x Abu Dhabi, UAESunday 21 January 2018

LVMH project on Nile halted

The LVMH hotel in Cairo has been held up by protests in the country

A Louis Vuitton sign sits on the window at the company's boutique on Via Dei Condotti in Rome, Italy, on Wednesday, March 9, 2011. LVMH Moet Hennessy Louis Vuitton SA Chief Executive Officer Bernard Arnault said his company's purchase of Bulgari SpA is "a step change" for its jewelry and watch unit. Photographer: Chris Ratcliffe/Bloomberg   *** Local Caption *** 817090.jpg
A Louis Vuitton sign sits on the window at the company's boutique on Via Dei Condotti in Rome, Italy, on Wednesday, March 9, 2011. LVMH Moet Hennessy Louis Vuitton SA Chief Executive Officer Bernard Arnault said his company's purchase of Bulgari SpA is "a step change" for its jewelry and watch unit. Photographer: Chris Ratcliffe/Bloomberg *** Local Caption *** 817090.jpg

The LVMH hotel being built in Egypt has been put on hold because of unrest in the country, says the developer of the project.

The hotel, which was being built on an island on the Nile in Aswan, is one of two properties under development under the Cheval Blanc brand. The other is in Oman. LVMH brands include Louis Vuitton luxury goods and Moet & Chandon champagne.

"The Egypt one is on hold right now because we still need to see what's going on there," said Samih Sawiris, the chief executive of Orascom Development.

"Things are not happening down there. There's a lot of labour unrest; there's a lack of security; lots of permits are not being issued because nobody knows who's the boss. So at the end of the day it becomes a futile exercise to try and pretend it's business as usual and it's not."

Mr Sawiris said other projects in more isolated areas that had not been so heavily affected by the situation were still going ahead.

"The island in Aswan is part of Egypt as a whole. We need everything to be provided by the surrounding infrastructure and the town."

He said "a little concrete work had been done" on the project. "That's why it's easy to stop."

But the Oman property is still going ahead, with an opening expected at the end of next year.

The hotels, where room rates are estimated to be in the region of US$2,000 (Dh7,346) a night, would have 40 to 60 rooms.

Mr Sawiris said he was confident that in the longer-term, the destinations were right for the brand.

"People are more and more aggressively seeking new things and new luxury," he said. The company's other projects had not yet been affected by the turmoil, he said.

"We need to watch the political context of what's going on and its effect on us," he said. "In Egypt and Oman we have already noticed that there is a lot of demand for higher wages."

The company is keeping a close eye on the situation because it could have an impact on its future developments. "The turmoil in the Middle East has made us apprehensive," Mr Sawiris said. "We need to be a bit more alert and a bit more prudent in our spending, in particular because banking is becoming more difficult under current circumstances and hotel projects need solid financing to be done."

Orascom also has projects in Morocco, Montenegro and a ski resort under development in Switzerland. "We have fixed plans to operate our first hotel [in Switzerland] by 2013, together with the real estate we have already sold. We have actually sold in the six months since launch more than $100 million," Mr Sawiris said.

In Morocco, he said, work had just started, and he expected the first hotel to be operational in about two years. The company also has a project in Cornwall in the UK. This is a housing development, including affordable housing, as well the redevelopment of a harbour that will be transformed into a marina with shops and restaurants.

"We have submitted our first planning permission request and we assume that before the end of the year we will be on the site."

Orascom also owns the Cove Rotana hotel in Ras al Khaimah.

rbundhun@thenational.ae