Abu Dhabi hotel chain swoops in as country begins to welcome visitors

Abu Dhabi's Cristal Group will open hotels across Iraq in the next one year, eyeing the business and religious travel industry as tourism picks up in Iraq after the war.

Thousands of Iraqi Shiite pilgrims gather near the Imam Abbas shrine in Karbala to commemorate the birth of Imam Mahdi, revered by Shiites. Mohammad Sawaf / AFP Photo

The Abu Dhabi-headquartered Cristal Group wants to expand beyond Baghdad to Erbil, Karbala, Basra and Suleimanya in the next two years to tap a growing hospitality market.

And several international hotel chains, including Marriott, Hilton and InterContinental Hotels, are making a beeline for Iraq.

Most are targeting the stable and oil-rich Kurdistan region with a raft of openings slated over the next two years. The region's tourism general board has allocated 30 billion Iraqi dinars (Dh950.9 million) to implement 47 projects this year, say media reports.

Iraq received 260,000 tourists last year, up from 237,000 the previous year. It expects to have 287,000 tourists this year, rising by 30,000 arrivals each year until 2015. The growth would remain focused in the Kurdistan region as indicated by the international chains moving there.

Euromonitor International forecasts religious tourism to grow at about 10 per cent a year until 2015 if the situation remains stable. The top cities for visitors remain Erbil, Baghdad, Mosul, Basra and Najaf.

The Cristal Group is scheduled to open its first Baghdad property, Cristal Grand Ishtar, on May 1 close to the Green Zone where the international presence is still concentrated.

Most of the visitors to the Iraqi capitalare business travellers seeking government contracts aimed at rebuilding the country.

"It is definitely not a [family] destination," said Peter Blackburn, the president and chief executive of the Cristal Group, referring to Baghdad and most of the country outside the Kurdistan region. "Baghdad and Iraq have major plans to improve infrastructure and that is bringing in the business travellers."

Baghdad is also en route to Karbala, which is picking up as a religious tourism destination, along with Najaf. While religious tourism tapered off after the 2003 US-led invasion, "it was also the first to recover thanks to visitors from Bahrain, Kuwait, Syria and Iran mainly", a Euromonitor International report said last year.

And Mr Blackburn expects that trend to strengthen. The Cristal Group predicts 40 per cent occupancy for its first year of operations, with daily room rates in the hotel of between US$190 (Dh697) to $250.

The group has spent $50 million refurbishing an existing hotel property, which it recently purchased. It expects to spend another $4m to open a seafood restaurant, a gym and a spa in the 307-room facility.

Cristal Group has also signed two deals in Erbil. The $13m Cristal Hotel Erbil is set to open in October, while the slightly larger Cristal Grand Erbil should open next year at a cost of $25m.

Cristal expects to open a hotel in Basra within a year, Mr Blackburn said. Facilities in Suleimanya and another in Karbala are also planned.

Dubai's Range Hospitality will start handing over serviced apartments in Karbala in the last quarter of this year.

Hilton is to open its first two hotels in Iraq in Erbil by the end of 2015.

Erbil is directly benefiting from economic growth, particularly in tourism, where the increasing number of international airlines is fuelling business and leisure travel, said Heather Shaw, a spokeswoman for Hilton Worldwide. "Leisure travellers, particularly, are attracted by the relative stability, the temperate climate and the increasing awareness of northern Iraq as an attractive destination," she said.

Despite the optimism and investments, challenges remain.

"The violent security situation, chaotic domestic politics, corruption and frequent dead ends in postwar nation-building attempts have kept Iraq significantly below its potential," said Jean-Michel Saliba, an economist with Bank of America Merrill Lynch.