The new road to Damascus

Syria's hotel industry has not had it easy in recent years but more are realising Syria's potential.
The new road to Damascus
By Gareth Rees
Sun 13 Jul 2008 04:00 AM

Syria's hotel industry has not had it easy in recent years but, as Gareth Rees discovers, with increased government spending on tourism and an influx of tourists, more and more hotels and investors are realising Syria's potential.

Syria's hotel industry has suffered in recent years due to negative international perceptions of the country fuelled by events in neighbouring Lebanon, but in 2008 the industry is not just back on its feet but walking along the road towards a much brighter future.

Figures from the Syrian Ministry of Tourism for the first quarter of 2008 indicate a 23% growth in visitor numbers to the country, and the government has renewed its commitment to boosting Syria's tourism sector, launching a sustained campaign to market the country on the world stage.

The demand is strong, but the supply is relatively static in terms of size.

"The market is buoyant, it's very positive moving forward. The hotels are all projecting strong occupancy levels and the forecast for the future is that it's only going to continue," says Four Seasons Damascus director of marketing Julian Crane.

"The hotel is doing extremely well and we are anticipating that occupancy levels will grow. They have grown quite significantly since opening, so it's going at a good pace."

The Four Seasons Damascus opened its doors in 2006, just as relations between Syria and Lebanon were at their lowest ebb. Crane admits that it was a slow start, but argues that's the case with "most hotels". Occupancy between 2006 and 2007 grew 10-15% and sits at a healthy 70% for the first five months of 2008.

So despite a bumpy start, Four Seasons Damascus is now on the right path - a change brought about by a shift in the country's situation and the positive attitude of the government, which has led to a healthier economy, the building of new infrastructure and what Crane calls "positive political dialogues internationally".

"The market is opening up here and we're seeing new banks, insurance companies, retail and car manufacturers [in the country]. It's really changed over the last year and a half and a lot of that stems from the perception of Syria now as a destination," he says.

"The international perception of Syria has changed significantly; there's been a big shift, and Syria is being seen in terms of a tourist destination. It's always been a safe place to visit, but that message is now getting through."

Four Seasons has anticipated this demand to perfection and is now reaping the rewards of that foresight, according to Crane.

"Our entry into the market was very timely, it was good foresight from our owners, who eight or nine years ago said there could be potential in Syria," he says.

"At the time there probably wasn't a whole lot of corporate and business demand coming through Syria because the country was, and is, still opening up."

This "opening up" is the reason investors are beginning to see the potential of the country and the tourism sector is growing, making it the ideal time for hotels to move in and take advantage of a market where demand is increasing, but supply is limited. The Four Seasons currently has only two close competitors - Sheraton Damascus Hotel and Le Méridien Damascus - both of which have been in the market for a quarter of a century.

"Demand is strong, but the supply is relatively static in terms of size. Therein lies an opportunity," explains Crane.

"It's like developing anywhere, a matter of having the local know-how and ensuring you're going by the laws of the country. Syria is very much worth considering."

Four Seasons welcomes the majority of its guests from within the Middle East region, with Crane putting the figure at 65-68% of the hotel's total business made up primarily of visitors from the Gulf States, Saudi Arabia and Kuwait."The remaining balance is split through Europe, with about eight or nine percent of our total business coming out of the UK - quite a big chunk," says Crane. "The people coming are predominantly corporate business travellers and corporate group related travellers, but there is also quite a large leisure market travelling from within this region, and we also get border business from Lebanon and Jordan."

While Four Seasons will continue to focus on this large regional market, Crane says that the hotel's marketing efforts are also moving towards promoting the destination in the UK.

"There's a focus on leisure business coming out of Europe, with a big emphasis on the UK. We've got direct flights daily from London to Damascus and there's been a huge amount of press interest in the UK for Damascus as a destination," he says.

They’ll do these day trips and come back to the luxury of the hotel in the evening, so there’s that psychological comfort of travel for the luxury traveler.

"We're focusing a lot of our PR on emerging markets, and the UK would be the biggest at present."

These high-end UK travellers are attracted by the fact that Damascus is a new destination for them.

"What we've found, and continue to find, is that you've got a lot of travellers coming and staying with us and going out to the historical old city of Damascus and out to the Roman ruins in Palmyra," explains Crane.

