rooms – is priced at just under $400 a night; a standard room is one-third of that rate.
Designed as a “hotel for the VIPs”, according to general manager Ali Jebbar Shghit, the Mnawi Basha is attracting a steady stream of international guests and the restaurant has become a popular dining spot for the local ‘who’s who’.
On the afternoon that fDi visited, the governor of Basrah dropped by for lunch, followed shortly afterwards by top US diplomatic officials and army officers. Two international oil companies are looking at boarding their workers at the hotel. Even the most senior military visitors and the armed guards surrounding dignitaries have to check their weapons at the door though; the hotel is going for diligent but discreet security, provided by Iraqi army and police patrols and the hotel’s own security team. There have yet to be any security incidents, says Mr Shghit.
Mr Shghit is well placed to understand the kind of service that international business travellers and corporate guests are seeking: he is himself a local businessman and investor in the area. The hotel is his pet project and it is a big gamble on the future
of his hometown. “Our situation in Basrah was very bad when construction started on the hotel, but I put all my money in this project because I know our future is promising.”
Among the projects that Mr Shghit is involved in are plans to build a resort on Basrah’s riverfront and a large shopping mall in the city. Both are slated to open in two years’ time. There are also plans for a facility selling building equipment.
“I am from Basrah and I know what is needed in Basrah,” he says. “Historically, Basrah was the rich area in Iraq. It can be that again.
I expect that over the next two or three years Basrah will grow step by step, like we have seen in other Gulf countries. Our businessmen have many good contracts and now they are making a number of significant projects here,” he says.
Meanwhile, aware of the urgent need to house prospective investors and other high-profile visitors arriving in Anbar in ever-greater numbers, governor Qasim Al Fahadawi has opened the gates to his own home, in a manner of speaking. He is building a guest house on his property next to his family’s new home. The inn will open in April 2010 and will have space for about 60 guests.
Within a few years, visitors to Anbar’s capital city will have another option in the form of the planned 400-room, five-star Ramadi Forest Hotel and Resort on a picturesque site on the banks of the Euphrates River. Closer to Baghdad, the managers of Habbaniyah Tourist Village on the eponymous lake are hoping that outside investment can help restore the once fashionable but now fraying 1 million-square-metre resort to its former glory.
In northern Iraq, which has been stable for longer and therefore has seen a more regular and longer-lasting influx of foreigners, developments are under way in the key cities to expand accommodation offerings. Iraqi-owned Le Royal, the name behind one of Amman’s leading hotels and night spots, has plans for a new five-star hotel in Erbil, which will have 260 guest rooms plus 11 buildings for long-lease tenants, and also one on the river in Baghdad.
As the national capital, largest city and natural entry point for travellers to Iraq, Baghdad needs to bolster its business-hotel capacity quickly. Plans for a five-star hotel within
the secured international zone (formerly known as the green zone) were drawn up a year and a half before the US withdrawal from Iraqi cities, with the support of the US government, and are moving along.
Summit Global Group, a consortium that includes Iraqi and US investors, won the bid for the project and was awarded one of the first two investment licences under Iraq’s new investment law in May 2008. Construction of the $100m, 300-room facility started in early 2009 on a long-lease plot of land (12,000 square metres) in a prime location within the international zone. Well known Middle Eastern hotel company Rotana will be the operator.
“Hospitality facilities are something Iraq needs a lot of and with other types of projects you sometimes have to be careful not to step on any toes because of political sensitivities. This is not the case with a hotel project; it is a safe investment in a sense,” says project manager Hayder Judi. “It helps that we have Iraqis as well as Americans in the investor group – and the Iraqis are equity partners, not just partners in name.
“On our side, there is a solid business case for the investment considering the lack of any decent hotel space in Baghdad, or Iraq for that matter,” he adds.
The hotel will also seek to cure one of the main afflictions of foreign business visitors to Iraq: a lack of entertainment options outside work hours in secure areas. In addition to meeting rooms and conference facilities, it will have several lounges and restaurants (which will serve alcohol).
“Potential long-term tenants have already started talking to us. Large companies in several sectors are very interested in booking space at the hotel for their employees. When foreign companies come to Iraq to investigate investment opportunities, they are keen to examine and understand everything about operating in the country and one thing they want to get a sense of is what kinds accommodation and hospitality will be available for their staff. A hotel in Baghdad that can supply world-class facilities will be appealing for them,” says Mr Judi.
Other localities in Iraq have approached the group about considering similar projects in their areas, but the first priority is seeing the Baghdad project through to completion in mid to late 2011 – by which time Mr Judi expects the hotel’s neighbourhood will have changed considerably, for the betterment of all those living and working in what is currently a rather cloistered environment.
“Over time, the concept of the international zone will be redundant. Already it is more or less a psychological conception – people are still nervous about going to other places in the city, even though it is increasingly safe to do so. In the next two to three years, their perceptions will change,” he says.
The workforce of the hotel, once open, is also likely to change in time, from an imported expatriate management staff brought in to instil international standards to a more local workforce once Iraqi hospitality workers get proper training. This should not take too long; the learning curve is not overly steep.
Mr Judi says there was a reasonable hospitality industry in Iraq prior to the early 1990s, when war and sanctions cut the country off from international connections, and it should not take too long to get hotel workers up to speed.
“People here have more than the required natural intelligence for these jobs, the only thing they lack is training. Once they get training, they will be equivalent to hotel staff you would find anywhere in the world,” he says.
In fact, most business visitors to Iraq would likely attest to the fact that the warm and welcoming Iraqis have a better-than-average natural sense of hospitality (try going to a meeting with Iraqis, at any time of the day, and not be plied with an endless supply of chai, coffee, cold drinks and food).
With a bit of polish and shiny new floors to lay the welcome mats across, Iraqis will really be ready to roll out the red carpet for investors. It is advised, however, that visitors eat and drink lightly before going to meetings with prospective Iraqi business partners.
The cost of this supplement was underwritten by the United States government. Reporting and editing were carried out independently by fDi Magazine.