The News: Opportunity in War-Torn Land

In an unusual market in which traditional demand sources prove unpredictable, global hotel companies can seek business in unexpected places. Thus, Marriott International has entered a locale that most would rather avoid, signing on to manage a five-star, 228-room hotel in Afghanistan’s capital of Kabul. Scheduled for completion by the end of 2010, the property is rising next to the U.S. embassy within the security perimeter.Rick Jenney, partner in the law firm of Morrison & Foerster L.L.P., represented Overseas Private Investment Corp. in its $60 million financing for the project, which is rising in a 3 million-resident city that offers almost no business-class hotel rooms. International developer Fathi M. Taher and U.S. firm General Systems International are building and will own the asset.The Marriott is expected to serve international business travelers like consultants involved in the country’s reconstruction efforts, Afghan government officials, foreign investors and Afghans returning to their homeland. The project will create 300 jobs in a city that sorely needs them.Obviously, the interested parties do need to take care of some extra concerns. Recent terrorist attacks on hotels in the region, notably 2008’s bombing of the Islamabad Marriott in Pakistan and the Mumbai Massacre at the Taj Mahal Palace & Tower Hotel in India, have punctuated the need for well-conceived security. “While many hotels have been retrofit with the latest security features, this hotel is a new build that will include these features,” Jenney noted. For example, vehicles will only be able to enter the Marriott by an underground tunnel that begins 100 yards from the hotel entrance.And the deal did not go down easily. The transaction has taken seven years to complete, and the original sponsors and hotel management company both have been replaced. Overseas Private Investment’s involvement has been critical, Jenney stated. The U.S. government agency helps U.S. companies invest in emerging, sometimes dangerous, markets, providing backstops like political risk insurance, which insures a company in case a foreign government seizes an asset.Marriott’s international experience has also proved to be a boon, Jenney noted. “They’re a sophisticated hotel company that knows how to deal with all of the issues involved in expanding into a new country.” And despite last year’s Marriott bombing in Islamabad, he reported, “it has been full speed ahead.”