"They'll do these day trips and come back to the luxury of the hotel in the evening, so there's that psychological comfort of travel for the luxury traveller. It really is that they want to explore something new - they really want the real Middle East - because only in the last seven or eight years has Syria started opening up to tourism."

Meanwhile the travellers from the Middle East are coming for the weather, according to Crane.

"We have four proper seasons in a year. The summers, while hot, are not unbearable," he says.

"We're also seeing more expatriates coming out of the UAE for long weekends, because there's easy air access, not just with Emirates but with budget airlines like Air Arabia, and it's an easy three hour flight away."

New competition

HVS International's 2007 report Syria - Country Snapshot highlights two developments that will include new hotels -Majid Al Futtaim Group's US $2 billion integrated mixed-use development in the Sabboura District on the outskirts of Damascus, which will include two hotels, and Qatari Diar's planned US$200 million development on Syria's Mediterranean coast near Latakia, which will include a five-star property - but the most recent hotel groups to announce their entry into Syria are Mövenpick Hotels and Resorts, InterContinental Hotels Group (IHG) and Kempinski Hotels.

Mövenpick Hotels and Resorts is set to open a 268-room property in Damascus in 2010, whilst IHG recently signed an agreement with Kuwait's MAK Hotel Holdings to develop the 370-room InterContinental Damascus, also due for completion in 2010.

"Over the last few years we have witnessed a substantial increase in tourism levels to Syria. Our aim is for IHG to be at the forefront of this demand for accommodation," said IHG MEA chief operating officer John Bamsey.

Kempinski Hotels has gone a step further, announcing plans for two Damascus properties, the Kempinski Hotel Khan Sulaiman Pasha and the Al Hayat Hotel, both originally due to open at the end of 2009.

"We have already signed a management agreement for two hotels in Damascus, both owned and developed by NESCO Egypt for Tourism Investment," confirms Kempinski Hotel Group regional director of public relations for the Middle East and Africa Doaa Amin."Kempinski Hotel Khan Sulaiman Pasha is a refurbishment project. It was an old guesthouse for travellers and caravans on their way to Saudi Arabia for pilgrimage, so it's a traditional building. It's being restored under the supervision of the UNESCO World Heritage Centre and should be ready by quarter three 2010."

The Kempinski Hotel Khan Sulaiman Pasha will be a 30-room "boutique" property catering mostly to leisure business, according to Amin.

Kempinski's main target market will be Germans and German speaking Europe, which will introduce eastern and central Europe to the destination and "drive business into Syria".

"They can enjoy it, and appreciate the fact that it's a historical hotel within the historical area of Damascus, very close to the major tourist attractions there," says Amin.

"Our feeder market is first and foremost central Europe, followed closely by the GCC where Kempinski has successfully built up a reputation with places like Kempinski Mall of the Emirates and Emirates Palace. We strongly believe that we will be able to drive business from the local feeder markets, especially Saudi Arabia, UAE and Kuwait."

Meanwhile the Al Hayat Hotel is a different proposition altogether, a new-build currently under construction.

"We will look to attract a mixture of leisure and business from GCC and central Europe, as well as local markets from within the Middle East, such as Syria, Jordan, Lebanon, Egypt and North Africa," explains Amin.

Kempinski has had its eyes set on Syria for some time, but was held up by prolonged contract negotiations, according to Amin, who adds that the group is still "open for negotiation" and will consider offers - the group has already considered a property in Aleppo - from owners or developers who have good products in or outside of Damascus.

"We have no further plans as yet but this is bound to change, because Syria has a lot to offer in terms of tourism, and leisure travellers are definitely going to start visiting. We certainly have a vision of complementing our portfolio within this area," adds Amin.

"We have two hotels in Jordan, another is opening in two months in Aqaba and one in Soma Bay Egypt. The two properties in Syria will compliment these, so we're trying to drive business from within the region by dynamic packaging.

There is a lot to see in Syria, there's good weather, security, it's very close to Lebanon and with what is happening there at the moment a lot of tourism will divert to Syria."

The destination is still "immature", lacking quality ground handlers and airport capacity, adds Amin.

"But time will take care of that, especially as the government lately announced it has strong plans in place to promote and develop tourism in Syria, which will definitely help us," she says.

"The minister of tourism announced at the end of last year that the government has tourism development in its sights and has plans to develop infrastructure, such as the airport and five-star hotels, and to increase the number of events in order to attract more tourists."

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