Frozen Twin Buildings to Transform into Five Star Hyatt Hotel After $25m Purchase


Dubai based Albwardi Investments to take over project from previous owners Kharafi & Sons




The Dubai-based holding company Albwardy Investments have finalised a 25 million dollar deal to purchase two hotels from M.A Kharafi & Sons Plc. The hotels are currently under construction at the junction of Africa Avenue and Jomo Kenyatta Street, at Meskel Square.

The deal was notarised at the Documents Registration & Authentication Office (DARO) on Wednesday, August 7, 2013.

M.A Kharafi & Sons Plc originally planned to build one three-star hotel, named Ibis, on the side of the Jomo Kenyata Street and another four-star, named Novotel, along Africa Avenue, both of them under the French company Accor Hotels.

Albwardy, however, intends to turn them into one five-star Hyatt Hotel – an American franchise with 492 locations worldwide, according to an official statement Fortune obtained via email from the company.

With the purchase it inherited a seven-storey building facing Jomo Kenyatta Street, which includes a basement meant to be a three-star Ibis Hotel and a six-storey building on Africa Avenue without a basement meant to be four-star Novetel Hotel.

“Albwardy intends to completely redesign the inside of the buildings,” a construction worker on the premises told Fortune.

What used to be two or three rooms will be merged into one larger room, and the fitness and swimming pool area will be overhauled, according to him. Moreover, a basement office will be added under the six-storey building facing Africa Avenue.

Albwardy has earmarked another 50 million dollars for redesigning the buildings, a company source Fortune interviewed revealed.

Kharafi was first approached for the on-going hotels by Albwardy over a year ago. Getting clearance from the Addis Abeba City Administration and the Ethiopian Revenues & Customs Authority (ERCA), however, took time, according to a management executive at Kharafi, who wanted to remain anonymous.

The Kuwait-based company, with several business interests in telecommunications, oil and construction, had already made a decision to give up its seven-year hotel project in Ethiopia, when Albwardy declared interest.

“Bureaucratic snags and a change in the company’s leadership were the causes,” the management staff revealed to Fortune.

The company is now run by the sons of Nasser Al-Kharafi, who passed away two years ago.

It was under the latter’s leadership that Kharafi brought its business to Ethiopia. It first made its mark under its subsidiary MAK Contracting by building the new Ethiopian Airlines Terminal building, from 1998 to 2003, for 81 million dollars. It decided to move into the hospitality industry in 2006, with French hotel management firm Accor Hotels. This was in a joint venture deal, where the latter owned 40pc.

Under the banner “Africa M. A. Kharafi & Sons Accor Plc”, the joint venture company acquired the 10,232sqm plot where construction of the two hotels began in January 2006. A part of this plot overlapped with a nearby hotel project by Sunshine Construction Plc; a case that took the Kirkos District some time to resolve. Getting the design approved took over a year. After construction started, Accor backed out of the deal, leaving the entire project under the sole ownership of Kharafi.

Although the hotels were initially intended to be completed after 38 months of construction, delay in the delivery of materials further extended the project, which still remained unfinished in 2011. Around 20 million dollars was spent on the hotel Fortune learnt. That same year, a change in management at Kharafi led to the decision to suspend the project. Kharafi has still kept several hotel and construction ventures in other African countries, namely South Africa and Gambia.

Ali Albwardy, owner of the investment firm, however, was willing to assume the risks of the project Kharafi has left behind. This is because he “has chosen Addis Abeba for investment due to Ethiopia’s fast growing emergence as a leading player within the region”, states the email comment Fortune received.

Established in 1976, Albwardy Investment has over 30 companies internationally, engaged in food distribution logistics, marine engineering, construction, commercial insurance, polo sports and the hospitality sector. Collaboratively, they have a billion dollar annual turnover.  The company already owns a Hyatt Regency in Dar es Salaam, Tanzania, and 13 other hotels in Africa and around the world.

Ali Albwardy was advised locally by Zemedeneh Negatu, managing partner of Ethiopian Ernst & Young (E&Y) – a global consulting firm – when deciding to venture into Ethiopia. Zemedeneh was previously the advisor to Marriott and Sunshine Construction Plc, which had partnered to construct a courtyard hotel in front of Medhanyalem Church.

Aside from those under construction, there are currently only three international hotels operating in Ethiopia, namely – Sheraton Addis, Hilton and Radisson Blu.



By ELLENI ARAYA
FORTUNE STAFF WRITER

Published on August 18, 2013 [ Vol 14 ,No 694]


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