Cablegate: Morocco's First Beach Resort Under National

VZCZCXYZ0017
PP RUEHWEB

DE RUEHRB #0978/01 3501413
ZNR UUUUU ZZH
P 161413Z DEC 09
FM AMEMBASSY RABAT
TO RUEHC/SECSTATE WASHDC PRIORITY 0947
INFO RUCNMGH/MAGHREB COLLECTIVE
RUEHCL/AMCONSUL CASABLANCA 0009
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS RABAT 000978

SIPDIS
SENSITIVE

STATE FOR EEB/CBA, NEA/MAG AND EEB/IFD/OMA
STATE PLEASE PASS OPIC

E.O. 12958: N/A
TAGS: EINV ECON EFIN SENV MO
SUBJECT: MOROCCO'S FIRST BEACH RESORT UNDER NATIONAL
TOURISM STRATEGY IS A GHOST TOWN

REF: RABAT 0392

Sensitive but Unclassified. Please protect company
proprietary information.

1. (SBU) Summary: Three months after the fanfare
surrounding the June 19 inauguration of Morocco's first
seaside resort completed under the "Plan Azur" or Blue Plan
tourism strategy, Saidia Mediterranean officially closed its
doors to tourists. The Saidia resort represents a USD 1.5
billion investment by the Moroccan real estate development
group Addoha. Its two major hotels have shut down, and
British buyers are reportedly backing out of villa purchases.
The associated marina is not fully functional.
Environmentalists have complained about accelerated
ecological destruction of the site, known for its
biodiversity. Addoha representatives state that the hotels
are closed for the low-demand winter season and will use the
time to prepare for the next season. Addoha, however,
recently announced the planned opening of a third hotel in
Saidia in summer 2010. While closing tourist resorts over
the winter is not unheard of in Morocco, the adjustment of
initially confident plans for year-round operations
represents another setback for Morocco's beleaguered
high-profile tourist stations. Other Plan Azur resorts are
proceeding, and Morocco is still hopeful that approximately 8
million tourists will visit in 2009. End Summary.

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Rush to the Finish Line Backfires
---------------------------------

2. (SBU) King Mohammed VI inaugurated the first seaside
resort under Vision 2010's Plan Azur or Blue Plan strategy to
boost tourism on June 19 in Saidia on the Mediterranean
border with Algeria. The USD 1.5 billion project envisions
accommodations for 30,000 tourists in 9 upscale hotels, 12
holiday villages, 8 tourist complexes, 2,700 apartments and
300 villas, with 3 golf courses, a 1,350-berth marina, and a
160-store mall (the "medina"). At the inauguration, however,
the resort was only filled to 33 percent capacity, the timing
of the opening dictated by the Government of Morocco's
(GOM,s) insistence that it host the country's ninth annual
tourism convention (the "Assises du Tourisme"). High-level
government, business and diplomatic representatives attending
the convention stayed at one of the hotels. (Note: EconOff,
who also attended, observed the resort in a substantially
incomplete state, with most of the facilities still under
construction. Two hotels, one golf course, a handful of
shops and part of the marina were operational. End Note.)

3. (SBU) Despite Minister of Tourism (MOT) Mohammed
Boussaid's admission of the "excessively ambitious timeline"
of the Plan Azur project in May (reftel), he announced his
commitment to maintain the "dynamism of investment in the
sector, develop the commercialization of Moroccan tourism,
and reinforce the quality of service provided" during the
convention in June. Three months later, Plan Azur's first
resort completely shut down. Adil Bensouda from the MOT
General Secretariat told EconOff that it is normal for some
hotels to close during the winter months. However, he
continued, "This is a 100 percent private matter handled by
the Moroccan branch of the Spanish group Fadesa (part of
Addoha Group) and the Ministry is not involved in its
decisions."

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Government Pressure to Develop Saidia
-------------------------------------

4. (SBU) Saidia's two operational hotels, Barcelo and
Iberostar, with 614 and 458 rooms, respectively, have been
closed since September and are expected to reopen in March
2010, Fadesa Maroc's Director of Communications Souhail
Berrada informed EconOff. The hotels are closed during the
off season, he added, mainly because of climatic conditions
that are not conducive to winter tourism in northern Morocco.
He underlined that many resorts in the region close during
winter. The resort is its initial period of functioning, he
said. He added that the company will use the winter recess
to train staff and make other preparations for the next
season, addressing a shortfall in qualified staff. (Note:
Before the inauguration, observers noted the lack of trained
tourism personnel as an obstacle for the resort to overcome.
End Note.) In the future, Berrada concluded, the resort will
be counting on 12 months' occupancy.

5. (SBU) Although ministry representatives insist the
Government is not involved in Addoha's decisions, Addoha's
General Director Jawad Ziyat acknowledged in a press
interview that, "from a purely touristic point of view,"
Addoha is more interested in operating in the southern part
of Morocco. Because of the need for equitable development of
different regions, he stated, the Government emphasized
Tangier, Tetouan and Saidia in the Plan Azur. While news
reports claim that there is very little activity in the
resort and that its golf course, many shops and restaurants
are closed, Ziyat noted that about half of the shops in the
"medina" are open, as well as several shops and restaurants
in the marina. Hotel management has also met MOT
representatives, highlighted Ziyat, to discuss how to "manage
the constraints imposed by the weather."

