Dubai: Major US hotel brands are moving into; the north of Iraq, a reflection of growing economic development in the Kurdistan region of a country that most US consumer brands have long avoided.
Yesterday at the new US consulate in Arbil in northern Iraq, Marriott International Inc plans to disclose two of its brands, Marriott Hotels & Resorts and Marriott Executive Apartments, will join a large real estate development project. That follows an announcement in May that Best Western International Inc plans to open its first hotel in Arbil.
The three hotels are on pace to become the first US hotel brands in modern-day Iraq. A Dubai-based hotel chain, Rotana, earlier opened in the city. Other hotel companies, such as Intercontinental Hotels Group, have said recently they would begin research on the region.
"Our view is that the commercial world is coming into Arbil," said Ed Fuller, Marriott's head of international lodging. "This is an emerging country."
The interest comes as the turmoil in the Middle East and North Africa has presented the hotel industry big challenges. Marriott earlier this year closed its hotel in Libya due to unrest. In Egypt, it continues to operate seven hotels. Some expansion plans have been slowed while others are moving ahead, Fuller said.
Two years ago, Fuller and other Marriott executives met in Baghdad with General David Petraeus, who encouraged the chain to open a hotel. But he felt then "it was too early."
Yesterday, Arbil, which is part of the relatively safe Kurdistan region of Iraq, has seen a boom in construction projects, including a new airport that opened in 2010, driven by a boom in the energy business there.
The Marriott hotels will be part of a $1 billion (Dh3.67 billion) real estate development currently under construction, called Empire Iraq, that will include villas, apartments, an office tower and a motorsports track.
The project includes a 200-room five-star hotel, now partly completed. It will be called Arbil Marriott and will have four restaurants and lounges. The hotel will open in 2014, Peshraw Agha, chairman of the Empire Iraq project said. Marriott has agreed to provide its name and manage the Arbil hotels, but will not be directly investing in the project.
Agha said there was room for a number of new Western-branded hotels in the city, given that much of the development occurring there attracts Iraqis, foreign contractors and investors to town.
Still, few American brands have entered Iraq beyond oil, gas and defence-related companies. That is due primarily to both unrest and to perceptions of corruption in the business community. In Arbil, that corruption problem is a serious hindrance, according to several experts. "It's a problem because you can do all the encouraging you want but if the environment is not conducive it's not going to happen," said Eric Davis, a professor at Rutgers University who studies Iraq's economy.
During the first Gulf War, Starwood Hotels and Resorts Worldwide lost control of the Sheraton in Baghdad, yet the hotel continued to use the name "Sheraton" illegally. The Baghdad Sheraton has suffered several bombings since.
Still, the company sees some promise in some areas of Iraq. "My take on northern parts of Iraq is that those areas have a great deal of stability and are interesting potential sites of hotels and have gotten to a point where there is potential," said Starwood Chief Executive Frits van Paasschen.
Van Paasschen declined to comment on the company's plans for the region.