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The Honolulu Advertiser
Posted on: Friday, May 9, 2008

Marriott considering offer to operate Baghdad hotel

By Michael S. Rosenwald
Washington Post

Hawaii news photo - The Honolulu Advertiser
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WASHINGTON — A Marriott International official said the company was evaluating whether to operate a new hotel in the fortified Green Zone in Baghdad, Iraq, responding to a request from U.S. officials seeking foreign investment and economic activity to help revive Iraq.

The Bethesda, Md., firm, one of the largest hotel operators in the world, would face major obstacles, such as Baghdad's poor security and ravaged infrastructure.

Marriott, which is paid fees by hotel owners to manage properties, is already embarking on a major expansion in the Middle East. To meet demand from a surge of business activity there, Marriott intends to boost its properties in the region from 26 to about 75 during the next several years.

Opening a Ritz-Carlton in Saudi Arabia, is one thing. Moving into Baghdad is quite another. The Green Zone has been a frequent target of attacks by insurgents. During a recent flare-up, 114 rocket and mortar rounds fell in the Green Zone during a 30-day period ending in late April.

Marriott is not the only company approached about managing the hotel development, but it has connections to the Bush administration. Its CEO, Bill Marriott, heads the president's Export Council, which advises Bush on trade issues. The council is appointed by the president and includes U.S. business leaders, Secretary of State Condoleezza Rice and several other Cabinet members.

Paul Brinkley, the deputy under secretary of defense for business transformation, declined to identify any hotel companies considering the deal, nor would he identify the developers, saying only it is a consortium of European, American and regional investors. A license for the hotel's construction has been issued by Iraqi authorities, he said.

"We're evaluating this, just as we are considering opportunities elsewhere," said Marriott spokesman John Wolf. Private entities in the U.S. and Iraq were also involved in approaching the company, Wolf said.

At a National Press Club event Wednesday highlighting Iraq's business opportunities, Brinkley appeared with Iraq's Industry Minister Fawzi Hariri. In an interview afterward, Hariri said Iraqis "would welcome" an American hotel in Baghdad. "We would welcome more than one," he said. "We would like all the chains to be there."

The Iraqi government is also willing, Hariri said, "to provide them with all the necessary support from infrastructure and facilities for this to happen." He expects any hotel venture would be "very productive and profitable" because as the country's situation improves, "there is a great deal of interest from business people and the business community to travel to Iraq."

This week, for instance, officials from German automaker Daimler said the company plans to open an office in Baghdad. However, hotel offerings for business travelers are slim. "We have a shortage of good quality accommodations," Hariri said.

Many foreigners stay at the al-Rasheed, inside the Green Zone, where a rocket attack wounded several guests in October 2003. There are other hotels in Baghdad outside the zone, including the Sheraton Ishtar, which hasn't been connected to the American brand Sheraton since Saddam Hussein's government took it over after the 1991 Gulf War. Not long after Hussein's capture in 2003, the hotel was hit with mortar fire on Christmas.

Marriott is generally a risk-averse company. Perhaps its biggest risk was in the 1980s, when it opened the Marriott Marquis in Times Square while the area was still a hangout for prostitutes and drug dealers. Times Square has revived into a commercial mecca and the Marquis is now among the company's most profitable hotels.