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Investors Back out of Villa Purchases
-------------------------------------

6. (SBU) Moroccan daily L'Economiste reported on November 30
that about 20 United Kingdom citizens have backed out of
villa purchases in Saidia and demanded a refund of their
deposits (approximately USD 120,000 each). These
individuals, the report continued, complained that the villas
were not ready during the timeframe agreed upon with the
developer. Ziyat attributed the UK buyers' withdrawal to the
international economic crisis (a factor the buyers' lawyer
admitted was important in the decision) and added that this
is not unique to the Fadesa project, since British clients
have also backed out of purchases in Portugal and Spain. At
the same time, he added, some 150 UK citizens have made
deposits for the group's other tourism project in Tangier.

7. (SBU) The UK Trade and Investment (UKTI) Center in
Morocco reports that almost 70 percent of the investors in
the Saidia project are British. Unmet deadlines, lack of
accountability and the developer's lack of professionalism
were the main reasons British investors decided to pull out
of the project, UKTI's Najat Benyahia informed EconOff. Some
wanted their money back, she continued, and asked for British
government's help. When the British Government was unable to
satisfy the investors, they wrote to the King, she told us.
To date, none has received a refund.

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Incomplete Marina
-----------------

8. (SBU) The marina has been criticized for the lack of a
fuel and service station for boats. According to news
reports, fuel for yachts is smuggled from Algeria in
five-liter jugs. Ziyat disputed these claims, saying that a
petroleum company is supplying fuel on-site to large boats
pending construction of a fuel station (slated to open in
early 2010), while smaller boats use fuel jugs which enter
the port after having passed through customs.

---------------------------------------------
Job Creation Overrides Environmental Concerns
---------------------------------------------

9. (SBU) Environmental activists have sharply criticized the
resort's impact on Saidia beach and the broader ecosystem
around the estuary of the river Moulouya, which the MOT has
classified as particularly biodiverse. Moroccan NGOs such as
"Ecoplateforme du Nord" and "Espace de Solidarite de
Cooperation de l'Oriental (the Movement or Space for
Solidarity and Cooperation in the Oriental -- SSCO), have
posted videos on YouTube denouncing the Saidia project from
its inception. The resort significantly contributes to the
erosion of Saidia beach, deforestation of the area and water
pollution, stressed ecologist and SSCO President Mohammed
Benanate. "Ecoplateforme du Nord" also denounced the
"irreversible ecological damage" that the resort has wrought
on Saidia's ecosystem.

10. (SBU) When asked about the project's impact on the
environment, local authorities in the Oujda region (of which
Saidia is a part) acknowledged that the benefits of
development outweighed the possibility of environmental
degradation in making the decision to proceed with the
project. "One has to choose," said Oujda Region Governor
Mohamed Brahimi in a press interview, "between the
preservation of a turtle and the creation of economic

dynamism in the region, with at least 50,000 new jobs and
income of 5 million dirhams (approximately USD 700,000)."
The choice was easy, he concluded, as "this used to be a
marshland which brought zero dirhams to the state." (Note:
The Mission is unaware of particular projected impacts on
turtle populations and believes Brahimi was speaking
off-the-cuff. End Note.)

------------------------------
More Plan Azur Resorts to Come
------------------------------

11. (SBU) Located one hour south of Casablanca, the second
seaside project under Plan Azur, the Mazagan Beach Resort,
opened in October 2009 near the Atlantic coast city of El
Jadida. American-owned Colony Capital, through its
subsidiary Kerzner Development, oversaw the development of
the five-star, 500-room hotel, golf course, spa and casino
resort, which remains open during the winter season. This
week MOT Minister Boussaid officially announced the
commencement of construction in 2010 of an additional
long-stalled Plan Azur project, Plage Blanche, managed by
Addoha through Fadesa Maroc. Addoha also recently announced
plans to open in July 2010 a third hotel costing USD 52
million within the Saidia resort, again managed by Fadesa
Maroc.

12. (SBU) COMMENT: Although it is not uncommon in Morocco
for a beach resort to close its doors during the winter
months, this forced change of plans is an embarrassment for
the Saidia resort, which validates Boussaid's belated
assessment that the original plan was too ambitious.
Circumstances outside of the developer's control (including
weather and the global economic climate) contributed to the
adjustments in earlier projections. The MOT and Moroccan
developers will need to carefully review their ongoing
tourism development plans -- equally sensitive to external
conditions -- to avoid a renewed plunge into construction
without adequate assurances of foreign demand. Despite the
setbacks, however, the GOM still identifies tourism as a key
base for the country's economic development and future
current account balance, and will likely continue developing
new offerings to attract foreign tourists. The GOM estimates
that approximately 8 million tourists will visit Morocco in
2009, and while Colony Capital substantially reduced its
planned investments in 2009, the MOT, Addoha and its Spanish
partners continue to move ahead. END COMMENT.

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