Hyatt brings back alcohol amid fear of losing business

The Grand Hyatt Hotel in Cairo has resumed selling alcohol after a three-month ban implemented by its Saudi Arabian owner.

The Grand Hyatt hotel on the river Nile is seen in Cairo on April 30, 2008. The Grand Hyatt is threatened to loose its five stars status by the begining of next month after banning alcohol on the premises of the hotel in the name of Islamic law. AFP PHOTO/CRIS BOURONCLE
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The Grand Hyatt in Cairo has resumed selling alcohol, ending a three-month ban on its sale implemented by the hotel's Saudi Arabian owner, a spokesman said yesterday. The absence of alcohol from the downtown hotel had become a major concern for its management, which was at risk of losing a large number of pre-booked reservations and being downgraded by the government's tourism authority.

"If the hotel continues to be dry the losses would have been huge for the Hyatt because the guests that booked with us for the coming year expect to stay at a five-star hotel that serves alcohol," said Sally Khattab, the public relations director for the facility, which is operated by Hyatt Hotels and Resorts of Chicago. When the ban was first imposed in April, Elhamy el Zayat, the chairman and chief executive of Emeco Travel, one of the largest tour operators in Egypt, said he had cancelled more than 1,000 bookings at the Hyatt after it imposed its alcohol ban.

"We cannot afford to ban alcohol from Egyptian hotels because, let's face it, that's one of the things that draws visitors and stopping it would put millions of Egyptians out of work," said Mr Zayat. After months of negotiation an agreement has been reached between the Grand Hyatt and the owner, Sheikh Abdel Aziz Ibrahim - a relative of Saudi Arabia's King Abdullah - to only sell alcohol in certain areas of the hotel.

"Starting on the 26th of July alcohol was sold on the 40th floor where we have our rotating restaurant and the lounge space in that area and in rooms upon a guest's request," said Ms Khattab. She added that Sheikh Ibrahim had realised the "serious" implications his decisions had on the business and agreed to allow alcohol back into the hotel under the condition that he would have no share in its profits or pay for its purchase.

Although many in the hospitality industry argue that dry hotels aimed at conservative guests and Muslim families can occupy a profitable niche in the industry, replacing the revenues that alcohol sales generate can be a challenge, they say. In the West, alcohol contributes an average of five per cent of a hotel's profit, according to the American Hotel and Lodging Association. "Putting all these issues into perspective the Hyatt decided that it would manage the purchase and sales of alcohol in the hotel," said Ms Khattab. "We are now looking at allocating a budget to repurchase a portion of the stock we lost."

On April 26, Sheikh Ibrahim had ordered his staff to get rid of all the hotel's alcohol. "We collected all the bottles from the hotel and poured it down the drains that are at the back of the hotel, of course not in front of the guests," said Ms Khattab. "It took us 24 hours to get rid of it all." The hotel estimated the cost of the lost alcohol to be around US$1 million (Dh3.67m). Ms Khattab said that the hotel was looking to position itself as a "family hotel" and therefore would begin limiting alcohol consumption to areas away from main guest traffic.

"That's why the alcohol will not be in any of the mini bars in the rooms and people who want to drink can only do so away from the dining areas." The rotating restaurant on the hotel's 40th floor, where alcohol will be allowed, is relatively isolated, she said. "I'm glad that this new agreement managed to reach a happy medium between the two parties," said Ms Khattab.