“We will respect the conditions imposed by the government. That could mean we either only make it available to foreigners in the bar, and are forced to check passports before serving drinks; or it will only be available in the guest rooms; or we will not serve it at all. We are not a brewery, we’re a hotel – so either way it does not change our main function,” he says.
Mr Brogan understands well the challenges of delivering an internationally benchmarked five-star hotel experience while taking into account local realities and sensitivities, and it seems the decision to serve liquor or not is not one of his main concerns right now. Having had to contend with a particularly harsh winter, which brought construction to a near standstill, Mr Brogan is under pressure to get the project delivered on time and overcome numerous niggling little nuisances that are a feature of doing business in Afghanistan.
Global hotel group
The Kabul Serena, Afghanistan’s first genuine five-star hotel, is nearing completion. The Serena Group operates 22 hotels, resorts and lodges around the world in Kenya, Tanzania, Zanzibar, Uganda, Mozambique and Pakistan. It is owned by the Aga Khan Fund for Economic Development, part of a group of private development agencies. The $28m project is part funded by the International Finance Corporation to the tune of $7m.
The hotel is on the site of the old Kabul Hotel, which has been stripped down and refurbished. It would have been easier to tear it down completely, says Mr Brogan, but out of respect for an old landmark, it has been incorporated into the new hotel. With an entirely new wing added, the Kabul Serena will comprise 186 guest rooms, two restaurants, a banquet hall, gym and spa. In terms of design and décor, the hotel will reflect subtle Afghan touches throughout, says Mr Brogan.
A five-star hotel is a benchmark project, testing whether it is possible to build and then maintain and operate a facility that must meet international standards.
Indian construction company Shapoorji Pallonji Co Ltd is the main contractor on the project, and it has had to bring in its own workers. The few skilled Afghan builders are spread thin across the country’s booming construction sector. Nearly all materials and fittings have had to be imported and routinely get held up in customs, often for months at a time. Mr Brogan says various government ministers have been helpful in smoothing the way for the project but the sheer volume of goods passing through customs has created a time-consuming and costly backlog.
As construction enters the final phase, staff training is being stepped up. “The Serena’s philosophy is to develop local people, utilising expatriate skills and experience in the early stages to train and transfer know-how, but in the long term – perhaps three to five years – have an entirely local management team,” says Mr Brogan, insisting that this is motivated by commercial reasons.
But he admits to achieve this, training has to be intensive. “Afghanistan has no tourism sector to speak of so we have had to start at the beginning.” Fifty new recruits have been sent to Serena hotels in Pakistan to begin training and gain on-the-job experience, including waiters, cooks, housekeepers and front of house staff. On their return, these recruits will start in junior management roles, overseeing up to 300 other staff who will be trained in Kabul.
Despite the staff’s scant exposure to the service industry, Mr Brogan says training procedures have not had to be adjusted. “Local recruits are very willing to learn; our main problem is getting foreign skills into the country as they have to be convinced the environment is safe,” he says. Compounding the problem, the paucity of safe and comfortable accommodation in Kabul has pushed rentals sky-high, meaning expatriate staff housing can cost anything from $5000 to $20,000 per month for even modest dwellings.
Mr Brogan also points out that there are many Afghans who fled the country who have received a good education and can speak English fluently. The problem, however, is that there is no job centre or similar where job vacancies can be posted.
With respect to women, the Serena is an equal-opportunity employer and 10 of the 50 Afghan staff members already recruited are women.
Security presents a challenge but is not insurmountable, says Mr Brogan. The hotel is being built to meet United Nations minimum security standards, including features such as blast protection for the windows. He says, however, the security situation has improved generally in the last six months. “When I arrived almost a year ago, rocket attacks on the city were frequent; now they are rare.”
The challenges will not end once the hotel opens. The vagaries of Kabul’s electricity supply mean the hotel will have to run almost entirely on generator power, guzzling thousands of litres of diesel and taking another piece off the bottom line.
Initially, most of the hotel’s procurement needs will be sourced from Dubai and Pakistan, reflecting the weakness of local suppliers. “Our long-term aim is to source much more from the local market. We are working with the Ministry of Agriculture to assist farmers in meeting our standards in terms of quality and hygiene. If you consider that eventually there will be perhaps three or four luxury hotels, plus the buying power of the foreign military presence, it’s a big market,” says Mr Brogan, seeing the savings to be made.
Despite the hurdles that have had to be overcome, room rates will start as $175-$200 per night, positioning the Serena competitively by international standards. “We compare ourselves to other hotels in other countries and we will position ourselves in the middle, despite the fact that we have a lot more expenses here,” says Mr Brogan.
With the uncertainty of Afghanistan’s security situation, changing political landscape and still-to-emerge legal and regulatory regime keeping other investors at bay, not to mention the chronically poor infrastructure, is the Serena Group foolhardy?
“I don’t think the challenges here are any greater than some of the other countries where we operate,” says Mr Brogan, himself an industry veteran who has opened and managed hotels in some of the toughest places on the planet. “I worked in Baku, Azerbaijan, in 1995, when there were three separate coups and a curfew at times. It had no infrastructure and it was very dangerous but look at it now: it’s a busy, vibrant city. I think the media paints the wrong picture of Afghanistan.”
Having spent the best part of an hour describing the challenges of doing business in Afghanistan, he does not pretend that it is an easy place to invest. But he sees beyond the challenges, to staking his share of a lucrative market of foreign diplomats, consultants and investors who seek safe, modern and comfortable lodgings, which are currently in short supply.
With this growing stream of well-heeled visitors to Kabul, plus strong demand for banqueting facilities (Mr Brogan anticipates strong interest for Afghan marriage receptions), he can even dismiss the competitive threat of the Hyatt hotel going up across town, confidently predicting ample demand for both.
Unwittingly, Mr Brogan sums up the investment case for Afghanistan: profitable demand exists in niches. The Kabul Serena may have yet to open for business, and much remains to be proved, but it is filling a hole in the market and is likely to have plenty of eager takers.