FROM THE MOUNTAINS TO THE SEA: MOROCCO'S PLAN AZUR

UNCLAS SECTION 01 OF 02 RABAT 001693

SIPDIS

DEPT FOR NEA/MAG
DEPT ALSO FOR EB
STATE PASS USTR FOR DOUG BELL
STATE PASS USAID FOR SARA BORODIN
USDOC ITA/MAC/ANESA FOR DAVID ROTH
USDOL FOR ILAB
PARIS FOR ZEYA
LONDON FOR GOLDRICH
ROME FOR ROSE

E.O. 12958: N/A
TAGS: ECON ELAB EINV EAIR MO
SUBJECT: FROM THE MOUNTAINS TO THE SEA: MOROCCO'S PLAN AZUR

REF: A) Rabat 1610


1. Summary: The principal strategy for meeting the goal of
Morocco's "Vision 2010" is the development of six beach
resorts under the $5.2 billion Plan Azur. Vision 2010 was
an agreement established in 2001 between the Government of
Morocco (GOM) and the private sector to focus on tourism as
a vehicle for economic growth by attracting 10 million
tourists per year by 2010 (Reftel). Plan Azur combines
cultural centers and beach resorts to give Morocco a
competitive edge in the tourism industry. The developments
of these resorts are contracted out to international
investors at low land prices and with tax incentives. This
cable is the second in a series of three cables on Morocco's
tourism industry. End Summary.

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Plan Azur Beach Resorts
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2. Concessions for four of the six beach resorts of Plan
Azur, each 500 to 700 hectares, have already been awarded,
and construction is already underway. The Mediterranean
site of Saidia with a target number of 28,700 beds was sold
to French company Fadesa in 2003; Mogador-Essaouira with
8,700 beds to a Belgian and Dutch consortium Thomas & Piron,
L'atelier, Colbert, and Orco in 2004; Mazagan-El Jadida with
8,000 beds to South African group Kerzner International in
2004; Lixus-Larache with 13,000 beds to a consortium
including Thomas & Piron, L'atelier, and Orco in the same
year. The GOM is currently looking for contractors for the
two remaining resorts in the south, Taghazout-Agadir with
25,000 beds and Plage Blanche-Guelmim with 26,000 beds,
which both require more infrastructure development than the
others. Plans for each of the resorts involve development
of villas, apartments, golf courses, restaurants, shops,
casinos and conference centers. Each investor signed a
contract committing to preserving nearby cultural sites
including medinas, and to help neighboring communities
benefit from the projects by using local resources such as
artisans and construction companies.


3. According to the Ministry of Tourism, the GOM targeted
international investors for the Plan Azur because of their
expertise and access to resources. All the resort
concessions were secured at low prices: Saidia for $1.10
per square meter, Lixus-Larache for $0.86 per square meter,
Mazagan-El Jadida for $1.67 per square meter, Mogador-
Essaouira for $2.22 per square meter and Taghazout-Agadir is
up for sale for $5.55 per square meter. The Ministry of
Finance was in charge of pricing the land. In order to
maintain ownership of some of the land, the GOM plans to
lease the golf courses to investors. The contractors are
committed to finishing the projects in three phases so the
GOM can monitor progress. The first four resorts are
scheduled to be finished by 2012.


4. As the first one sold, Saidia has made the most progress
with $30 million worth of villas sold to Spanish, English,
and Moroccan investors and two hotels to Spanish hotel
management company Barcelo. A total of $1.4 billion has
been invested in Saidia so far with $345 million directed
toward the creation of 28,000 new jobs, of which 8,000 are
directly related to the project. There are two nearby
international airports at Oujda and Nador. $530 million has
been invested in Essaouira-Mogador, which is expected to
create 28,500 direct and indirect jobs. $600 million in
Mazagan-El Jadida is expected to generate 12,000 jobs in the
beginning and 30,000 by the end of the project, and $700
million in Lixus-Larache is expected to generate 3,800
direct jobs and 19,000 indirect jobs.


5. In an interview with Moroccan financial daily
L'Economiste, Kerzner Group chairman Butch Kerzner expressed
complete confidence in Vision 2010. Kerzner Group, which
developed Sun City in South Africa and Atlantis in the
Bahamas, recently decided to increase the level of
investment for the first phase of the project in Mazagan-El
Jadida from $230 million to $280 million. Kerzner has
confidence in the GOM's efforts in Morocco's tourism
industry, and notes that he was impressed by the pragmatism
and progressive vision of the GOM's strategy. He believes
that the Plan Azur will be a success for Morocco.


6. Comment: Plan Azur is an ambitious project that involves
a large amount of coordination between different GOM
ministries and with the private sector. Recently, the
Minister of Tourism noted that the Vision 2010 goals of
230,000 beds may not be achieved until 2012 because it would
be unrealistic to expect investors to finish projects of
these magnitudes by 2010. Vision 2010 is largely dependent
on the success of Plan Azur. The first four resorts,
however, are not scheduled to be completed until 2012.
Although the strategy of combining culture and beach creates
a unique tourist product, beach tourism is still highly
competitive, and Morocco needs to avoid relying too much on
the Plan Azur for achieving its tourism objective. End
Comment.