HILTON TO LEAVE MADAGASCAR

UNCLAS ANTANANARIVO 001021

SIPDIS

SENSITIVE
SIPDIS

JOHANNESBURG FOR FCS

E.O. 12958: N/A
TAGS: EINV PGOV ECON MA
SUBJECT: HILTON TO LEAVE MADAGASCAR



1. (U) SUMMARY: The Hilton Corporation confirmed that as of
November 1 they will no longer manage the largest hotel in
Madagascar. END SUMMARY.


2. (U) La Gazette, a local newspaper known for exaggeration, first
reported the imminent departure of the Hilton. In typical
sensationalist fashion, the newspaper insinuated that this change
was the result of friction between the Hilton and the owners of the
building, including a large share owned by the Government of
Madagascar. The General Manager of the Hilton denies that the
transfer of management to the owners is anything but amicable. He
reported no staff changes were planned and the owners will directly
hire a new General Manager. According to the current General
Manager, the Hilton plans on making the transfer as smooth as
possible and hopes the hotel will continue to operate as "business
as usual". In the near term the owners will operate the hotel, but
there is a possibility that a solicitation could be tendered in the
future for managing the hotel.


3. (U) The hotel is 52 percent owned by the French-American Henri
Fraises Group and 48 percent by the Government of Madagascar. While
it may be unlikely another American hotelier would want to enter
where Hilton has departed, Post encourages colleagues to share this
"opportunity" with other companies.


4. (SBU) COMMMENT: As the Hilton brand serves as an American
symbol, this loss will be noted as the departure of one of the few
visible American operations in Madagascar. While the Hilton denies
the claim in La Gazette that disagreements arose between the owners
and Hilton over renovations to the building, it would not be
difficult to imagine this as a plausible reason. The hotel is
visibly decaying and in need of rehabilitation. Thus Hilton may be
pulling out so as to preserve their brand image. END COMMENT.

MARQUARDT