Hotel Diplomacy

With sanctions a threat and rigid laws a hindrance, can the opening of the long awaited Four Seasons hotel in downtown Damascus change the business climate of Syria? Andrew Lee Butters reports.

When UN investigator, Detlev Mehlis came to Damascus in September to interview high-ranking government officials about the assassination of Rafik Hariri, the question of when the Four Seasons Hotel would finally open was probably not at the top of his agenda. But that would have made Mehlis just about the only character in the country who didn’t care.

For months, the hotel’s debut has been the main topic of conversation among foreign visitors in need of spa treatments, local businessmen in search of state-of-the-art conference space, and everyone else who’s been longing for a restaurant that doesn’t serve mixed grill and mezze.

Luxury-deprived Damascenes can now sleep easy in the knowledge that the $100 million hotel will at last open its doors to guests on November 15, after more than eight years in the making, 60 of the hotel’s 297 rooms will be available at an introductory rate of $155 across the board. More rooms will be added at the beginning of December ahead of a full opening by January.

To sleep a little less easily, perhaps, guests could pay almost $8,000 for just one night in the Royal Suite, the most lavish of the hotel’s 66 suites.

The Four Seasons project is a bell-weather for the opportunities and difficulties faced by global name-brand corporations interested in doing business with Syria. And if successful, it could be a model for encouraging more of those companies to travel the road to Damascus.

“Syria has plenty of potential,” said Markus Iselli, the Four Season’s Swiss-born General Manager. “There are a lot of investors watching this project, to see if we will be successful. I know we will be. We can change how people see Syria.”

As a hotel operator, the Four Seasons company doesn’t actually own the recently completed 18-story building in downtown Damascus, or any of the more than 67 hotels in 29 countries around the world which it manages and markets under the Four Season’s brand for a portion of their revenue. The majority share of the physical hotel in Damascus is owned by His Royal Highness Prince Walid Bin Talal of Saudi Arabia. The Prince, who as the original investor owns 65 percent, brought on the Syrian Ministry of Tourism (17.5 percent) and the Governorate of Damascus (17.5 percent) as strategic partners, with the blessing of President Bashar al-Assad himself. The hotel project is to be both the flagship of Syria’s still underdeveloped tourism industry, and an advertisement to foreign investors that Syria is open for business.

With such high-level local wasta, it’s been easy for the hotel’s owners to get things done. The Ministry of Tourism and the Governorate of Damascus were instrumental in obtaining real estate in central Damascus and obtaining building permits. Nevertheless, construction of the hotel took longer than expected.

The rumour around town was that Rami Maklouf, the president’s cousin and a gate-keeper to business in Syria, tried to slow the project down because the Prince hadn’t cut him in on the deal. However, the reason for the delays may have been more mundane. The head of the construction company building the hotel died mid-project.

With the hotel nearing completion by autumn of last year, the Four Seasons company was ready to swing into action. Or was it? For a global corporation, there are plenty of hurdles to doing business in Syria. Although the Toronto-based Four Seasons is a Canadian company, it is publicly traded on the New York Stock Exchange. Before moving forward in Damascus, the company sent its lawyers to the State Department in Washington to make sure the project wouldn’t incur the wrath of the United States, which lists Syria as a sponsor of terrorism and whose sanctions on Damascus prevent the sale of any US goods, except food and medicine, to the country. “We got the green light last year in September-October, and we got here in December,” said Iselli.

International politics aside, the biggest hurdle facing the Four Seasons was Syria’s rigid labour laws, which means only the prime minister himself can fire workers in the public sector and joint sector ventures which include government stakeholders.

As a global brand, the Four Seasons has to provide global standards of services to its guests, according to Iselli. “We can’t run a hotel if we can’t fire an employee who misbehaves,” he said. Working through the Ministry of Tourism, the Four Season negotiated a set of labour regulations that would make it possible to fire workers for poor performance on the company’s ‘Three Strikes’ policy. In effect, the Four Seasons is a kind of offshore labor market right here in Damascus.

“The government has realized something needs to be done on labour laws and has started its own work mirroring what we have been proposing and what has been adjusted,” said Iselli. “They are trying to implement newly revised labour laws, particularly in the tourism sector.”

After hiring about 600 employees, Iselli said he’s been pleasantly surprised by the quality of the Syrian labour force. True, it’s been hard to find managers with certain critical skills, such as a reservations manager capable of operating the latest software, and a procurement officer not obviously tainted by prior relationships with local suppliers. “We had several applicants offering to work for free,” said Iselli, who eventually hired a Jordanian for the job. But on the whole, Iselli said his employees are young, enthusiastic and well-educated. “Everyone is fired-up and eager,” he said. “We’ve had people coming in from corporate [headquarters in Canada], and they’ve said our Syrian people are fantastic.”

But the deteriorating relationship between Syria and the US continues to cause problems for the hotel. While the hotel was being built, US sanctions weren’t yet in effect, and the hotel owners bought Carrier brand American air conditioners for the building. But with US President George Bush’s June 5 implementation of selected provisions of the Syrian Accountability and Lebanese Sovereignty Act, Four Season’s guests could start feeling the heat of sanctions. If the air conditioners break, it will be difficult for the hotel to get spare parts. Even more critical, the computers and hotel management software used by the Four Seasons company come from the US. The company was forced to turn a blind eye while the hotel’s ownership obtained them through sources of their own.

But by far the biggest challenge will be riding the diplomatic waves caused by the Mehlis report, which blamed key Syrian officials for Rafik Hariri’s murder. If passed by the UN Security Council, multilateral sanctions would drive away some of the business travelers whom Iselli expects to make up some 40 percent of the hotel’s guests. And sabre-rattling statements from the US could keep away tourism, which Iselli sees as the area of biggest potential growth.

Still, Iselli is undaunted. Even under a worse case scenario from the Mehlis report, he predicted the hotel would average a 45 percent occupancy rate, enough for the hotel to be ‘successful.’ Besides, he said: “We’re here for the long term, and the future is the Middle East.”

And who knows, perhaps the Four Seasons could even help Syria out of its diplomatic dire straits. If the UN sends Mehlis back to Damascus, perhaps he won’t be so critical of Syria if he’s had a good night’s sleep at the Four Seasons.

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