Back in its heyday, the Hotel & Casino San Stefano was the grandest of the belle epoque hotels. Built in 1887 to rival the swank casinos of France, the historic Alexandria landmark hosted the crme de la crme of society and a stellar cast of diplomats and royalty.
Even before its nationalization in 1961, the grandiose hotel was plagued by mismanagement and in a sorry state of disrepair. In 1998, the Egyptian General Organization for Tourism & Hotels (EGOTH) sold the property for E 250 million to a group of investors led by Egyptian real estate investment company Talaat Mustafa Group. Within months, demolition crews had reduced the dilapidated hulk to rubble.
"In 1998, there was a big push on the government's side for privatization and at the same time Alexandria was starting to go through some kind of revival, so we made a bid for the land and started on the design of the project," recalls Hisham Talaat Mustafa, chairman of the Alexandria Real Estate Investment Company, which won the tender to develop the hotel and its 31,000-square-meter seafront property.
The Alexandrian businessman is the youngest son of Talaat Mustafa, founder of parent company Talaat Mustafa Group, the project's key investor. The group has a number of large-scale projects to its credit, most notably Al-Rehab community on the outskirts of Cairo, Al-Rabwa community in Al-Sheikh Zayed City, Four Seasons Nile Plaza and Four Seasons Sharm Al-Sheikh.
The San Stefano Grand Plaza project envisions a five-star hotel, 1,000 residential units ranging from 131 to 1,271 square meters, a four-level shopping mall, 10 cinemas, a private beach and a marina with berths for 80 yachts. With plans to finish construction by the end of this year, Mustafa hopes the restored hotel complex will reinstate Alexandria's image as a playground for the rich and famous. "We aim to attract the category of tourists with a lot of cash to spend," he admits candidly.
But can the project succeed in luring Arab and international jet-setters? Alexandrian-born Marcos Bekhit, regional vice president of Four Seasons Hotels, thinks so. He notes that wealthy tourists, whether foreigners visiting Egypt for the first time, Egyptians living in Cairo or Gulf Arabs escaping the oppressive Arabian summer heat, usually visit Alexandria as a daytrip. "Alexandria is a place where people go to do their business in the city - at the consulate, factories, refineries, etc. - then leave the same day. Hotel accommodation in Alexandria is really limited and our type of [high-class] clientele would not prefer to spend the night in the city."
Bekhit says a new Four Seasons under construction in San Stefano Grand Plaza will cater specifically to affluent visitors, providing them attractive resort accommodation and amenities, including the largest conference space in the city. "We will encourage them to spend the night instead of taking the train and rushing back to Cairo," he says, noting that the hotel chain's expansion in Egypt works in its favor. "Because of our presence in Cairo and Sharm Al-Sheikh, it's very easy to package Alexandria for a few nights."
Mustafa, meanwhile, is positive his company can secure the critical mass it takes to sustain the venture. "We've so far sold 65 percent of our residential units and all the outlets of the mall have been sold as well," he told Business Monthly. "This is a clear indication that the demand is there. People like the destination and all that is lacking is the provision of the service."
According to Mustafa, almost all apartment sales have been made to Egyptian expatriates and Gulf Arabs. Other foreign buyers account for just 4 percent of all purchases.
One reason may be in the water. The murky waters that lap the shore in front of the complex are hardly the sort to attract wealthy foreigners. An underground tunnel from the hotel to its private beach, currently a public one, represents the investor's optimism on the matter. "The government ceased all sewage dumping into the sea around five years ago, which is more than enough time to allow for the waters to clear," says Mustafa.
"The water in Alexandria is now as good as anywhere else, but the challenge is to maintain its cleanliness levels after the project is implemented," says Mohamed El-Guindy, chairman of Friends of the Environment, a local NGO opposed to the project. He is particularly concerned about the large marina under construction as part of the hotel complex. The yacht club hopes to attract some of the estimated 60,000 yachts that cruise the Mediterranean Sea each year. "Can you imagine the environmental damage that will take place as a result? Yachts are powered by petrol products, which will only serve to pollute the beach."
Mustafa, however, sees no contradiction between the marina and the adjacent beach. He believes the marina will complement world-class marinas at Sharm Al-Sheikh, Al-Gouna and Port Ghalib, the latter being constructed on 22 million square meters near Marsa Alam. "If international standards are properly applied to the marina, the yachts will come," he says, pointing to the experience of Tunisia and Morocco, where Sidi Bou Said and Marina Smir succeeded in drawing jet-setters. "People are interested in the culture and history of this city and so they will definitely come."
The inability of both sides to see eye to eye on the project continues. In 1998, Friends of the Environment filed a lawsuit against the project stating that the planned 270-meter-high hotel complex violated the city's building code, which stipulates that buildings should not exceed 36 meters in height. The case was reportedly dismissed when then prime minister Atef Ebeid gave it exceptional permission provided plans for the marina and private beach were shelved and only the hotel would be built. "We are currently studying the possibility of filing another case in court because the group has moved forward with the construction of the marina and the private beach, which they do not have permission to do," says El-Guindy.
And while the hotel complex will inevitably block the sea view of some San Stefano residents, Mustafa insists the busy complex will neither strain the city's infrastructure nor disrupt local traffic, as some area residents have charged. "The Talaat Mustafa Group paid for the expansion of the corniche in front of the project specifically to prevent any future traffic problems that might occur and we are certain this project will not cause any problems," he says.
The San Stefano Grand Plaza project hopes to capitalize on the upward trend Alexandria has experienced as of late to prove its worthiness. Under the guidance of a proactive governor, the Mediterranean city has seen a number of high-profile foreign investments. The success of capital-intensive ventures such as the Hilton Green Plaza and Alexandria City Center indicate a high demand for upscale services. The E 3 billion San Stefano Grand Plaza could be the latest catalyst to the city's economic growth, providing 7,000 employment opportunities in construction and another 14,000 in construction feeding industries.
But the economic benefits reach well beyond the seafront, insists Mustafa. "It will be a very good plus for the country as a whole in terms of the amount of revenues from sales taxes, for example, generated through the shopping mall and the foreign currency injected through the tourism boost," he says. But the project cannot stand on its own. "We need other investors to bring money into the city in order for the project to truly flourish."
Maha El Dahan
© Business Monthly 2005
