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Unrest Interrupts Albanian Hotel Industry
Illyria / May 14, 1997

By Larry Luxner

In 1960, businessman Nasi Lesku, then a teenager, fled his native Albania during the height of a Marxist dictatorship so paranoid that it forbade rock music, long hair, contact with foreigners and eventually belief in God. Lesku spent four months in a Yugoslav prison before escaping again, to Italy. He finally received political asylum in the United States, and became a successful real-estate developer in South Florida.

Last year, Lesku -- convinced that the Berisha government would be conducive to large-scale tourism -- decided to invest $10 million in a 100-room hotel and timeshare complex in the port city of Durres. He had already opened a string of photocopy centers, and figured his isolated, mountainous country would avoid the bloodshed that had engulfed so many other Balkan hotspots.

He figured wrong.

"We broke ground on the hotel, but since the riots broke out everything is on hold," Lesku said from his office in Fort Lauderdale. "Our copy center in Vlorė was completely looted and destroyed, and our warehouse in Tiranė was broken into. My business partner was threatened and had to leave. It doesn't look like anything will be done until they have elections, and then we have to see if the government will honor all the contracts."

Street protests against President Sali Berisha and his Democratic Party -- fueled by the collapse of fraudulent investment schemes earlier this year -- led to open insurgency in February. Since then, TV images of 10-year-old boys pointing stolen Kalishnikov rifles at passersby have been broadcast around the world, while over 400 people have died as government troops continue to battle well-armed rebels in southern Albania, prompting the U.S. Embassy to evacuate all non-essential staff.The fighting, which triggered an exodus of 13,000 Albanian refugees to Italy, is being stemmed only by the arrival of a 6,000-man multinational force from half a dozen European countries. The heavily armed peacekeepers will likely remain in Albania well after elections now set for June 29.

The unrest has paralyzed Albania's fledgling tourist industy, which was only beginning to take off after 50 years of Communist-imposed isolation.

In a 1994 interview with Illyria, former Tourism Minister Edmund Spaho had boldly predicted that his Maryland-sized nation would be receiving half a million visitors a year by 2004 -- up from the paltry 9,000 tourists that visited Albania in 1993, and a 180-degree turnaround from the policies of the Communist regime, which kept tourists out. Spaho said visitors would flock to Albania, attracted by its unspoiled Mediterranean coastline, 17th century Orthodox church frescoes in Voskopoja, and well-preserved Roman ruins at Butrint.

Yet no one's visiting Albania now.

"Investment is at a standstill. Everybody's battening down the hatches and hoping that law and order gets restored," said Tom England, executive vice-president of the Washington-based Albanian-American Trade Association. "I wouldn't recommend anybody to go there at all. No foreigner wants to be on the street at night."

At the 137-room Rogner International in downtown Tiranė, widely considered to be Albania's best hotel, occupancy has dipped only slightly, from 80-85% before the fighting to 78% now. Venera Cocoli, sales and marketing manager at the Austrian-owned property, says "there was no damage because we have our own security." Most of the guests at the Rogner -- whose rack rate is $170 a night -- are journalists covering the insurrection, or international delegations trying to stop it.

The same is true at the nearby Hotel Tirana, where only 30-40% of the property's 165 rooms are currently occupied. That hotel recently underwent a $16.4 million facelift thanks to an Italian investment group, yet it remains the country's only tall building.

Meanwhile, Lesku says he's already sunk $300,000 into his timeshare complex in Durres. "We hope that either we'll have a new agreement with whatever government comes into power, or that they'll honor the old one," he said.

Albania's biggest hotel project, the proposed five-star Hotel Inter-Continental Tirana, has also been delayed by the fighting, but is still on track to open in mid-1998.

"People obviously have a wait-and-see attitude," said Tom Krooswijk, GM of the Hotel Inter-Continental Vienna and the chain's regional vice-president for Central and Eastern Europe. "The government has agreed to call elections this summer, and until the elections take place, there might be some delay in construction activities."

Based on a projected 262 rooms and an Eastern European industry average of $225,000-$250,000 per room, the Inter-Continental represents an investment of between $60 million and $65 million. It is being constructed at the end of Tiranė's main boulevard, within walking distance of the University of Tirana, by the Mohamed Abdul Mohsin Kharafi Group of Kuwait.

Krooswijk, interviewed by phone from Vienna, said the hotel will likely charge $180 a night. Upon opening, the eight-story luxury hotel will an extensive fitness center, outdoor swimming pool, tennis courts, state-of-the-art communications systems, a nightclub and convention facilities; itt will also provide jobs for around 300 people.

In fact, Inter-Continental is so enthused with Albania's potential that it's planning a second hotel -- probably under the four-star Forum brand. Offering rooms at around $110-120 a night, the proposed Forum Tirana will be converted from an existing property, though Krooswijk declined to say which one since negotiations are still at an early stage.

Despite the chaos, Krooswijk thinks both tourists and foreign investors will return to this unpredictable country, even if it takes awhile.

"I think from the outside, if you're not familiar with Albania, it looks like civil war," said the hotelier. "But for people living around here -- Austrians, Germans and Italians -- I don't think they're terribly put off by what's happened in the last few months."

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