ERBIL, Kurdistan Region — The influx of Arabs fleeing violence in cities like Mosul, Tikrit and Samarra is filling up Iraqi Kurdistan’s motels, but leaving many of its hotels empty.
Violence just outside of the Kurdistan Region drew refugees but is keeping foreign tourists and visitors away. While many hotels in the Kurdistan Region’s capital, Erbil, suffer from lack of occupancy, motel owners are increasing their prices due to high demand by Arab families for low-cost motels and short-term apartments.
Many families who are renting motel apartments worry how long they can afford it, and less fortunate refugees sleep in parks.
At the same time, the hotel market — offering mainly rooms or suites at higher prices — is barely impacted by the influx. Erbil is the 2014 Arab Tourism Capital, yet hotels are shutting down because they can’t attract enough customers.
Safeer Hotel became the second 3-star hotel in Erbil to close its doors last month. Although ranked as one of the most popular for Erbil on the Trip Advisor website and well liked by foreigners on Booking.com, revenue could no longer cover the costs of rent, electricity and staff, said general-manager Akram Mohammed Ali.
Erbil now boasts some 600 motels and hotels, according to Mohammed — a far cry from the 15 or so accommodations that existed when Safeer opened its doors in 2006. Until 2011, the occupancy of the 32-room hotel was around 65 percent, drawing businessmen and tourists from Iraq as well as NGOs and private organizations that hosted events in the hotel’s conference center.
Business started to falter around 2011 and plummeted to about 20 percent occupancy just before the closure. By that time, the hotel across the road and the restaurant next door had also closed.
One feature they have in common: all of the properties were rented.
“I tried to convince the landlord to lower the rent, but he refused,” Ali said. “Some 90 percent of the hotels in Erbil are not owned by the management, and I expect many to find the same problems.”
Hearsh Ahmad Karem, chairman of the Kurdistan Hotels and Restaurant Association, also expects more closures of low-cost and mid-range hotels.
“The lack of planning and unlimited building of new hotels has caused this competition in which the prices have gone down, while the costs, especially for electricity, have gone up,” he said.
Mohammed confirms this.
“We tried everything to find new costumers,” he said. “We found new markets through Booking.com. But the authorities did not let in single businessmen and visitors from the south of Iraq and families went to the motels. Our occupancy over Eid and Nowroz went from 90 percent down to 30.”
Mohammed, who owned and ran hotels in Baghdad before 2006, blames the Kurdish government and tourist organizations for weak regulations that allowed too many hotels to open. “Anyone can start a hotel, which has led to a grossly oversupplied market in which services are not up to standard.”
Ahmad has urged the government not to grant any more licenses to budget hotels. He admits this is an uphill struggle, as special loans for those who invest in the tourism industry are still offered.
At the same time Ahmad has asked for a review of the rent hikes for hotel properties. “Regulations there, for instance on taxes to be paid, could help those to survive who suffer now.”
The 4- and 5-star market is also in danger of oversupply.
At the Kurdistan Projects Conference at the Rotana Hotel in Erbil, projections showed massive growth in the hotel industry over the few next years, with Sheraton, Kempinski, Hilton and Marriott Hotels adding some 2,500 new rooms. With an estimated 74 percent occupancy, experts warned that oversupply will force a sharp drop in those figures between 2017 and 2019.
“The market is growing, but not as fast as new properties are implemented,” said Rotana Erbil-manager Thomas Touma, who urged investors to study the market.
Creativity is a must for those who want to survive, Ahmad said. Some hotel managers are drawing additional revenue by opening massage centers and spas in hotels to attract guests, just as the association’s chairman has done for his own hotel in Erbil. He also rents out space to a liquor shop on his premises.
But he refuses the general impression that hotels with these facilities attract prostitution.
“That’s the close-minded idea people have in this region,” he said. “Elsewhere in the world, even in Dubai, people realize these services exist for health reasons.”
