Marriott International Inc. (MAR:US) plans to add three hotels to the seven it now operates in Egypt and wants assurance that the country’s new Islamist-dominated government will welcome tourists and the alcohol they like to consume.
Egypt did both under President Hosni Mubarak, who ruled for 30 years before being ousted last year during the Arab Spring revolutions that swept the Middle East. Executives for Marriott plan to join a trade delegation to Egypt this week to see if those policies will change under the newly elected President Mohamed Mursi, whose Muslim faith generally shuns alcohol.
“We’re hoping to learn from the minister of tourism what his strategy is for tourism,” Alex Kyriakidis, president and managing director of Bethesda, Maryland-based Marriott’s Middle East & Africa business, said in a phone interview. The trip provides an opportunity for learning about “the strategy for the new government in industry,” he said.
Kyriakidis will be among more than 100 executives from 49 U.S. companies including Exxon Mobil Corp. (XOM:US), Microsoft Corp. (MSFT:US), Morgan Stanley (MS:US) and Pfizer Inc. (PFE:US) scheduled to participate in what the U.S. Chamber of Commerce said is its largest business delegation ever to visit Egypt. The Washington-based industry group and its affiliate, the U.S.-Egypt Business Council, are leading the Sept. 8-11 trip.
President Barack Obama’s administration is moving ahead with a $1 billion aid package, including debt relief, to help Egypt’s economy, slowed by political instability that reduced tourism and investment. A military council ruled after Mubarak’s February 2011 ouster, and the current government is seeking a $4.8 billion International Monetary Fund loan.
The June election of Mursi, who was the Muslim Brotherhood’s candidate, has raised uncertainty for businesses and created a delicate situation for the Obama administration. Mursi’s victory and the rise of the Brotherhood as a political force have left U.S. officials wary of helping an Islamist group with militant elements versus taking the risk that others, such as Iran, might step in to fill any void.
The trade mission “is a critical aspect of dealing with a very rapidly changing political structure,” Anthony Cordesman, an analyst at the Center for Strategic and International Studies in Washington, said in a phone interview. Strong ties with Egypt are essential “if you’re going to be trading in the Middle East and you want to have a future in the Middle East,” he said.
While the $8.3 billion in merchandise trade between the U.S. and Egypt in 2011 was less than 1 percent of the $3.7 trillion in global U.S. trade, the Arab nation grants U.S. military planes fly-over rights and provides access to the Suez Canal, a key channel for oil shipments and American military transport to the Persian Gulf.
G. Steven Farris, chief executive officer of Apache Corp. (APA:US), a Houston-based oil and natural gas producer, is chairman of the U.S.-Egypt Business Council and a leader of the U.S. delegation, according to the Chamber of Commerce.
Ken Hyatt, the U.S. Commerce Department’s acting deputy under secretary for international trade, will focus on development of Egypt’s travel and tourism industry during the trip, agency spokesman Tim Truman said in a phone interview.
The trip is a “goodwill mission” that will “deepen our overall commercial relationship with this important trading partner,” Hyatt said in an e-mailed statement.
At the Cairo Marriott Hotel, located on an island in the Nile River, U.S. executives will meet with Egyptian officials including Hisham Zazou, the tourism minister, on Sept. 9 for a workshop before dinner at the hotel, according to Marriott officials.
“Egypt has been on the receiving end of bad news for the past 16 to 17 months,” Kyriakidis said. A central question facing hotels, airlines and tour operators is, “How do we bring back the face of Egypt that was being promoted to the world” prior to Arab Spring, he said.
Marriott operates seven hotels in Egypt and plans to open three more within the next four years, including the 331-room Nile Ritz-Carlton in Cairo scheduled for 2013.
The company wants ensure that the government won’t make changes to past policies that encouraged cultural, archaeological and religious tourism. It also wants to establish a dialog to promote the industry, after a decline in visitors during the political upheaval, according to Kyriakidis.
“These are the practical things that we’re hoping we can walk away with,” he said.
Official statistics show the number of tourists reached 5.08 million in the first half of 2012, up 23 percent over the same period last year, though still lower than record levels reached in 2010, according to the state-run Ahram Online website.
Other companies participating in the trade mission include Boeing Co. (BA:US) of Chicago; Citigroup Inc. (C:US) of New York; Coca-Cola Co. (KO:US) of Atlanta; General Electric Co. (GE:US) of Fairfield, Connecticut; Google Inc. (GOOG:US) of Mountain View, California; and FedEx Corp. (FDX:US) of Memphis, Tennessee, according to the U.S. Chamber of Commerce.
Egypt’s “transition to a more transparent and accountable governance will set the stage for even greater engagement by U.S. companies,” Lionel Johnson, the industry group’s vice president for Turkey, Middle East and North Africa affairs and a leader of the delegation, said in a statement.
“For us, this is about supporting an important relationship that goes back more than 40 years,” Tim Neale, a Boeing spokesman, said in an e-mail. The U.S. company has sold commercial jets to Egypt Air since 1968 and has provided its military with aircraft since 1979, he said.
Government officials participating in the trade mission include Deputy Secretary of State Thomas Nides, a co-leader of the delegation, and Deputy National Security Adviser Michael Froman.
Secretary of State Hillary Clinton announced the delegation’s visit in July during a trip to Cairo in which she focused on Egypt’s economic challenges and outlined the details of the $1 billion aid package Obama announced last year, including loans and loan guarantees for small- and medium-sized businesses.
Egypt’s economic and political stability is a crucial strategic concern for the U.S., in part because of its influence on the region. Instability continues to plague the Middle East, with conflict in Syria in its 18th month, and violence disrupting security in Libya and Iraq.
Deputy Secretary of State Robert Hormats said Sept. 4 in Cairo that a new United States-Egypt Enterprise Fund, initially funded at $60 million, will foster stronger investment ties, encourage other investors, and help Egyptians launch and grow more small-and medium-sized businesses in the future.
“No one delegation is going to reform the Egyptian economy,” Cordesman, the analyst from the Center for Strategic and International Studies, said. “There has to be a start.”
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