NO WAY TO RUN A HOTEL IN ERITREA

C O N F I D E N T I A L SECTION 01 OF 02 ASMARA 000359 SIPDIS DEPARTMENT FOR AF/E LONDON AND PARIS FOR AFRICA WATCHERS E.O. 12958: DECL: 07/20/2018 TAGS: ECON BEXP ER SUBJECT: NO WAY TO RUN A HOTEL IN ERITREA Classified By: AMBASSADOR RONALD K. MCMULLEN FOR REASON 1.4 (d) ¶1. (C) SUMMARY. Asmara's Intercontinental Hotel is often seen as a beacon of modernity, efficiency, and comfort in an otherwise bleak Eritrean landscape. However, the Intercon's newly arrived expatriate manager (protect),in a July 17 meeting with the ambassador and A/DCM, painted a dire picture of his ability to maintain minimal hotel standards amid shortages of nearly everything, including customers. End Summary. ¶2. (C) TOO FEW CUSTOMERS, TOO MANY STAFF -------------- Eritrea's premier hotel has been running at 17% occupancy recently, its manager stated, adding that for the first time in his 22 years of managing hotels, his hotel had absolutely no new arrivals for the day (July 17). He said the Intercontinental chain's ten-year management contract of this government-owned hotel runs until 2014, but the manager said he would be doing a careful assessment of whether customers could get a true "Intercontinental experience" in Asmara. If not, he said the company may reconsider its contract. The manager lamented the low quality and high numbers of hotel staff. He said he plans to fire 175 of the hotel's 250 employees, if permitted. (COMMENT: Post is aware that a number of the hotel staff are National Service conscripts, young people paid about a dollar a day for this open-ended obligatory government service. END COMMENT.) ¶3. (C) WIDESPREAD SCARCITIES -------------- The manager said the hotel and its "outlets" (i.e., in-house restaurants, bakery, shops, nightclub, and function rooms) lacked numerous basic items, such as butter, milk, chocolate, spare parts, and replacement tiles, carpet, tires, and furniture. He said, "Yesterday we didn't have any milk, so I sent someone out to milk three cows." He said the hotel had a working generator but only enough diesel fuel to operate it for three days in the event of prolonged electricity cuts. When he asks his government point of contact in the Ministry of Tourism for consent to import vital items, the answer is "we must ask permission," with long delays turning into negative responses. He said the Intercon had recently been able to import a container of beer, which is generally unavailable in Eritrea. As the bandwidth of the government-owned Internet service provider was inadequate for modern travelers, he intends to seek permission to establish a hotel-owned satellite Internet service. ¶4. (C) ANY PROSPECTS FOR IMPROVEMENT? -------------- The manager sought an embassy assessment of any potential turn-around of the country's glide-path to economic disaster. He said he had met with leading business enterprises and only one factory (an Italian shirt-making company) was very active. However, due to inefficient shipping routes, it was forced to export the bulk of its shirts by air, which ate up most of the company's profit margin. The Intercon's manager was very skeptical that current government policies would permit the economy to pull itself out of the doldrums. Emboffs said many Eritreans look to late 2010, when the Canadian and Australian gold mines are expected to come on line, as the best hope for an infusion of liquidity into the deteriorating economy. ¶5. (C) DEPRESSED AND DEPRESSING MASSAWA -------------- The manager described his impressions of Massawa after a recent short visit. Massawa is often considered the crown jewel of Eritrea's tourism potential. He said he came away depressed, saying "Massewa offers a tiny port, lots of shot-up buildings still full of bullet holes, two absolutely horrible hotels, no fishing industry, no tourism infrastructure - why would anybody want to go there?" The reconstructed Italian-era railroad between Asmara and Massena is scenic but terribly unsafe, according to the manager. ASMARA 00000359 002 OF 002 ¶6. (C) COMMENT: -------------- Just as "fish can't see water," perhaps Eritreans and even some resident expatriate personnel have become inured to widespread shortages, severe economic mismanagement, and the lack of potential (apart from mining) in the business, industrial, and tourism sectors. The new Intercontinental manager's shock at what he has found at the hotel, in Asmara, and in Eritrea as a whole is a bracing reminder that what passes for normalcy in Eritrea is unacceptable by international business standards. End Comment. MCMULLEN