If the Public-Private Partnership (PPP) Charter were to be put into practice — which currently seems unlikely — it seems that state-owned hotels would be among the first in the firing line.
This came as good news owners such as the president and CEO of the state-owned Hôtellerie Tourisme et Thermalisme (HTT) hotel group, Lazhar Bounafaa. In his speech, he highlighted parameters that, he presumed, would put most state-owned hotels — with the exception of El Aurassi, Sofitel and Mercure — in the frame: high debt; an unstructured financial situation with some subsidiaries on the verge of bankruptcy; management out of touch with the realities of today’s tourist markets; and surplus and untrained labour and sub-international quality of service. To those, he added the dilapidated state of equipment and infrastructure unsuited to the expectations of the modern tourist market.
The track record of hotel privatisation is not good. Several have already been sold into private ownership, but little signs of improvement. Examples include Skikda’s Es Salem Hotel, Annaba’s Orient Hotel, the Grand Hotel in Oran, Setif’s El Hidhab and Sidi Fredj’s El Riadh. Their privatisation brought no improvement in either revenues or facilities, and little to no new investment has taken place. One reason may be that they were bought with bank loans rather than the owners’ own money.
Some analysts argue that if there is one sector from which the state should disengage, it is tourism. Others maintain that ‘jewels’, such as the historic El Djazair (formerly St George) hotel and El Aurassi, should remain in national ownership.
There are three categories of hotels in Algeria: the state-owned HTT group, privately owned family-dominated hotels; and the Hotel Investment Company (SIH), which is responsible for building hotel infrastructure and putting hotels under international management to set an example for investors and attract major hotel groups.
A vast modernisation of the public hotel fleet was launched a few years ago, with the aim of rehabilitating and modernising public hotels, aligning them with international standards of service, expanding capacity and creating new services. As with most state projects, implementation has been slow.
With the brake seemingly put on the PPP programme, the problems of the sector look likely to linger on.
This article is taken from our monthly Algeria Focus publication. If you are interested in discussing the topic, or receiving a complimentary copy, then please contact us.
